Smith v. District Unemployment Compensation Board

• Decision Date: 28 August 1970
• Docket Number: No. 23448.,23448.
• Citation: 140 US App. DC 361,435 F.2d 433
• Parties: Anita SMITH v. DISTRICT UNEMPLOYMENT COMPENSATION BOARD, Appellant, Paul R. Ignatius, Secretary of the Navy.
• Court: U.S. Court of Appeals — District of Columbia Circuit

140 US App. DC 361, 435 F.2d 433 (1970)

Anita SMITH v. DISTRICT UNEMPLOYMENT COMPENSATION BOARD, Appellant Paul R. Ignatius, Secretary of the Navy.

No. 23448.

United States Court of Appeals, District of Columbia Circuit.

Argued April 22, 1970.

Decided August 28, 1970.

Mr. George A. Ross, Washington, D. C., with whom Messrs. F. G. Gordon, Jr. and Russell L. Carter, Washington, D. C., were on the brief, for appellant.

Mr. Joseph F. Dugan, Washington, D. C., for appellee.

Before FAHY, Senior Circuit Judge, and LEVENTHAL and ROBB, Circuit Judges.

LEVENTHAL, Circuit Judge.

This case involves an issue of the procedure required where a person seeking unemployment compensation payable under state law (here, the law of the District of Columbia), following the termination of Federal employment, finds compensation denied or curtailed because of findings of the employing (Federal) agency made in the absence of a hearing.

Appellee was employed as a clerk in the Washington Naval Yard in the District of Columbia. She left her job in June 1968, after having worked there for approximately one year. She subsequently filed an application for unemployment compensation which disclosed that her previous employment had been with the Navy. In accordance with standard procedure, the claims deputy of the D.C. Unemployment Compensation Board sent to the Navy a Request for Wage and Separation Information (Form ES-931), which asked, as one item: "Reason for Separation or Non-pay Status." The Navy returned this form, setting forth the reasons given by appellee for resigning, and adding the Navy's finding. The item, as completed, read as follows:

"I am resigning because of poor transportation, poor military supervisory-employee relations and uncongenial working conditions. My advancement in this position was intensely impeded by (Personal Prejudice) in this department.

Finding\'s sic: Investigation failed to support allegations of employee."

The form was signed by the Head of the Payroll Branch.

The D.C. Unemployment Compensation Board disqualified appellee's claim to the extent of five weeks' compensation.¹ The procedure within the Board, the basis for the Board's determination, and the reasons why the District Court, on appeal taken under 46 D.C.Code § 312, disapproved the Board's procedure are succinctly set forth in a Memorandum Opinion of the District Court. These are the pertinent passages of that opinion:

In this case the Navy informed the District Board that plaintiff\'s allegations were not supported by its investigation. Since in the case of a federal employee the only task of the Board is to take the facts as found by the federal agency and apply to them the District\'s standards for compensation, the Navy\'s finding here effectively precluded any result other than the one reached by the Claims Deputy. When he disqualified her claim for five weeks she appealed and pursuant to 46 D.C.Code 311(e) a hearing was held before the Appeals Examiner; but this was not a hearing such as the one afforded a private employee or an employee of the District of Columbia Government. Plaintiff gave evidence but the Navy did not appear. Then, on the basis of the Navy\'s finding, the Appeals Examiner affirmed the denial of her claim since the facts as found by the Federal agency were accepted as final and conclusive.

Counsel could point to no specific provision requiring a hearing on the facts before the Navy. Although an ex parte determination by the federal agency may be sufficient to guide the decision of the Claims Deputy, surely when an appeal is taken to the Appeals Examiner the claimant cannot be foreclosed from testing these ex parte findings. To hold otherwise would be to cast doubts upon the constitutionality of the statute or the implementing regulations due to the denial of due process of law. Federal claimants who appeal under 46 D.C.Code § 311(e), if they have not been given a hearing before the federal agency in order to determine the reasons for termination, must be given a due process hearing in front of the District Board or its representatives as are other claimants. Greene v. McElroy, 360 U.S. 474, 79 S.Ct. 1400, 3 L.Ed. 2d 1377 (1959).

The defendant\'s motion for summary judgment is denied. The plaintiff\'s motion is granted in part and this case is remanded to the District Unemployment Compensation Board for a hearing consistent with the terms of this opinion.

The order entered by the District Court provided:

This matter is remanded to the District Unemployment Compensation Board to hold a hearing in the above-captioned case for the purpose of determining the reasons for the plaintiff\'s terminating her employment with the Department of the Navy and further to determine, based on the evidence adduced at said hearing, whether the plaintiff\'s leaving her employment was for or without good cause. The District Unemployment Compensation Board is directed to make an independent decision based solely on evidence produced at said hearing and the District Unemployment Compensation Board shall not be bound in any respect by any decision of the Department of the Navy as to the reasons for plaintiff\'s terminating her employment.

The Board appeals the District Court's order directing that it hold a hearing, and contends that it cannot take evidence on the issue of the reasons for termination of employment because the Navy's official findings are conclusive on it and to do so would be to exceed its authority under the statute and exceed the function which it undertook to discharge, as an agent of the Federal Government, in its agreement with the Secretary of Labor. We conclude that the District Court was correct in holding that appellee was entitled to a hearing on the reasons for her resignation, but we differ as to the procedure appropriate for ensuring that hearing.

In our opinion the statutory scheme established by Congress plainly contemplates that a Federal employee whose claim for compensation is denied is entitled to a fair hearing. Congress expressly provided, in 42 U.S.C. § 503 (a), which makes provision for grants by the United States to States for unemployment compensation administration, that the Secretary of Labor shall make no certification to the Secretary of the Treasury for payment to any state "unless he finds that the law of such State * * * includes provision for * * * (3) opportunity for a fair hearing, before an impartial tribunal, for all individuals whose claims for unemployment compensation are denied." We now consider the Board's contention that this assurance of a hearing does not apply to a situation where the applicant has left Federal government employment, and the Federal employing agency has made findings on the reason for termination of service.

The pertinent Federal statutes are found at 5 U.S.C. § 8501 et seq., which derive from a 1954 amendment to the Social Security Act wherein Congress revised the government's compensation program so as to extend unemployment compensation to substantially all Federal civilian employees. Congress was keenly aware that Federal employees face risks of unemployment, since there had been a substantial drop in Federal employment between June 1952 and 1954, just as there had been a drop beginning in 1945 following the peak of World War II.

Congress established two procedures. One, now in 5 U.S.C. § 8502, provides for administration of unemployment compensation of Federal employees pursuant to agreements reached between the Secretary of Labor and the states. The other, 5 U.S.C. § 8503, provides for their compensation in the absence of state agreement.

This case is governed by § 8502, since the Secretary of Labor has entered into an agreement with the District Unemployment Compensation Board. Section 8502(a) provides that the Secretary is authorized to enter into agreements with the agency administering the unemployment compensation law of the state, "under which the State agency shall (1) pay, as agent of the United States, compensation * * * to Federal employees." Subsection (b) directs that the agreement provide that the compensation will be paid to a Federal employee in the same amount, on the same terms, and be subject to the same conditions, as if he were a private employee. Subsection (d) provides for the review of the state agency's determination in the same manner and to the same extent as review is provided under the State unemployment compensation law.

Particularly involved in the present case is 5 U.S.C. § 8506(a), which provides that the Federal employing agency shall make available to the State agency information concerning the employee's Federal service and wages, and specifically its findings concerning "the reasons for termination of Federal service." It further provides: "The employing agency shall make the findings in the form and manner prescribed by regulation of the Secretary. The regulations shall include provision for correction by the employing agency of errors and omissions. Findings made in accordance with the regulations are final and conclusive for the purpose of sections 8502(d) and 8503(c)."

The Secretary has provided such regulations at 20 C.F.R. § 609. Section 609.6 directs that the Federal agency shall, within four days after receipt of a request from the State agency, "make its Federal findings, complete Form ES-931 and transmit its Federal findings to the State agency, or the Secretary, as appropriate, on such form." Section 609.22 sets forth procedures by which the employee and the State agency may obtain additional information to understand the basis for the Federal finding, and may make request for additional facts. Section 609.23 provides a means whereby the employee and the State agency may make a request of the Federal agency for a reconsideration and correction of findings. Section 609.25 of 20 C.F.R. provides:

"A determination or redetermination by a State agency as to a Federal civilian employee's...