Amicus Curiae Brief — Indiana Employment Security Div. v. Burney

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IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER (ERM, 1971

No. 71-1119

INDIANA EMPLOYMENT SECURITY DIVISION, JOHN F. COPPES,

Individually and as Director of the Indiana Employment Security

Division; VAN SMITH, MAX WRIGHT, and ALBERT SUMMERS, Individu-

ally and as Members of the Indiana Employment Security Board,

KENNETH M. SWAIN, Individually and as Manager of the Fort Wayne

Branch of the Indiana Employment Security Division,

Appellants,

V

ESSIE D. BURNEY,

Appellee.

Appeal from the United States District Court for the

Northern District of Indiana, Fort Wayne Division

PETITION FOR LEAVE TO FILE

BRIEF AMICI CURIAE

Pursuant to Rule 42(3) of this Court, permission is

sought to file the attached brief since consent has been

tefused by the parties.

wines

Petitioners are all employers doing business in Indiana

with employees in Indiana for whom they make contribu.

tions under the Employment Security Act of the State,

the statute involved in this appeal. Indiana Code 1971,

22-4-1-1, et seq.; Burns’ Ind. Stat. Ann. 52-1525, et seq.

The last two named Petitioners also have hundreds of

members who are employers in Indiana and have employees

in Indiana for whom such members make contributions un-

der the aforesaid statute. The Petitioners are:

College/University Corporation, of Indianapolis, Indi-

ana, a holding company owning insurance and other

companies, employing 320 persons;

Danners, Inc., of Indianapolis, Indiana, operator of re-

tail variety stores in Indiana, employing 1,323 per-

sons;

Indiana Steel & Engineering Corporation, of Bedford,

Indiana, manufacturer of overhead cranes, employing

45 persons;

LML Engineering and Manufacturing Corporation, of

Columbia City, Indiana, manufacturer of grain drying

and moistening equipment and pontoon boats, employ-

ing 84 persons;

Stewart-Carey, Inc., of Indianapolis, Indiana, distribu-

tor of paint, mirrors, wallpaper and other products,

employing 127 persons;

Indiana State Chamber of Commerce, of Indianapolis,

Indiana, employing 32 persons and with approximately

5,300 member companies; and

Indiana Manufacturers Association, of Indianapolis,

Indiana, employing 13 persons and with approximately

1,700 member companies.

Each of the Petitioners has a favorable experience ac-

count under the aforesaid Indiana Employment Security .

stintilaies

Act, which has resulted in each of Petitioners paying less

than the maximum rate provided for in the Act for em-

ployers who do not have such a favorable experience rat-

ing. Indiana Code 1971, 22-4-11-2 to 3; Burns’ Ind. Stat.

Ann. 52-1535a and 52-1535b (Supp. 1972).

Under the decision of the lower court, if an employee

is paid benefits in the interim pending a hearing and the

hearing results in a decision unfavorable to the employee,

the Petitioners’ experience accounts would be charged with

all such payments and remain so charged until it is finally

determined that claimant has received benefits to which

he was not entitled, at which time the account is relieved

of such overpayment. IC 1971 22-4-13-1; Burns’ Ind. Stat.

Ann. 52-1537(d) (Supp. 1972). To the extent that such

payments are not recovered, the employment security fund

of the state could be reduced below the minimum level,

thereby requiring an increase in the rate of tax on all em-

ployers to restore it. IC 1971 22-4-11-2; Burns’ Ind. Stat.

Ann. 52-1535a (c) (Supp. 1972). The ‘*Unemployment In-

surance Statistics’? published monthly by the U.S, Depart-

ment of Labor Manpower Administration, show that there

is 8 lapse of time, as obviously there must be, between the

denial of a claim and a review hearing. Such figures also

show that in a substantial percentage of cases where

monetary benefits have been initially allowed, there has

been a subsequent reversal. In Indiana, recovery from em-

ployees of payments erroneously paid over a ten-year pe-

riod was only 68.69% of the total. Some Significant Statis-

tics About Unemployment Insurance in Indiana, March 1972,

p. 13. Petitioners and all other employers likewise situated

are, therefore, adversely affected by the decision of the

lower court in this case in that their experience accounts

could be charged with all payments where there has been

& review or hearing resulting in reversal, and the inability

to recover such erroneous payments causes the tax rate on

employers to increase. Such charges to Petitioners and

a

others with favorable experience ratings could result in

a substantial increase in rate of tax from as low as less

than one per cent to as high as three and two-tenths per

cent. Indiana Code 1971, 22-4-11-3; Burns’ Ind. Stat. Ann

52-1535b (Supp. 1972).

Petitioners, since they stand to be adversely affected

financially by any affirmance of the lower court decision,

therefore, have an interest separate and distinct from that

of the named Appellants in the action who are simply

charged with enforcement of the Act. Petitioners desire

to present, and do present, in the attached brief the ques

tions of law therein discussed which could affect them

adversely financially, and which would concern appellants

only as to procedural requirements.

Petitioners, therefore, respectfully request that the Court

enter an order permitting the filing of the attached brief of

Respectfully submitted

HARRY T. ICE

Attorney for Petitioners

ICE MILLER DONADIO & BRYAN

Indianapolis, Indiana

Of Counsel

INDEX

Page

Anterest of Amici Curiae .............00eeeeeeeeeees 1

“Btatement of the case ...........- se eeeeeeeeecceeee 3

‘The i cin ens sen aatiobecoender ede one 3

The decree and injunction below ............++++++- 5

EEE Se6S6esb0s6bdccdecenvecccecccccsecececes 7

Benefit rights determined weekly ................. 7

_ Hearing required by federal act is provided ....... 11

SC Te GUE oo oc cccccccccvcccceccccce 14

Due process of law provided ................2044- 18

Ett ticks veges bessteeiesenaseceaine 19

dix A—Indiana statute on claims for benefits.. A-1

Appendix B—Federal statute, 42 U.S.C. 503 (a) (1)

7 OC) Bee eee eee eee A-5

Appendix C—Statutes of other states ............... A6 -

Appendix D—Excerpts from the legislative history of

nT MOD siscvcccostecscovcevesorss A-9

fo

<

: TABLE OF CITATIONS

Cases

California Department of Human Resources v. Java,

_ 402 U.S. 121, 28 L. ed. 2d 666 (1971) .............. 14

Dandridge v. Williams, 397 U.S. 471, 486, 25 L. ed. 2d

491, IS AR rel deere ae 9

curity Division, ... Ind. App. ..., 271 N.E. 2d 191

Diseidcsvewscsrsudibatecsavecsececedunaes 5

v. New York State Department of Labor, 321

_ F. Supp. 432 (S.D.N.Y. 1971); vacated 402 U.S. 968,

L. ed. 2d 133; reinstated 333 F. Supp. 341 (1971);

ed 31 L. ed. 2d 228 (1972) ......... 2, 14, 16, 18, 19

ret v. Review Board of Indiana Employment Se-

(

li

Constitutional Provisions, Statutes and Rules

42 U.S.C., Sec. 503 (a) (1)

42 U.S.C., Sec. 503 (a) (3)

Indiana Code 1971

22-4-1-1; Burns’ Ind. Stat. Ann. 52-1525

_% SEPTTTTTTETTTTTTTLTTrr eee Petition p. 2, supra

22-4-11-2; Burns’ Ind. Stat. Ann. 52-1535a (Supp.

1972) Petition p. 3, supra

22-4-11-3; Burns’ Ind. Stat. Ann. 52-1535b (Supp.

1972) Petition pp. 3, 4, supra

22-4-13-1; Burns’ Ind. Stat. Ann. 52-1537 (d) (Supp.

1972) Petition p. 3, supra

22-4-14-1; Burns’ Ind. Stat. Ann. 52-1538 (Supp.

1972)

22-4-14-2; Burns’ Ind. Stat. Ann. 52-1538a (Supp.

1972)

22-4-14-3; Burns’ Ind. Stat. Ann. 52-1538b (Supp.

1972)

22-4-17-2; Burns’ Ind. Stat. Ann. 52-1542a (Supp.

1972) 7, 10, 12, 15

22-4-17-3; Burns’ Ind. Stat. Ann. 52-1542b 8, 10, 13

22-4-17-6; Burns’ Ind. Stat: Ann. 52-1542e

22-4-17-12; Burns’ Ind. Stat. Ann. 52-1542k

Burns’ Indiana Administrative Rules and Regulations

Some Significant Statistics About Unemployment In-

surance in Indiana, March, 1972

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1971

No. 71-1119

INDIANA EMPLOYMENT SECURITY DIVISION, JOHN F. COPPES,

Individually and as Director of the Indiana Employment Security

Division; VAN SMITH, MAX WRIGHT, and ALBERT SUMMERS, Individu-

ally and as Members of the Indiana Employment Security Board,

KENNETH M. SWAIN, Individually and as Manager of the Fort Wayne

Branch of the Indiana Employment Security Division,

Appellants,

v.

ESSIE D. BURNEY,

Appellee.

Appeal from the United States District Court for the

Northern District of Indiana, Fort Wayne Division

BRIEF OF AMICI CURIAE IN

SUPPORT OF APPELLANT

INTEREST OF AMICI CURIAE

The interest of amici curiae fully appears in the peti-

tion for leave to file this brief. Amici curiae and all other

employers in Indiana may be adversely affected by the

decision of the lower court in the manner stated in the

petition for leave to file this brief.

The concern of amici curiae is genuine, and increased

rates for amici curiae and all other employers, if the lower

= a a

court decision is not reversed or drastically modified, is

possible. The volume of cases handled by the Indiana

Employment Security Division is tremendous.’ A ‘‘prior

due process hearing,’’ undefined by the court below, if it

involves all of the elements contended for by Appellee

Burney (Appendix 45), would serve no purpose where,

as here, there are no disputed facts. It would slow down

administrative procedure, particularly when unemploy-

ment is on the rise and expedition of claims is most de-

sirable. It would cause the number of appeals to soar

when knowledge becomes current that payments would

continue until final determination. It would invite as a

counter-measure initial holdings against claimants to

avoid the assertion of the failure to make payment ‘‘ when

due’’ argument. It would add wasteful administrative

expense. It would afford no rights to claimants not now

available under the rules and regulations, and procedures

now in force. It would increase the amount of unrecov-

ered payments with which employers are ultimately re-

quired to bear.

Amici curiae submit that neither the Federal Act (42

US8.C., See. 503(a)(1), Appendix B of this brief) nor the

Constitution (Amendment XIV) requires any different

procedures than are now applied under the Indiana Act.

The Torres case is directly in point. Torres v. New

York State Department of Labor, et al, 321 F. Supp. 432

(U.S. Dist. Ct. S.D. N.Y. 1971); judgment vacated and

remanded by this Court (1971), 402 U.S. 968, 29 L. ed. 2d

133; judgment reinstated 333 F. Supp. 341 (U.S. Dist. Ct.

S.D. N.Y. 1971); judgment affirmed ... US. ..., 31 Led.

2d 228 (1972).

The judgment of the court below should be reversed.

1 The published statistics for Indiana in 1971 show 341,917

new claims, 2,310,657 contacts with claimants, and denial for

one reason or another of 49,698 claims.

STATEMENT OF THE CASE

Appellee, Essie D. Burney, filed a motion to intervene

as plaintiff in a cause initially filed by a Ronald M. Hiatt.

Appendix 15-16. Leave was granted. Appendix 2. Mrs.

Burney then filed a complaint as a member of a class

under Rule 23, seeking an injunction against suspension

of payments to her of benefits under the Indiana Employ-

ment Security Act without ‘‘a prior due process hearing”’

and ‘‘final determination,’’ restoration ‘‘immediately’’ of

benefit payments and a declaration that suspension of

payments of unemployment insurance benefits without a

prior due process hearing was ‘‘unconstitutional under

the due process and equal protection clauses of the Four-

teenth Amendment to the United States Constitution.’’

Appendix 17-23.

Only the intervening complaint and the judgment (Ap-

pendix Jurisdictional Statement A-1—A-11) entered on the

intervenor’s supplemental motion for summary judgment

(Appendix 27-28) are involved in this appeal.

The facts were stipulated. Appendix 29-31.

THE FACTS INVOLVED

The defendants are the Indiana Employment Security

Division, members of the Security Board, and the manager

of the Fort Wayne branch where the Burney case was

processed. Appendix 24-25. Mrs. Burney, a citizen and

resident of Indiana, had been employed at the Holiday

inn in Fort Wayne, and her employment was terminated

December 27, 1970. Appendix 24-25. She applied on Jan-

wary 7, 1971, for unemployment compensation insurance

benefits at the Fort Wayne branch and was declared eli-

gible. Appendix 25. She received her first benefits late

an

in January, and up to March 20 received ten weekly bene-

fit checks of $40.00 each. Appendix 25. By notice dated

March 26 she was advised that her benefits were sus-

pended as of the week ending March 27. Appendix 25.

The reason stated in the notice was:

‘*Because the claimant is limiting and restricting the

hours for which she is available for work, she is

being held as not available for work as of week end-

ing 3-27-71 and until such time as she enters the

labor market and becomes available for all shifts of

work.’’ Appendix 32.

The notice also states:

‘‘During periodic interview of 3-24-71, claimant stated

that, due to parental responsibilities, she was avail-

able for only first shift work.’’ Appendix 32.

The issue involved, as shown by the notice, was ‘‘availa-

bility for work as of week ending 3-27-71.’’ Appendix 32.

The court treated Mrs. Burney’s Request for Admis-

sions, to which no timely response was filed, as admitted

(Appendix Jurisdictional Statement A-7), and on that

basis stated that the deputy’s conclusion in the notice

‘‘was based upon Mrs. Burney’s failure to accept employ-

ment as a dishwasher from 5:00 p.m. to 2:00 a.m. because

of transportation difficulties.’”’ Appendix Jurisdictional

Statement A-8.

Mrs. Burney was granted a hearing before an appeals

referee on July 1, 1971, and on July 13, 1971, the referee

affirmed the ruling that Mrs. Burney was ineligible. Mrs.

Burney then appealed the referee decision to the Review

Board of the Division, which, an December 6, 1971, re-

versed the referee decision. Jurisdictional Statement p. 4.

The decision of the deputy (Appendix 32) and the ap

peal referee referred to above were contrary to the decision

. sili

in Hacker v. Review Board of Indiana Employment Se-

curity Division, ... Ind. App. ..., 271 N.E. 2d 191 (1971).

The court there held that a claimant who restricted her

availability for work to certain hours because of family

responsibilities had not removed herself from the labor

market so as to justify cutting off unemployment compen-

sation. Hacker was decided June 30, 1971, but was not

published in the advance sheets until after the referee’s

decision. The Board of Review followed Hacker which,

by the time of its decision, had been published.

So, Mrs. Burney had a hearing and her right to benefits

was restored. Her representation of a class and the broad

decree and injunction remain although the issue as to Mrs.

Burney has long since become moot.

THE DECREE AND INJUNCTION BELOW

The Court ordered, adjudged and decreed three things

(Appendix, Jurisdictional Statement, A-10-A-11):

(1) It held that part of the Indiana Act (Burns’

Ind. Stat. Ann. Secs. 52-1542a and 52-1542b (Supp.

1972), Appendix A this brief) invalid and inconsistent

with Sec. 303(a)(1) of the Social Security Act (42

U.S.C. Sec. 503, Appendix B this brief) which pro-

vides that, in the event a hearing is requested, pay-

ment of disputed benefits shall not be made until

after a final determination. (This section of the Indi-

ana Act was changed by the Indiana General Assem-

bly in 1972, and any questions as to it are now aca-

demic. See note to Appendix A of this brief.)

(2) It held the practice of suspending payments

without ‘‘a prior, due process hearing’’ inconsistent

with Sec. 303(a)(1) of the Social Security Act (42

U.S.C. Sec. 503, Appendix B this brief).

a

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(3) It enjoined suspending benefits of any person

who had been determined eligible for unemployment

compensation ‘‘without a prior due process hearing.”

The court denied defendants’ motion to amend the de-

cree by substituting ‘‘predetermination hearing’’ for

‘‘prior due process hearing.’’ Appendix 34-43, Counsel for

Mrs. Burney, in a memorandum opposing the defendants’

motion to amend the decree, set forth their interpretation

of ‘‘prior due process hearing.’’ Appendix 44-47.

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ARGUMENT

The court erroneously applied the Social Security Act

and imposed vague restrictions not required by statute,

decisions or the Constitution of the United States.

Benefit Rights Determined Weekly

The lower court misconstrued the nature of the initial

determination and the weekly determinations. The In-

diana Act provides:

“When an individual files an initial claim the division

shall promptly make a determination of his status as

an insured worker .. .” (our emphasis) IC 1971

22-4-17-2; Burns’ Ind. Stat. Ann. 52-1542a (Supp.

1972) (Appendix A this brief).

As the remaining portions of the section quoted indicate,

this is simply a determination of whether the claimant is

qualified under the Act, or, in other words, is an “insured

worker” and thus entitled to make future claims to weekly

benefits, and, if so entitled, the extent of the benefits. The

initial determination of coverage is not a determination

that anything is due to claimant at all. It simply is a de

termination that the claimant had prior employment which

would qualify him and was not unemployed for reasons

which would disqualify him. Appendix A this brief. The

Act makes it clear that the entitlement to benefits is a

weekly determination. Subsection (d) of the same section

quoted in part above reads:

“(d) In addition to the foregoing determination of

insured status by the division, the deputy shall,

throughout the benefit period determine the claimant’s

eligibility with respect to each week for which he

claims waiting period credit or benefit rights, the

aiden

validity of his claim therefor, . . . or may refer such

claim to a referee, who shall make the initial determi-

nation with respect thereto in accordance with the

procedure in IC 1971, 22-4-17-3 [GSee. 52-1542b]

hereof.” (Our emphasis) Appendix A this brief.

Not until each subsequent weekly determination is made

does anything become due to claimant. What then becomes

due is one week’s payment and no more, since the Act

provides that throughout the benefit period the claimant’s

eligibility shall be determined “with respect to each week”

for which rights are claimed. The acts of virtually every

other state contain similar provisions. Appendix C this

brief. The provision for a weekly determination of bene-

fits is consistent with the purpose of all employment se-

curity acts which were fostered and brought into being by

the Social Security, Act.

The legislative history of the Social Security Act is set

forth in Appendix D. It is clear from the history that un-

employment benefits are conditioned upon continued in-

voluntary unemployment.

The interpretation by the lower court of “when due” in

42 U.S.C. 503(a)(1) (Appendix B this brief) is not con-

sistent with the legislative purpose as indicated by the

legislative history set forth in Appendix D, nor with the

language of the Act itself.

First—The “when due” provision relates to a finding by

the Secretary of Labor that the states’ methods of ad-

ministration are such as “to be reasonably calculated to

insure full payment of unemployment compensation when

due.” There is nothing in the record to show that the

Secretary of Labor has made a finding that the methods

of administration in Indiana do not comply with 42 U.S.C.

Sec. 503 (a)(1). On the contrary, the Indiana method of

administration has, from the beginning, had the sanction

required under this section,

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Second—The provision of the Indiana Act requiring a

determination of eligibility “with respect to each week”

for which benefits are claimed during the “benefit period”

(Appendix A, p. 2 this brief) is consistent with the Fed-

eral Act and is essential to the preservation of the in-

tegrity of the concept of unemployment compensation in

both the Federal and State Acts, which is that only an

eligible employee is to be compensated, and only if from

week-to-week during the benefit period he remains eligible.

The statute spells out specifically what is required to

remain eligible from week-to-week:

“An unemployed individual shall be eligible to re-

ceive benefits with respect to any week only if: ...”

- (our emphasis).

(1) “He has made a claim for benefits . . .” IC 1971

22-4-14-1; Burns’ Ind, Stat. Ann. 52-1538 (Supp.

1972).

(2) “he has registered for work .. .” IC 1971

22-4-14-2; Burns’ Ind. Stat. Ann. 52-1538a (Supp.

1972).

(3) “he is physically and mentally able to work,

is available for work and is found by the division to

be making an effort to secure work .. .” IC 1971

22-4-14-3; Burns’ Ind. Stat. Ann. 52-1538b (Supp.

1972).

The statute defines certain circumstances as cases of

mavailability, including, but not limited to, some of the

following: attending a regularly established school, col-

lege, university, hospital or training school; in full-time

ative military service; unemployment is due to preg-

nancy; failure without good cause to accept suitable em-

ployment.?

* Cf. Dandridge v. Williams, 397 U.S. 471, 486, 25 L. ed. 2d

491, 502 (1970), where this court said that the State had a

- interest in encouraging employment,”

— 109 —

The decree of the court below enjoins the suspension

of payments to any persons ‘‘without a prior due process

hearing’ who ‘‘have been determined eligible but sub-

sequently ineligible pursuant to an administrative hear-

ing.’’ Appendix, Jurisdictional Statement, A-11. A per-

son would become ineligible, under the Act, in any week

that he goes back to work, is hospitalized, enters the

military service, or dies. In all of these cases the sweep-

ing lower court decree would require a prior due process

hearing even though the fact which creates the ineligi-

bility is obvious and undisputed.

A due process hearing including all of the elements

asserted by Mrs. Burney’s counsel (Appendix 44-46)

makes no sense at all in cases where, as here, there is no

dispute as to the facts. The only question was whether

the employment offered Mrs. Burney was suitable® in

light of undisputed facts about the job and Mrs. Burney’s

situation.

The lower court decree ignores the fact that no pay-

ments are due on any determination beyond a one-week

period. It also, by requiring a prior hearing, in effect,

extends payments beyond the week-to-week basis wherever

a hearing cannot be held within a week. A claimant has

ten days to appeal to a referee (IC 1971 22-4-17-2; Burns’

Ind. Stat. Ann. 52-1542a (e) (Supp. 1972)), and fifteen

days to appeal a referee’s decision (IC 1971 22-4-17-3;

Burns’ Ind. Stat. Ann. 52-1542b). The notice required is

five days before a referee or a board of review bearing (IC

1971 22-4-17-6; Burns’ Ind. Stat. Ann. 52-1542e). There

is thus built-in a minimum of thirty-five days’ delay in

appeal and notice time to reach the Board of Review,

if all goes on schedule. Some such time period is neces-

8 The question of whether employment is suitable arises only

three out of a thousand cases on the average. Some Significant

Statistics About Unemployment Insurance in Indiana, March

1972, p. 11.

a

sary to give both employer and employee an opportunity

to prepare and appear to be heard.

A claimant, simply by taking an appeal to a referee

and the board of review, in a case where the facts are

undisputed and totally without merit, gains a minimum

of six weeks of payments. How significant the time ele-

ment is becomes apparent in light of a statistic. The

Indiana experience shows that the duration of unemploy-

ment on the avérage in the last ten years for each spell

of unemployment has varied from a low of 3.9 weeks in

1969 to a high of 5.7 weeks in 1971. In the other eight

years the average duration of unemployment was less

than 5 weeks, So, return to employment terminates the

vast majority of cases where claims are filed. Some Sig-

nificant Statistics About Unemployment Insurance in In-

diana, March 1972, p. 7. The notice and appeals period

of 6 weeks thus exceeds the average unemployment period.

If the lower court decision should stand, appeals would

unquestionably increase the actual payment period. Cou-

pled with the statistics on recovery of overpayments shown

in the same volume (p. 13), which is only 68.69% in the

last ten years, it becomes apparent that the lower court’s

decision opens the way to wholesale abuse of the appeal

process with the possibility of substantial additional cost

resulting to employers from rate increases resulting from

unrecovered overpayments. Pending an appeal, the incen-

tive for the claimant to actively seek employment would

also be reduced.

The decree below effectively writes out of the Act the

provisions that the determination of the right to benefits

is for one week only.

Hearing Required by Federal Act Is Provided

The Federal Act does provide for a hearing:

‘*(3) Opportunity for a fair hearing, before an im-

partial tribunal, for all individuals whose claims for

arma ane

unemployment compensation are denied; . . .” 42

U.S.C. Sec. 503 (a)(3); Appendix B this brief,

The court below has read into the Federal Act the

word ‘‘prior’’ which is not there and has substituted

the nebulous undefined words ‘‘due process’? for the

word ‘‘fair.’? The Indiana Act does provide for the fair

hearing required by the Federal Act.

The volume of claims is such that procedures are estab-

lished in the Claims Manual for placing claimants into

three groups for review of weekly benefits on the basis

of whether their claims show (1) a firm attachment to

the labor market, (2) no firm attachment to the labor

market, and (3) need for clarification. The interview

procedure and review periods are geared to what experi-

ence has shown to be the need for and time of review

with a selective interview in each category. Claims Man-

ual, Sees. 13720-13732. Apart from the mechanics for

handling volume, the law and regulations do provide for

protection of a claimant’s rights and a fair hearing.

The Indiana Act requires a ‘‘prompt’’ determination

of status upon filing of an initial claim, with written no-

tice to the claimant of the determination of status. The

claimant may ask for a hearing before a referee. IC 1971

22-4-17-2; Burns’ Ind. Stat. Ann. 52-1542a (Supp. 1972).

Throughout the benefit period ‘‘with respect to each week”’

for which benefits are claimed, a determination is made as

to benefit rights. IC 1971 22-4-17-2; Burns’ Ind. Stat. Ann.

52-1542a (d) (Supp. 1972). In cases of disqualification

notice to claimant is required and hearing before a referee

may be had by claimant. IC 1971 22-4-17-2; Burns’ Ind

Stat. Ann. 52-1542a (e) (Supp. 1972). Any person par-

ticipating in a hearing must be disinterested. IC 1971

22-4-17-2; Burns’ Ind. Stat. Ann. 52-1542a (f) (Supp.

1972). The decision of a referee may be appealed to the

— 13—

Review Board. IC 1971 22-4-17-3, 22-4-17-5; Burns’ Ind.

Stat. Ann. 52-1542b, 52-1542d (Supp. 1972).

Regulations adopted pursuant to the Act provide as to

the hearing before the referee:

‘‘All hearings shall be conducted informally in or-

der to determine the substantial rights of the parties.

The parties may present such evidence as the referee

deems necessary for determining the substantial rights

of the parties. The parties to the appeal may appear

in person, by attorney, or duly authorized agent or

representative, and shall have the right to examine

their own witnesses, present evidence and cross-ex-

amine witnesses of the opposing party.’’ Burns’ Ind.

Administrative Rules and Regulations, 52-1542b-1.

Other provisions of the same section are designed to as-

sure informality and fairness, and representation of a

party.

The same kind of regulations pertain to the Review

Board hearing, including the right to have counsel and

have an agent or representative of a labor organization to

appear for claimant. Burns’ Ind. Administrative Rules

and Regulations, 52-1542e-4 and 5.

A Claims Manual issued by the Indiana Employment Se-

curity Division specifies in great detail all the matters re-

lating to the rights of a claimant of which he must be

informed at the first interview on a claim. Claims inter-

viewers are abjured:

‘Reason for the interview. A statement of the pur-

pose of the interview and an explanation of the claim-

ant’s rights and responsibilities under the law should

be made. The importance of the claimant understand-

ing everything that is expected of him while he is in

claimant status should be stressed. He should be en-

=~ 14—

couraged to ask questions on any point which is not

clear.’? Unemployment Compensation Claims Manual,

Sec. 13712.

The entire thrust of the manual is to assure fair han-

dling and fair hearing with the fullest assistance to claim-

ants in making claims or appeals.

In the initial Torres case (321 F. Supp. 432), the court

reviewed the procedures required under New York law.

An initial ‘‘Determination of Entitlement’’ is made in New

York which corresponds to the determination of status in

Indiana and there is a subsequent determination of the

right to weekly payments. A hearing is provided for in

New York following any week claimant was declared in-

eligible. These procedures were held adequate to ‘“‘com-

port with minimum standards of due process.’’ (pp. 4387-

8) The court also found no violation of 42 U.S.C. 503 (a)

(1) (p. 438).

The New York Act, in its basic aspects, is similar to

the Indiana Act. The finding of the Secretary of Labor

referred to in Torres is fully applicable to the Indiana

Act before the Court in this ease. (p. 438) The record

does not show that the Secretary of Labor has taken any

different position as to Indiana.

The Indiana Act provides for the kind of hearing re-

quired by the Federal Act. The lower court was in error

in requiring any different hearing than that now provided

for by the statute and the regulations under it.

Java Is Not Controlling

In California Department of Human Resources v. Java,

402 U.S. 121, 28 L. ed. 2d 666 (1971), the claimant had

been initially determined to be eligible for unemployment

compensation and had received payment of some benefits,

Upon a belated protest by the claimant’s former employer,

zo

— —15—

the payments to the claimant were automatically termi-

nated until an evidentiary hearing could be held to de

termine the validity of the employer’s protest. Although

the district court found this procedure violative of the

due process clause and the Social Security Act, the Su-

preme Court abstained from determining the constitutional

issue and decided only the statutory question. This Court

held that denying benefits to otherwise eligible claimants

automatically upon an employer’s protest under the cir-

cumstances contravened the mandate of 42 U.S.C. 503 (a)

(1). Appendix B this brief. The key to the Court’s de-

cision is found in the following quotation from Chief Jus-

tice Burger’s opinion:

‘“‘It would frustrate one of the Act’s basic purposes

—providing a ‘substitute’ for wages—to permit an em-

ployer to ignore the initial interview or fail to assert

and document a claimed defense, and then effectu-

ate cessation of payments by asserting a defense to

the claim by way of appeal. If the employer fails to

present any evidence, he has in effect defaulted, and

neither he nor the State can with justification com-

plain if, on a prima facie showing, benefits are al-

lowed.’’ 402 U.S. 134.

The issue in the instant case is significantly different

from the issue in Java. It involves no belated employer’s

protest and no automatic suspeusion of payments at the

time found to be due.* It involves a case where the finding

is that payments are not due. The finding of “not due” was

predicated upon the employee’s own act. Though the ques-

tions as to the effect of Mrs. Burney’s act were erroneously

decided and the issue now mooted as to her, the question

* The Indiana Act was amended in 1972 to provide for con-

tinuance of payments in the event of an appeal by the employer

, or the division. IC 1971 22-4-17-2; Burns’ Ind. Stat. Ann. 52-

1542a (e) (Supp. 1972), Appendix A this brief, see note at end,

= =

stated is the one remaining on behalf of the class she

purports to represent. The question really is the one de

cided in Torres v. New York State Department of Labor,

321 F. Supp. 482 (S.D.N.Y. 1971); vacated 402 U.S. 968,

29 L. ed 2d 133; reinstated 333 F. Supp. 341; affirmed 31

L. ed. 2d 228 (1972), already discussed above.

In Torres there was no automatic termination of bene

fits. The district court reasoned that in Torres the pro-

cedures complied with due process. Emphasizing that the

same procedures were followed in denying benefits as were

followed in initially granting benefits, the court concluded

that these procedures were reasonably calculated to insure

full payment when due. The claimant was afforded an op-

portunity to explain and support his claim for benefits be-

fore any action was taken, and he was provided with a

statutory means of appealing adverse decisions. Finally,

the court pointed out that in Torres ineligibility was

founded upon the basis of new facts admitted by claimant.

These new facts rendered claimant ineligible, and, thus,

no payment was due. In Java, payments due were sus-

pended automatically, without affording the claimant an

opportunity even to orally present his position. Torres

and this case are thus inapposite to Java because Indiana

procedures are like those of New York.

The Indiana Claims Manual makes it clear that at the

first suggestion of a question as to the right to benefits,

the claims taker refers the claimant to a deputy for the

necessary fact finding. Sec. 13620 provides:

“The benefit rights interview will have thoroughly

acquainted the claimant with the import and content

of the statement which he will be required to sign as

part of his certification with respect to each week for

which he is making a claim, The statement contains

all of the elements pertinent to questions of avail-

ability and capability. Therefor it is unnecessary to

= =

question the claimant in detail to the same effect with

respect to each certification. Consequently, the normal

continued claim function will be reduced to:

a. Ascertaining answers to the following ques-

tions:

(1) Did you work anywhere last week?

If so, what were your earnings?

(2) Did you refuse an offer of work?

b. Exploring any obvious question of the claim-

ant’s ability to work.

At any time in the accepting of a claim that

a potential issue of eligibility or disqualifica-

tion arises, the claims taker will refer the

imant to a deputy for the necessary fact

finding.”

(Our emphasis) Claims Manual, Sec. 13620.

The claimant, if the meeting with the deputy results in

a disallowance, has the rights of appeal alluded to in this

brief. The Claims Manual requires that in the first inter-

view:

“The claimant must be properly informed of his right

to appeal any adverse decision by the Division af-

fecting his benefit rights.” Claims Manual, Sec. 13712.

Other factors also distinguish Java. The first is the

administrative feasibility of holding, on notice, a due

process hearing for each claimant with a contested claim

each week. Determination must be made weekly to in-

sure payment only to the eligible claimants and to deny

payment to the ineligible claimants. Changes in status

can and do occur. Imposing the requirement of formal

hearings each week for each contested claim would be a

burden impossible to meet, particularly in case of mass

layoffs or major unemployment, and would significantly

~~

undermine the whole unemployment compensation system.

It would invite initial holdings of no eligibility m such

periods of stress.

The decision in this case would require a hearing be-

fore benefits could be suspended even if claimant were

rehired, during the benefit period, on his old job at his

former rate of pay.

Neither public policy nor the Federal Act requires such

a result. The employee, if a determination as to any

week is erroneous, is paid in full on final determination.

Due Process of Law Provided

Torres is sufficient answer that the procedures afforded

under the Indiana law ‘‘comport with minimum standards

of due process.’’ Torres v. New York State Department

of Labor, et al, 321 F. Supp. 437-438. Those procedures

have already been described in this brief, and, in addition

to those described, there is the right of appeal to the

courts from the decision of the Review Board. IC 1971

22-4-17-12; Burns’ Ind. Stat. Amn. 52-1542k. The Court,

in Torres, of due process said:

‘‘Claimants participate in an application interview,

weekly benefit rights interviews, periodic reinter-

views and, as needed, claim adjustment interviews.

Information which the agency has received is in-

vestigated and brought to the claimant’s attention at

these interviews. Finally, a full due process hearing

is provided, with both administrative and judicial

review, and any determination favorable to the

claimant results in fully retroactive payments.’’ 321

F. Supp. 438. .

The judgment in Torres was vacated by this Court and

remanded for reconsideration in light of Java (402 US.

een

968, 29 L. ed. 2d 133). On remand, the lower court ad-

hered to its prior decision (333 F. Supp. 341) and this

Court affirmed that adherence (31 L. ed. 2d 228).

Nothing really needs be added to what was said in

Torres and the decisions referred to therein.

We respectfully submit that this Court should reverse

the lower court and hold the Indiana procedure to be in

conformity to 42 U.S.C. 503 (a) (1) and (3), and not a

denial of due process of law under the Fourteenth Amend-

ment to the Constitution of the United States.

Respectfully submitted

HARRY T. ICE

CHARLES J. TODD

Attorneys for Amici Curiae

ICE MILLER DONADIO & RYAN

Indianapolis, Indiana

Of Counsel