Jenkins v. Bowling

• Decision Date: 01 November 1982
• Docket Number: No. 82-1356,82-1356
• Citation: 691 F.2d 1225
• Parties: Unempl.Ins.Rep. CCH 21,698 Juvena JENKINS, et al., Plaintiffs-Appellees, v. William M. BOWLING, Director, Illinois Department of Labor, et al., Defendants- Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1225

691 F.2d 1225

Unempl.Ins.Rep. CCH 21,698

Juvena JENKINS, et al., Plaintiffs-Appellees, v. William M. BOWLING, Director, Illinois Department of Labor et al., Defendants- Appellants.

No. 82-1356.

United States Court of Appeals Seventh Circuit.

Argued Sept. 23, 1982.

Decided Nov. 1, 1982.

Imelda R. Terrazino, Deputy Atty. Gen., Chicago, Ill., for defendants-appellants.

Jeffrey B. Gilbert, Legal Asst. Found., Chicago, Ill., for plaintiffs-appellees.

Before BAUER, POSNER and COFFEY, Circuit Judges.

POSNER, Circuit Judge.

We are asked to decide the constitutionality of a portion of section 602 B of the Illinois Unemployment Insurance Act, Ill.Rev.Stat. 1981, ch. 48. Section 602 B denies unemployment benefits to anyone "discharged because of the commission of a felony in connection with his work, or because of theft [which may be either a felony or a misdemeanor, see Ill.Rev.Stat.1981, ch. 38, Sec. 16-1] in connection with his work, for which the employer was in no way responsible," provided that either the employee has admitted the act in writing or the act "has resulted in a conviction by a court of competent jurisdiction." This much of section 602 B is unchallenged. However, the section goes on to provide "that if by reason of such act, [the person claiming unemployment benefits] is in legal custody, held on bail or is a fugitive from justice, the determination of his benefit rights shall be held in abeyance pending the result of any legal proceedings arising therefrom." This class action against the officials who administer Illinois' unemployment insurance program challenges the "held in abeyance" proviso--which so far as we know has no counterpart in any other state's unemployment law--as a violation of both the supremacy clause of Article VI of the Constitution and the due process clause of the Fourteenth Amendment. The district court held the proviso unconstitutional under both clauses and, by way of remedy, directed the defendants to offer people whose claims are postponed under section 602 B the same administrative procedure, involving a hearing and several layers of appellate review, that the state offers people whose claims are initially denied under other provisions of the Illinois Unemployment Insurance Act. See Ill.Rev.Stat.1981, ch. 48, Secs. 450-53, 455-56, 470-74. We begin and for reasons that will eventually appear end our consideration of the merits with the supremacy clause.

Though administered at the state level in accordance with criteria for eligibility largely determined by each state, unemployment insurance is partly financed by the federal government, which naturally has attached some strings to its largesse. The two strings that are relevant to this case are sections 303(a)(1) and (3) of the Social Security Act, 42 U.S.C. Secs. 503(a)(1), (3).

Section 303(a)(1) forbids the Secretary of Labor to allow federal money to go to a state to help the state defray the costs of administering its unemployment compensation program unless the state's unemployment insurance law makes provision for "such methods of administration ... as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due." Pursuant to this grant of rule-making authority, see Wilkinson v. Abrams, 627 F.2d 650, 660 (3d Cir. 1980); 42 U.S.C. Sec. 1302, the Department of Labor has issued regulations requiring "prompt determination of eligibility" and administrative methods that "will reasonably insure the full payment of unemployment benefits to eligible claimants with the greatest promptness that is administratively feasible" and that are "reasonably calculated to insure full payment of unemployment compensation when due." 20 C.F.R. Secs. 640.1(a)(2), 640.3(a), 650.1(b).

Section 303(a)(3) forbids the Secretary to allow federal money for administrative costs to go to a state that does not provide "opportunity for a fair hearing, before an impartial tribunal, for all individuals whose claims for unemployment compensation are denied." There are regulations under this section too but they add nothing so far as the issues in this case are concerned.

As an original matter one might wonder how a state statute could be challenged as inconsistent with section 303(a) of the Social Security Act, and hence as invalid under the supremacy clause, when section 303(a) does not purport to require anything of the states. A state can have any kind of unemployment compensation scheme it wants, at least so far as the Social Security Act is concerned, provided it does not insist on receiving federal money. Since the Act is addressed not to the state but to the Secretary of Labor, one might think the appropriate remedy for a violation was an order forbidding the Secretary to pay money to the noncomplying state for its unemployment-compensation program, which is not what the plaintiffs in this case have asked for; or, less obviously, an order forbidding the state to use federal money unless it conforms its unemployment insurance law to the requirements of the Social Security Act. Such a remedy was upheld in Rosado v. Wyman, 397 U.S. 397, 420-422, 90 S.Ct. 1207, 1221-1222, 25 L.Ed.2d 442 (1970), but is not what the plaintiffs want either. They just want the held in abeyance proviso enjoined.

Despite the lack of any obvious basis in the language of section 303(a) for such a remedy, the Supreme Court, though without discussion of the issue beyond an extremely cryptic dictum in Rosado, supra, 397 U.S. at 421, 90 S.Ct. at 1222, has consistently assumed that it is a proper remedy, see California Dep't of Human Resources v. Java, 402 U.S. 121, 91 S.Ct. 1347, 28 L.Ed.2d 666 (1971); Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 97 S.Ct. 1898, 52 L.Ed.2d 513 (1977); cf. King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968), as have the lower federal courts, see, e.g., Wilkinson, supra. We regard the point as too well settled to be questioned by us, especially since the defendants do not question it either. The result, at least given Rosado, makes a certain amount of practical sense in a case like this; it is unlikely that faced with a choice (as in Rosado ) between forgoing federal money and modifying or even abandoning section 602 B, a provision as we shall see of limited practical significance, Illinois would choose to forgo the money. Maybe that is why the defendants have not questioned the nature of the remedy that the plaintiffs are seeking.

The question we do have to decide, which is one of first impression, is whether Illinois' practice of postponing payment of benefits to applicants who are in legal custody or on bail for a work-related felony or theft, until the charges are resolved, is an administrative method "reasonably calculated to insure full payment of unemployment compensation when due," or as this is glossed in the regulations "with the greatest promptness that is administratively feasible." The state argues that section 303(a)(1) has no application to this case because benefits do not become due until the criminal charges are resolved; in its view the held in abeyance proviso postpones the determination of eligibility, rather than the payment of benefits to eligible persons.

This is not an absurd argument, although it has been rejected in related contexts, see Fusari v. Steinberg, 419 U.S. 379, 388 n. 15, 95 S.Ct. 533, 539 n. 15, 42 L.Ed.2d 521 (1975); Wilkinson, supra, 627 F.2d at 661 n. 14. But it would give section 303(a)(1) a very restricted scope, limiting it to cases, such as Burtton v. Johnson, 538 F.2d 765 (7th Cir. 1976), where the state concedes that unemployment compensation is due someone and simply fails to establish administrative mechanisms that result in paying him within a reasonable time. Under this view a state could take all the time in the world to decide that an unemployed person was entitled to compensation, provided that it got the check to him promptly when it did decide.

We think Congress had larger objects in view than the ministerial competence of state comptrollers. Both the humane (or redistributive) objectives of unemployment insurance and its macroeconomic objective (dampening the business cycle by keeping up the purchasing power of people laid off in a recession) require that unemployment compensation be paid as promptly as possible after the worker is laid off. Of course he must meet the state's eligibility criteria but if the state delays indefinitely in deciding whether he has met them it defeats the objectives behind requiring prompt payment. It is true that section 303(a) is in Title III of the Social Security Act, which provides for federal financing of just the administrative expenses of unemployment compensation. See 42 U.S.C. Sec. 502. But it does not follow that the concern behind section 303(a) is limited to administrative efficiency in a narrow sense. In fact the legislative history suggests that the purpose of Title III in general and section 303(a) in particular was to furnish federal money for the administrative expenses of state unemployment compensation programs as an inducement to the states to adopt programs that would achieve the larger objects suggested above. See H.R.Rep. No. 615, 74th Cong., 1st Sess. 7, 9, 23 (1935).

Now we know that a large fraction of the people whose benefits are postponed under section 602 B of the Illinois Unemployment Insurance Act because they are in legal custody or on bail for a work-related felony or theft are in fact eligible from the day they became unemployed, because the district court found, and the defendants do not contest its finding, that 39 percent of the claimants whose benefits were postponed under section 602 B in 1979 (the only year for which there are data in the record) neither admitted their guilt nor were convicted of a work-related felony or theft. If Illinois had good reason to postpone the payment of benefits to these...