Opinion

Zambrano, Rene v. Reinert, Jennifer

Court: Court of Appeals for the Seventh Circuit
Filed: May 29, 2002
Status: Published
On the bench: Per Curiam
Nature of suit: civil
Cited by: 0 cases
Authority: More cited than 39.7%

stating that eligibility requirements are "beyond the reach of the ’when due’ clause"

How later courts described this case

stating that eligibility requirements are "beyond the reach of the ’when due’ clause"
no standing if redressability depends on choices of third parties not before the court

Written by the judges who cited it.

The opinion

In the

United States Court of Appeals

For the Seventh Circuit

No. 01-2724

Rene Zambrano,

Plaintiff-Appellant,

Jennifer Reinert, in her official capacity

as Secretary of the Wisconsin Department

of Workforce Development,

Defendant-Appellee.

Appeal from the United States District Court

for the Western District of Wisconsin.

No. 01-C-35-S--John C. Shabaz, Judge.

Argued November 13, 2001--Decided May 29, 2002

Before Harlington Wood, Jr., Easterbrook, and

Kanne, Circuit Judges.

Kanne, Circuit Judge. After being denied

unemployment compensation benefits in

accordance with Wis. Stat. sec.

108.02(15)(k)(14) (the "Cannery Rule"),

Rene Zambrano filed suit pursuant to 42

U.S.C. sec. 1983, alleging that the

Cannery Rule was in conflict with two

federal statutes and violated the Equal

Protection Clause of the Fourteenth

Amendment. The district court upheld the

validity of the Cannery Rule, and we

affirm.

I. Background

Under Wisconsin’s unemployment

compensation scheme, "base period" wages

count towards unemployment compensation

eligibility. See Wis. Stat. sec.sec.

108.02(4) & 108.06. Base period wages

include, inter alia, wages earned during

employment, see id. at sec. 108.02(4m),

and "employment" is defined as "any

service . . . performed by an individual

for pay." Id. at sec. 108.02(15)(a).

However, in applying the Cannery Rule,

the definition of employment does not

include services

[b]y an individual for an employer which

is engaged in the processing of fresh

perishable fruits or vegetables within a

given calendar year if the individual has

been employed by the employer solely

within the activeprocessing season or

seasons, as determined by the department

[of workforce development], of the

establishment in which the individual has

been employed by the employer, and the

individual’s base period wages with the

employer are less than the wages required

to start a benefit year under s.

108.04(4)(a), unless the individual was

paid wages of $200 or more for services

performed in employment or other work

covered by the unemployment insurance law

of any state or the federal government,

other than work performed for the

processing employer, during the 4 most

recently completed quarters preceding the

individual’s first week of employment by

the processing employer within that year.

Id. at sec. 108.02(15)(k)(14). In other

words, for a seasonal fruit or vegetable

processing worker to meet the definition

of "employment," and thus be eligible to

receive unemployment compensation

benefits, he must have 1) been employed

with the processor outside the "active

processing season"; 2) been separately

eligible under Wis. Stat. sec.

108.04(4)(a); or 3) earned over $200 in

another job during the time period

outlined in the statute. See id. at sec.

108.02(15)(k)(14).

Zambrano, a Texas resident, provided

seasonal labor for vegetable processor

Seneca Foods, Inc. in Mayville, Wisconsin

from June 11 to October 7, 1999, earning

$10,290.98. On April 4, 2000, Zambrano

filed for unemployment compensation in

Wisconsin. Because Zambrano was employed

by Seneca, a processor of vegetables, the

Department for Workforce Development (the

"DWD") noted that his claim for

unemployment compensation fell under the

purview of the Cannery Rule and thus

found that Zambrano was ineligible to

receive unemployment compensation

benefits.

To be eligible for benefits, Zambrano

had to meet one of three conditions

listed in the Cannery Rule: First,

Zambrano would have had to have worked

for Seneca outside the active processing

season. See id. at sec.

108.02(15)(k)(14). Zambrano concedes that

he did not, and therefore this provision

is irrelevant to our present review.

Second, he would have been eligible if

his "base period wages" with Seneca were

equal to or greater than the wages

described in Wis. Stat. sec.

108.04(4)(a). See id. at sec.

108.02(15)(k)(14). To start a benefit

year under that section, an applicant’s

base period wages must, among other

things, be equal to at least four times

his weekly benefit rate "in one or more

quarters outside of the quarter within

the claimant’s base period in which the

claimant has the highest base period

wages." Id. at sec. 108.04(4)(a). In this

case, as Zambrano concedes, the amount of

wages that he earned during this time

period was $1,159.81, and this amount was

less than four times his weekly benefit

rate of $305 (i.e., 4 x $305 = $1,200).

Thus, the DWD concluded that Zambrano did

not meet the second condition to be

eligible for unemployment compensation

benefits under the Cannery Rule.

Finally, Zambrano would have been

entitled to receive benefits had he

earned more than $200 from an employer

other than Seneca during the four most

recently completed quarters preceding his

first week of work at Seneca. See id. at

sec. 108.02(15)(k)(14) (the "Other

Employment" provision). Zambrano’s only

income from Wisconsin employers other

than Seneca that year was $1,250 that he

earned for work performed for Lifestyle

Staffing during May and June 1999.

However, because these wages were earned

in the same quarter as the start of his

employment with Seneca, and not in the

preceding quarter, the DWD concluded that

Zambrano was not eligible to receive

benefits because he did not meet the

requirements of the Other Employment

provision of the Cannery Rule. See id.

As a result of this ruling, Zambrano

brought suit against Jennifer Reinert in

her official capacity as Secretary of the

DWD, alleging that the Cannery Rule ran

afoul of two federal statutes and that it

violated principles of equal protection.

The district court granted summary

judgment in favor of the Secretary,

upholding the Cannery Rule in the face of

Zambrano’s challenges.

II. Analysis

The facts of this case are essentially

undisputed. The only issues on appeal

involve the interpretation of statutory

and constitutional provisions. We review

these questions of law de novo. See,

e.g., Publ’ns Int’l Ltd. v. Meredith

Corp., 88 F.3d 473, 478 (7th Cir. 1996).

A. Social Security Act

Initially, Zambrano contends that the

Cannery Rule conflicts with section

503(a)(1) (the "When Due Clause") of the

Social Security Act (the "SSA"). Under

the SSA, federal funds are made available

to states in order to encourage them to

enact unemployment insurance laws. See 42

U.S.C. sec.sec. 501-04; see also Jenkins

v. Bowling, 691 F.2d 1225, 1228 (7th Cir.

1982). However, before the federal

government will provide funds to a state

to administer its unemployment insurance

laws, the Secretary of Labor must certify

that the recipient state’s unemployment

program meets certain statutory

requirements. See 42 U.S.C. sec.sec. 502-

03; Jenkins, 691 F.2d at 1228. The When

Due Clause states that one of those

requirements is that the state’s program

must provide 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."

Jenkins, 691 F.2d at 1228 (quoting 42

U.S.C. sec. 503(a)(1)). The basic thrust

of the When Due Clause is timeliness--the

state should determine who is eligible to

receive unemployment compensation and

make payments to such individuals at the

earliest stage that is administratively

feasible. See, e.g., California Human

Resources Dept. v. Java, 402 U.S. 121,

131, 91 S. Ct. 1347, 28 L. Ed. 2d 666

(1971).

The first step in deciding whether a

state statute violates the When Due

Clause is to determine whether the state

provision is an administrative provision

or an eligibility requirement. See

Pennington v. Didrickson, 22 F.3d 1376,

1381 (7th Cir. 1994) (Pennington I),

rev’d on other grounds sub nom.

Pennington v. Doherty, 138 F.3d 1104,

1105 (7th Cir. 1998) (Pennington II). An

administrative provision governs when

eligibility is determined or when

unemployment benefits are paid, while an

eligibility requirement governs who is

eligible to receive unemployment

compensation benefits. See Pennington I,

22 F.3d at 1385-87. Drawing this

distinction is important because

eligibility requirements do not fall

under the purview of the When Due Clause,

whereas administrative provisions do. See

id. 1381 (stating that eligibility

requirements are "beyond the reach of the

’when due’ clause").

Zambrano contends that the Other

Employment provision of the Cannery Rule

violates the When Due Clause because it

operated to exclude the wages he earned

at Lifestyle Staffing from his

eligibility determination. Zambrano’s

claim is unavailing, however, because the

Other Employment provision sets forth a

method of determining whether work

performed by an applicant is "employment"

and thus whether the applicant is

eligible to receive benefits. See Wis.

Stat. sec. 108.02(15)(k)(14). Therefore,

because it determines who is eligible to

receive benefits, as opposed to when the

eligibility determination is made or when

an eligible person receives benefits, the

Cannery Rule is an eligibility

requirement that is "beyond the reach of

the ’when due’ clause." Pennington I, 22

F.3d at 1381.

Zambrano relies on Pennington I to

support his argument that the Cannery

Rule is an administrative provision. In

that case, we addressed whether the

definition of "base period" in section

237 of the Illinois Unemployment

Insurance Act (the "IUIA"), 820 ILCS

405/237, violated the When Due Clause.

See Pennington I, 22 F.3d at 1377. We

noted that in order to be eligible for

unemployment compensation in Illinois, a

claimant must have earned sufficient

wages during the "base period." Id. at

1378. We further noted that the IUIA

defined a base period as "the first four

of the last five completed calendar

quarters immediately preceding the

benefit year," thus excluding the wages

that a claimant earned in the quarter

immediately preceding the quarter in

which the claimant filed a claim (the

"lag quarter"). Id. (citation omitted).

We concluded that excluding wages earned

during the lag quarter had the purpose of

accommodating the time needs of those

administering Illinois’ unemployment

compensation program. See id. at 1387. We

also concluded that the lag quarter

affected the timing of when the claimant

would file his claim. See id. In sum, the

IUIA did not determine what wages would

be considered, but rather when certain

wages would be considered. See id. at

1385-87. Therefore, we held that the

provision of the IUIA was an

administrative provision subject to the

When Due Clause. See id. at 1387.

On appeal, Zambrano notes that

Pennington I was abrogated by federal

statute. See Pennington II, 138 F.3d at

1104-05. He posits, and we agree, that

the Balanced Budget Act of 1997, sec.

5401 does not apply to the Cannery Rule

because that Act only applies to state

law provisions that define "base

periods." However, he asserts that the

"reasoning of the original Pennington

decision . . . remains apt, since the

base period and the cannery rule period

serve similar purposes." Assuming,

arguendo, that Zambrano is correct in

this assertion, his claim is still

unavailing because our case is

distinguishable from Pennington I.

In contrast to the lag quarter at issue

in Pennington I, the Other Employment

provision affects what wages will be

considered, not when they will be

considered. Further, the Cannery Rule did

not have the effect of requiring Zambrano

to delay in filing his claim for

unemployment compensation, but rather

only determined whether or not Zambrano

was eligible to receive unemployment

compensation benefits based on his

earnings in non-food processing jobs

before his work with Seneca. Because the

wages that the Other Employment provision

excluded are not those earned prior to

filing a claim, but rather those earned

in the same quarter as when the claimant

started working for a fruit or vegetable

processors, Zambrano could have waited

forever and still would have been

ineligible to receive benefits under the

Cannery Rule. Therefore, in the absence

of the Cannery Rule’s delay of either the

determination or the payment of

unemployment compensation benefits, we

hold that it does not violate the When

Due Clause.

B. Federal Unemployment Tax Act

The Federal Unemployment Tax Act

("FUTA") taxes employers on the wages

they pay to their employees and provides

a tax credit for employers’ contributions

to federally-approved state unemployment

compensation laws. See 26 U.S.C. sec.sec.

3301 & 3302(a)(1). For the Secretary of

Labor to approve a state’s unemployment

compensation law (as the Secretary of

Labor did in this case), he must find,

among other things, that the state law

does not operate to cancel "wage credits"

or reduce "benefit rights" for reasons

other than fraud or misconduct. Id. at

sec. 3304(a)(10).

Zambrano asserts that the Cannery Rule

cancels wage credits or benefit rights

for reasons other than fraud or

misconduct and thus violates 26 U.S.C.

sec. 3304(a)(10). In order for the

Cannery Rule to have cancelled Zambrano’s

wage credits or reduced his benefit

rights, he must have had such wage

credits or benefits in the first place.

Thus, the initial issue is whether

Zambrano earned wage credits or benefit

rights--a matter of state law. We have

previously noted that states have "free

rein" to design eligibility requirements

for receiving unemployment compensation.

Pennington I, 22 F.3d at 1382. In the

present case, eligibility is calculated

from wages earned during employment--

employment being a statutorily defined

term. See Wis. Stat. sec.sec. 108.02(4) &

108.02(15)(a). The Cannery Rule qualifies

that statutory definition of employment,

excluding wages earned by fruit and

vegetable processors unless those workers

meet one of the three aforementioned

conditions. See id. at sec.

108.02(15)(k)(14). As discussed above,

the Cannery Rule merely sets forth

requirements for being eligible to

receive unemployment compensation, and

Zambrano concedes that he did not meet

those requirements. Therefore, he never

had any wage credits or benefit rights to

cancel or reduce in the first place, and

accordingly, the application of the

Cannery Rule in this case does not

violate FUTA.

C. Equal Protection

Zambrano argues that seasonal fruit and

vegetable workers are denied equal

protection because they are subject to

different eligibility requirements under

Wisconsin’s unemployment compensation

laws than are other workers. Seasonal

fruit and vegetable workers are not a

suspect classification, nor does

Zambrano’s claim implicate fundamental

rights. Therefore, we will address

Zambrano’s equal protection claim under

the familiar rational basis test, see,

e.g., Turner v. Glickman, 207 F.3d 419,

424 (7th Cir. 2000), and uphold the

Cannery Rule if "there is any reasonably

conceivable state of facts that could

provide a rational basis for the

classification." FCC v. Beach

Communications, Inc., 508 U.S. 307, 313,

113 S. Ct. 2096, 124 L. Ed. 2d 211

(1993).

The Secretary asserts that Wisconsin’s

interest in treating seasonal fruit and

vegetable processing workers differently

is to ensure that workers receiving

unemployment compensation benefits are

firmly committed to the Wisconsin labor

market. Because fruit and vegetable

processing occurs during only three to

four months a year, employment

availability and duration in this line of

work is necessarily limited.

Nevertheless, under the Cannery Rule,

individuals working in seasonal fruit and

vegetable processing can show a

commitment to the Wisconsin labor market,

and consequently gain unemployment

compensation eligibility, by meeting the

requirements of the Other Employment

provision. See Wis. Stat. sec.

108.02(15)(k)(14). Under this provision,

seasonal fruit and vegetable processors

are eligible to receive benefits if they

earned a mere $200 in unrelated

employment in the year prior to the

quarter in which they began working for

seasonal processors. See id. Thus, the

Other Employment provision of the Cannery

Rule has a rational basis for its

classification, which is sufficiently

linked to the government purpose of

ensuring commitment to the Wisconsin

labor market. See FCC, 508 U.S. at 313.

III. Conclusion

For the foregoing reasons, we AFFIRM the

district court’s grant of summary

judgment in favor of the Secretary.

Easterbrook, Circuit Judge, concurring.

This case is shot through with procedural

issues, some concerning subject-matter

jurisdiction. Neither the parties nor the

district judge said "boo" about any of

them. Following that lead, my colleagues

let all pass in silence. Yet

jurisdictional questions should not be

swept under the rug. What one can say for

the parties’ assumption (and the

majority’s silence) is that they are

following the Supreme Court’s example,

for it has resolved on the merits a

series of cases in which one or more of

the same problems lurked in the

background. See, e.g., King v. Smith, 392

U.S. 309 (1968); Rosado v. Wyman, 397

U.S. 397 (1970); California Department of

Human Resources v. Java, 402 U.S. 121

(1971); Fusari v. Steinberg, 419 U.S. 379

(1975); Ohio Bureau of Employment

Services v. Hodory, 431 U.S. 471 (1977).

In Jenkins v. Bowling, 691 F.2d 1225,

1228 (7th Cir. 1982), we wrote that these

years of neglect by the Supreme Court

made the issues "too well settled to be

questioned by us". But times have changed

since 1982. The Justices now devote

greater attention to the issues that

arise in cooperative programs such as

unemployment insurance, and while this

appeal was under advisement the Court

granted certiorari in a case that poses

one of the questions that we deemed "well

settled" in 1982--whether 42 U.S.C.

sec.1983 allows a court to order a state

official to act in a particular way, when

the relevant federal statute names

cessation of federal funding as the only

remedy. See Gonzaga University v. Doe,

cert. granted, 122 S. Ct. 865 (2002)

(argued April 24, 2002). So it is time to

think about a few issues that for too

long have been ignored.

Rene Zambrano applied for unemployment

insurance in Wisconsin and was turned

down on the basis of Wis. Stat.

sec.108.02(15)(k)(14), known as the

Cannery Rule. This law makes it hard for

a person engaged in seasonal agricultural

employment to obtain unemployment

benefits when the season ends;

Wisconsin’s legislature likely thought

that the employee would find work in

another state whose agricultural products

mature on a different schedule. Benefits

are available only if the worker received

$200 in wages from a different Wisconsin

employer, in a different calendar

quarter. This tests whether the applicant

has an enduring connection to the state’s

labor force. Zambrano contends that the

Cannery Rule violates three laws with

superior authority: sec.303(a)(1) of the

Social Security Act, 42 U.S.C.

sec.503(a)(1), known as the When Due

Clause; 26 U.S.C. sec.3304(a)(10), part

of the Federal Unemployment Tax Act; and

the Equal Protection Clause of the

Fourteenth Amendment. My colleagues hold

that the Cannery Rule is compatible with

the Constitution and the two federal

statutes. I agree with their substantive

analysis and thus explore only the

question whether Zambrano’s claims should

be here in the first place.

1. No federal law requires any state to

have an unemployment-insurance program,

or to follow any particular rules if the

state chooses to have a program. But the

federal government does provide tax

breaks for employers and reimbursements

for state treasuries if states adopt pro

grams with certain features. Section 303

of the Social Security Act conditions

reimbursement of the state’s

administrative expenses on certification

by the Secretary of Labor that the

state’s law meets these conditions.

(Employers pay for the benefits; the

federal assistance covers overhead./1)

The Secretary "shall make no

certification for payment to any State

unless he finds that the law of such

State . . . includes provision for . . .

[s]uch methods of administration . . . as

are found by the [Secretary] to be

reasonably calculated to insure full

payment of unemployment compensation when

due". In other words, the national

government won’t cover the costs of

slapdash implementation. Like other

buyers, the Treasury wants to get what it

pays for. One would suppose, given the

language of the When Due Clause, that the

right way to contest a certification is

to sue the Secretary of Labor under the

Administrative Procedures Act, 5 U.S.C.

sec.sec. 701-06, and that the right

remedy if the plaintiff prevails is an

order revoking the certification, and

thus suspending federal funding until the

state gets its act in gear. But Zambrano

sued a state official, not the Secretary

(who as far as I know is unaware that her

certification of Wisconsin’s program has

been questioned), and seeks benefits

rather than an order suspending

reimbursement. The one remedy that a

court cannot provide is suspension of

funding, because the Secretary of Labor,

as a non-party, cannot be bound by the

judgment.

What the Justices said about this when

they briefly considered a related issue

in Rosado is: The more remedies, the

merrier. Does federal law forbid a

specific-performance or back-benefits

remedy against the state official? Only

by foreclosing a given remedy, Rosado

stated, may Congress preclude relief to

the beneficiary of a social-welfare

program (in Rosado, Aid for Families with

Dependent Children). See 397 U.S. at 420-

22. This view is of a piece with J.I.

Case Co. v. Borak, 377 U.S. 426 (1964);

Mills v. Electric Auto-Lite Co., 396 U.S.

375 (1970), and other decisions of the

time that blithely created private rights

of action for damages even if Congress

had left enforcement to public officials

and named specific remedies.

A lot of water has passed under the

bridge since then, and the question is no

longer whether the statute precludes a

private right of action, but whether the

law creates one. See, e.g., Cort v. Ash,

422 U.S. 66 (1975); Touche Ross & Co. v.

Redington, 442 U.S. 560 (1979);

Transamerica Mortgage Advisors, Inc. v.

Lewis, 444 U.S. 11 (1979); Aaron v. SEC,

446 U.S. 680 (1980); Central Bank of

Denver v. First Interstate Bank of

Denver, 511 U.S. 164 (1994). When the

defendant is a state official, sec.1983

gets part of the way there, see Maine v.

Thiboutot, 448 U.S. 1 (1980)--but the

general language of sec.1983 must not be

used to sidestep limitations built into

another federal statute. See, e.g.,

Blessing v. Freestone, 520 U.S. 329

(1997); Golden State Transit Corp. v. Los

Angeles, 493 U.S. 103 (1989). Section

1983 allows courts to enforce personal

rights, but a statute may influence

behavior without creating "rights."

Conditional funding is an example. It

does not create "rules," let alone

"rights," for a state is free to turn

down the money and escape the strings.

The When Due Clause does not create

rights in favor of workers or impose

duties on states to pay particular

benefits; it just tells the Secretary of

Labor which states’ administrative

overhead may be reimbursed.

What is at stake is not just the

difference between public and private

enforcement, or the difference between

loss of subsidy and new substantive

eligibility criteria--though these

differences may be substantial. The main

question is whether the courts will play

by the rules that Congress has laid down.

Enforcement through threats of funding

cutoff is cumbersome. A Secretary of

Labor with only one tool, an unwieldy

hammer, may be reluctant to use it. Which

may be exactly the point; the states’

advocates in Congress may have succeeded

in limiting remedies in order to increase

states’ leeway in operating-unemployment-

insurance systems. Other cooperative

programs have a different structure. For

example, the Individuals with

Disabilities Education Act, another

federal program that attaches conditions

to grants, has a clause, 20 U.S.C.

sec.1403(a), requiring states that take

the money to consent to suits by private

persons. By requiring states to give up

their immunity under the eleventh

amendment, and by authorizing private

suits elsewhere in the idea, Congress

differentiated the idea from the

unemployment insurance system. See Oak

Park Board of Education v. Kelly E., 207

F.3d 931 (7th Cir. 2000). Congress put a

lot more cash into idea grants than into

unemployment-overhead grants,/2 so it

was able to extract larger concessions.

Wisconsin may be willing to give up the

modest federal subvention to retain the

Cannery Rule, though litigation of the

kind exemplified by this suit would deny

the state that choice. Zambrano wants us

to say that it just does not matter what

enforcement mechanisms Congress writes

down. I see no reason why courts should

strip the legislature of options in this

way. Judges hobble legislators when they

treat different statutory structures as

if all said the same thing. Changing the

conditions on which states have agreed to

participate in a federal program-- by

adding private to public enforcement and

adding different remedies in the process-

-also has little to recommend it as an

original matter.

The Social Security Act has two

provisions like the clause in the idea,

see 42 U.S.C. sec.sec. 1320a-2, 1320a-10,

but neither applies to the chapter

containing the When Due Clause. In the

absence of such provisions, the eleventh

amendment blocks retrospective monetary

relief. See Regents of the University of

California v. Doe, 519 U.S. 425 (1997);

Edelman v. Jordan, 415 U.S. 651 (1974);

Paschal v. Johnson, 936 F.2d 940 (1991).

And although, as Rosado observed, an

order requiring a state to abide

prospectively by the terms of a grant

that it has accepted does not encounter

constitutional obstacles, it does create