Gary v. Nichols

• Citation: 447 F. Supp. 320
• Decision Date: 09 March 1978
• Docket Number: Civ. No. 1-75-122.
• Parties: Matthew C. GARY, Plaintiff, v. Glenn W. NICHOLS, Director of the Department of Employment, State of Idaho, Defendant.
• Court: U.S. District Court — District of Idaho

447 F. Supp. 320

Matthew C. GARY, Plaintiff, v. Glenn W. NICHOLS, Director of the Department of Employment, State of Idaho, Defendant.

Civ. No. 1-75-122.

United States District Court, D. Idaho.

March 9, 1978.

Louis Garbrecht, III, Idaho Legal Aid Services, Inc., Twin Falls, Idaho, for plaintiff.

R. Lavar Marsh, Deputy Atty. Gen., Roger B. Madsen, Asst. Atty. Gen., Boise, Idaho, for defendant.

Before KOELSCH and ANDERSON, Circuit Judges, and McNICHOLS, Chief Judge.

MEMORANDUM DECISION

McNICHOLS, Chief Judge:

Plaintiff worked as a general maintenance man for Western Beverage Corporation in Twin Falls, Idaho, until October 5, 1974, on which date his employment terminated. On February 10, 1975, he applied for and was subsequently granted unemployment compensation benefits by the Idaho Department of Employment in accordance with the Idaho Employment Security Law, Idaho Code §§ 72-1301 to -1379, and the regulations promulgated thereunder. Weekly benefits were paid in the sum of $60.00 per week for the weeks ending February 22, 1975, and March 1, 1975.

On February 26, 1975, the employer filed a timely request for a redetermination of plaintiff's eligibility for benefits, alleging that the plaintiff had voluntarily terminated his employment without good cause. A form-letter notice, with the employer's request attached, was duly sent to Gary at his Twin Falls address, advising him of the employer's request for redetermination and requiring him to reply "as soon as possible". The form was designed to be completed and returned to the agency office prior to March 10, 1975.

Unfortunately, the plaintiff was away from his home seeking employment and his reply was not received at the agency office until March 18, 1975. On March 13, 1975, a redetermination was made, holding Gary ineligible for benefits and requiring reimbursement to the agency for the two initial payments.

A timely appeal from the initial redetermination was filed on March 20, 1975, and a final redetermination hearing before a senior appeals examiner was set for April 18, 1975. After several continuances, the appeal hearing was held on June 3, 1975, at which all parties were in attendance and represented by counsel. On June 13, 1975, the appeals examiner issued his decision, affirming the initial redetermination of ineligibility; he found that the claimant had indeed left his employment voluntarily and without good cause. This holding is not now under attack, and for our purposes is considered to be a correct determination of the issue.

Although additional administrative appeal to the Idaho Industrial Commission was available to the plaintiff, he did not pursue the same, and on July 23, 1975, filed this action, alleging jurisdiction by virtue of 28 U.S.C. §§ 1343(3) and (4), and seeking inter alia: (1) relief under 28 U.S.C. §§ 2201 and 2202 declaring the Department's rules and regulations relating to redetermination unconstitutional; (2) convention of a three-judge panel pursuant to 28 U.S.C. §§ 2281 and 2284¹ in order to enjoin enforcement of the Department's rules and regulations relating to redetermination; and (3) an order requiring defendant to pay plaintiff the sum of $480 in damages, costs and attorney's fees.²

The requisite notification and certificate for a multijudge panel was filed, and an order constituting the panel was entered. Subsequently, the plaintiff dismissed the following allegations and causes of action:

1. All claims for money damages;

2. All claims in the Second Cause of Action, Paragraph 26, regarding failure to provide a hearing before an impartial tribunal;

3. All claims in the Third Cause of Action, Paragraph 29, regarding failure to provide a fair hearing before an impartial tribunal; and

4. All allegations and claims in the Fifth Cause of Action.

In the present posture of the case, the plaintiff's causes of action are respectively: (1) that the redetermination procedures are in violation of the Fifth and Fourteenth Amendments to the United States Constitution and 42 U.S.C. § 1983, in that they provide for termination of unemployment benefits without first affording the recipient a pretermination evidentiary hearing; (2) that the delay from the time of termination to the date of the final redetermination hearing, approximately 87 days, violates the due process clause of the Fifth and Fourteenth Amendments and 42 U.S.C. § 1983; (3) that the termination of benefits prior to a hearing violates 42 U.S.C. § 503(a)(1) and 42 U.S.C. § 1983, in that the administration of claims is not calculated to insure full payment of benefits when due; and (4) that the granting of repeated continuances of the final redetermination hearing was unreasonable, arbitrary and a violation of 20 C.F.R. § 650.1(b) and 42 U.S.C. § 1983.

As jurisdiction was properly invoked under 28 U.S.C. §§ 1343(3) and (4), as a three-judge court was properly convened, and as the plaintiff's claims are not moot, we directly address the plaintiff's specific constitutional and statutory claims.

I.

A. Plaintiff's first cause of action comprises essentially two issues: (1) whether due process requires a pretermination evidentiary hearing before the recipient of unemployment benefits may no longer receive those benefits; and (2) if not, whether due process mandates more than an oral interview before an unemployment claimant may have his benefits terminated. We decide both issues in the negative.

The analysis of a due process challenge is two-fold: First, whether the interest asserted is within the Fourteenth Amendment's protection of "liberty" or "property"; and if so, what process is "due" in the particular context. Smith v. Organization of Foster Families, 431 U.S. 816, 838-39, 847, 97 S.Ct. 2094, 53 L.Ed.2d 14 (1977).

It is clear and virtually conceded that the claimant's asserted interest in continuing to receive unemployment benefits is a protected one. See Graves v. Meystrik, 425 F.Supp. 40, 47 (E.D.Mo.1977), aff'd without opinion, 431 U.S. 910, 97 S.Ct. 2164, 53 L.Ed.2d 220 (1977). Not unlike wages and welfare benefits, unemployment benefits are specific, more than expectational, and conferred by existing statutes, rules and regulations. See Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). Thus it is the second prong, the process due, that is the gravamen of plaintiff's complaint and the major issue before us.

In Fusari v. Steinberg, 419 U.S. 379, 95 S.Ct. 533, 42 L.Ed.2d 521 (1975), the Supreme Court came within a breath of disposing of this issue, for one of the questions was whether the Connecticut seated-interview procedures for determining unemployment eligibility were constitutionally defective in failing to provide a pretermination hearing in accordance with the standards set forth in Goldberg. However, while the matter was pending, the Connecticut legislature enacted major remedial revisions in their unemployment benefit statutes, and the Court vacated and remanded.

As the Supreme Court, then, has not specifically addressed the issues sub judice, we must apply the Court's test set forth in Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Noting that due process "is not a technical conception with a fixed content unrelated to time, place and circumstances", and "is flexible and calls for such procedural protections as the particular situation demands", id. at 334, 96 S.Ct. at 902, citing Cafeteria & Rest. Workers Union v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961), and Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972), the Mathews Court said that exegesis of their prior decisions indicates three distinct factors that must be considered and weighed before the specific dictates of due process may be found:

"First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail." Mathews, 424 U.S. at 335, 96 S.Ct. at 903, quoted in Smith v. Organization of Foster Families, 431 U.S. at 848-49, 97 S.Ct. 2094 (1977), and Dixon v. Love, 431 U.S. 105, 112-13, 97 S.Ct. 1723, 52 L.Ed.2d 172 (1977).

As plaintiff's private interest in this case is not an interest in receiving unemployment benefits as such, but only an interest in continuing to receive unemployment benefits between an initial redetermination after something less than a full evidentiary hearing and a final redetermination after a full hearing by an appeals examiner, the nature of and weight to be given such an interest are found only after our careful examination of Goldberg, upon which plaintiff relies, and Mathews, upon which defendant relies. We find Mathews controlling.

In Goldberg the Court held that due process did require a pretermination evidentiary hearing before termination of welfare benefits to families with dependent children. Focusing on the need of the welfare recipients, and the overwhelming private interest at stake, the Court wrote:

"For qualified recipients, welfare provides the means to obtain essential food, clothing, housing, and medical care. Thus the crucial factor in this context — a factor not present in the case of the blacklisted government contractor, the discharged government employee, the taxpayer denied a tax exemption, or virtually anyone else whose governmental entitlements are ended — is that termination of aid pending resolution of a controversy over eligibility may deprive an eligible recipient of the very means by which to live while he waits. Since he lacks independent resources, his situation becomes immediately desperate. His

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