Royer v. State Dept. of Employment Sec.

• Decision Date: 17 October 1978
• Docket Number: Nos. 78-049,78-050,s. 78-049
• Citation: 118 N.H. 673,394 A.2d 828
• Parties: Arthur J. ROYER, Individually and on behalf of all others similarly situated, v. The STATE of New Hampshire DEPARTMENT OF EMPLOYMENT SECURITY et ano.
• Court: New Hampshire Supreme Court

Page 828

394 A.2d 828

118 N.H. 673

Arthur J. ROYER, Individually and on behalf of all others similarly situated, v. The STATE of New Hampshire DEPARTMENT OF EMPLOYMENT SECURITY et ano.

Nos. 78-049, 78-050.

Supreme Court of New Hampshire.

Oct. 17, 1978.

New Hampshire Legal Assistance (Raymond J. Kelly, Keene, orally), for plaintiffs.

Edward F. Smith and Andre J. Barbeau, Concord (Mr. Barbeau orally), for defendants.

PER CURIAM.

These unemployment benefit cases present issues concerning the maintenance of class actions in this State and the authority of the department of employment security (DES) to terminate without prior notice and hearing the benefits of initially eligible claimants who have continued to make weekly filings according to RSA 282:3 A and Regulation 13 (1975). Plaintiff Arthur J. Royer was found initially eligible for unemployment benefits on August 22, 1974, and was disqualified indefinitely for benefits on September 27, 1974. On appeal, the decision of the appeals tribunal on October 30, 1974, upholding the disqualification, was overturned by the Hillsborough County Superior Court (Batchelder, J.) on October 25, 1976. Defendants excepted to the court's award of eight weeks of benefits and filed an appeal with this court. Subsequently, the benefits were paid and therefore the defendants' exception is overruled.

Mr. Royer, on behalf of himself and the class of others similarly situated, also filed a bill in equity on October 9, 1974, in Hillsborough County Superior Court, seeking a temporary restraining order and a temporary injunction. These prayers were denied by Bois, J. However, a motion to dismiss the class action brought against the State was also denied by Bois, J. The benefit appeal case and bill in equity seeking a permanent injunction, declaratory relief, and damages were then heard on a consolidated record in the Hillsborough County Superior Court (Batchelder, J.). The trial court allowed the case to proceed as a class action and ruled on statutory and constitutional grounds that unemployment benefits may not be terminated without prior notice and hearing. Defendant's motion for consideration was denied and all questions of law raised by exceptions were reserved and transferred to this court by Batchelder, J. For the reasons contained herein, we affirm.

I.

The defendant argues that plaintiff Royer's claim is moot since he has received all unemployment benefits to which he was entitled. Mootness is not subject to rigid rules, but is a matter of convenience and discretion. Proctor v. Butler, 117 N.H. ---, 380 A.2d 673 (1977). Plaintiff raises issues of significant constitutional dimensions; the pressing public interest in those issues and the avoidance of future litigation of the same issues justify a decision on the merits. Martel v. Hancock, 115 N.H. 237, 238, 339 A.2d 9, 10 (1975); O'Neil v. Thomson, 114 N.H. 155, 159, 316 A.2d 168, 171 (1974). Additionally, this case presents issues that are "capable of repetition, yet evading review." Weinstein v. Bradford, 423 U.S. 147, 148, 96 S.Ct. 347, 348, 46 L.Ed.2d 350 (1975). The challenged action was too short in duration to be fully litigated prior to its expiration, and although plaintiff is now employed, there is a reasonable expectation that he may again be subjected to the challenged action. Weinstein, id. at 149, 96 S.Ct. 347. Because of this ruling on mootness, the class action question need not be considered.

II.

The trial court correctly found that the practice of the department violates RSA 282:5 B(9), which provides that "It shall be a condition precedent to the cessation of payment of benefits to any individual that he be given an opportunity to appear in person . . . to be heard relative to his continued entitlement to benefits." Although the statute requires that the commissioner promulgate regulations to carry out its mandate, the department has no written directive requiring certifying officers to talk to initially eligible claimants before terminating benefits, and has no standard procedure for notifying initially eligible claimants before termination of benefits that a specific question has arisen concerning their continued receipt of benefits. Plaintiff Royer and another claimant, Elizabeth Becker, received no written notice to inform them that the department questioned their availability for work (one of the conditions for receiving benefits) until they received the decision terminating their benefits. Further, DES' standard procedure after an initially eligible claimant has been disqualified by a certifying officer is to stop benefits entirely while an appeal is pending before the Appeal Tribunal. This procedure and its resultant cessation of benefits violate RSA 282:5 B(9). The interview with a certifying officer, which DES provides claimants prior to termination of benefits, does not comport with the requirements of RSA 282:5 B(9), because a claimant receives no prior notice of any specific questions concerning the claimant's continued entitlement of benefits. Additionally, the existing procedures of DES violate RSA 282:5 B(10) (1977), which requires that unemployment benefits found payable by an administrative determination must continue until the decision of a subsequent appellate body finding that benefits are not payable.

III.

The termination of unemployment benefits without prior notice and hearing also violates the Social Security Act, 42 U.S.C. 503(a)(1) (1970), which requires that the State, to qualify for payment of DES administrative expenses by the federal government, must comply with certain federal requirements. Section 503(a)(1) states that individual State methods of administration must be "reasonably calculated to insure full payment of unemployment compensation when due." The Supreme Court, in an unemployment compensation case, held that the words "when due" meant the time promptly after an initial determination of eligibility. California Human Resources Dep't v. Java, 402 U.S. 121, 91 S.Ct. 1347, 28 L.Ed.2d 666 (1971); Pregent v. New Hampshire Department of Employment Security, 361 F.Supp. 782 (D.N.H.1973), Vacated and remanded for determination of mootness, 417 U.S. 903, 94 S.Ct. 2595, 41 L.Ed.2d 207 (1974).

The department's procedure of summary termination by a certifying officer, on the grounds of a subsequent finding of ineligibility, does not change the concept of when benefits are due. Pregent, supra at 793. The average delay of eight weeks between the last check received prior to termination and the issuance of the first check after the Appeal Tribunal reverses the termination decision is not a De minimis deprivation of property and highlights the importance of a pretermination due process hearing.

IV.

The existing procedures for the termination of unemployment benefits also violate the due process clause of the fourteenth amendment to the United States Constitution and part I, article 15 of the New Hampshire Constitution, which provides that no person can be deprived of his liberty or estate but by the judgment of his peers or the "law of the land." "Law of the land" has been consistently interpreted as meaning due process of law. Petition of Harvey, 108 N.H. 196, 230 A.2d 757 (1967); Opinion of the Justices, 66 N.H. 629, 33 A. 1076 (1891). Unemployment compensation claimants have "the same type of statutorily grounded claim of entitlement to, or property interest in, unemployment compensation benefits that the welfare recipients had in the Goldberg case." Wheeler v. State, 115 N.H. 347, 341 A.2d 777, 781 (1975), Cert. denied 423 U.S. 1075, 96 S.Ct. 860, 47 L.Ed.2d 86 (1976). Having found that the plaintiff class has a property interest in the continuation of unemployment compensation benefits, the only question remaining is what procedures are due.

The trial court ruled that DES must provide notice and hearing before termination comporting with the following guidelines:

(a) A hearing need not take the form of a judicial or quasi-judicial trial, but the claimant must be provided with timely and adequate notice detailing the reasons for termination, and an effective opportunity to defend by confronting and cross-examining adverse witnesses and by presenting his own arguments and evidence orally before the decision-maker;

(b) Counsel need not be furnished at the pretermination hearing, but the claimant must be allowed to retain an attorney if he so desires;

(c) The decision-maker need not file a full opinion or make formal findings of fact or conclusions of law, but should state in writing the reasons for his determination and indicate the evidence he relied on; (d) The decision-maker must be impartial, and he shall not have participated in the investigatory or fact-finding stages of the case or in making the determination under review.

The trial court enjoined DES from terminating unemployment benefits without such notice and hearing.

The due process provision of the State Constitution requires notice and hearing before deprivation of a property interest. Burgess v. City of Concord, 118 N.H. ---, 391 A.2d 896 (1978); Calawa v. Town of Litchfield, 112 N.H. 263, 296 A.2d 124 (1972). The United States Supreme Court has also set out a balancing test under the due process clause which utilizes three factors:

the private interest that will be affected by the official action . . . 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 v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976).

The defendant argues that the individual's interest is not particularly strong, because an unemployment compensation claimant has access to private resources and...