Amicus Curiae Brief — California Department of Human Resources Development v. Java

ARGUMENT:

I. Minimum standards of justice dictate that any

final adjudication of the nonconformity of the

California law to the federal requisites of the

Social Security Act should refiect exhaustive

consideration of the position of Secretary of

RANE AAA

II. Invalidation by the district court of Section

1335 of the California statute on both consti-

tutional grounds of due process infringement

and statutory grounds of nonconformity with

the Social Security Act compels full review

-

III. The decision of the district court places the

more fundamental issue before this Court of

whether or not the concept of due process

protected by the Fourteenth Amendment to

the United States Constitution, coupled with

the federal standards provided for in the

Social Security Act, so preempt the question

of postponement of benefits pending possible

disqualification so as to deprive the various

state legislatures of the right to set up a sys-

tem of adjudication of contested claims which

involve postponement of benefits

TABLE OF CITATIONS

Cases

Carmichael v. Southern Coal Co., Carmichael v.

Gulf States Paper Corporation, 301 U.S. 495

T

ii

PAGE

Dandridge v. Williams, 397 U.S. 471 (1970) ............ 4

Goldberg v. Kelly, 397 U.S. 254 (1970) 6, 7,8

Kelly v. Wyman, 294 F. Supp. 893 (D. C. S. D. N. V.,

W ERE SR WARS Aa a ee 7

King v. Smith, 392 U.S. 309 (1988)))))⸗ 5

Rosado v. Wyman, 397 U.S. 397 (1970) 45

Steward Mach. Co. v. Davis, 301 U.S. 548 (1937) 49

Statutes

California Unemployment Insurance Code, Califor-

nia Statutes, 1953, Section 1335 ...................... 2, 3, 6, 7,8

Maryland Unemployment Insurance Law, Maryland

Annotated Code, Art. 95A

r / ,,,. 2

r . 2

1935 Social Security Act, 49 Stat. 626, 42 U.S. C.,

Sections 301-130 3, 4, 5, 6, 7, 8, 9, 10

Other

House Report No. 615, 74th Congress, Ist Session

a OE IBERIA th SOI Ot 5

Senate Report No. 628, 74th Congress, Ist Session

e sananincene 4

In THE

Supreme Court of the United States

Ocroser Term, 1970

No. 507

CALIFORNIA DEPARTMENT OF HUMAN

RESOURCES DEVELOPMENT, Er Al.,

Appellants,

v.

JUDITH JAVA, ET A.,

Appellees.

On APPEAL FROM THE UNITED States Districr Court

FOR THE NORTHERN District OF CALIFORNIA

BRIEF OF THE STATE OF MARYLAND,

AS AMICUS CURIAE

INTEREST OF THE AMICUS

The filing of the Appellants’ jurisdictional statement oc-

casioned by the decision of the three-judge court sitting as

the United States District Court for the Northern District

of California,* has raised legal questions that will inev-

itably have a momentous effect on every state’s adminis-

tration of its unemployment insurance program, and, more

* Not officially reported, but is contained as — A to Juris-

dictional — of Appellants.

— — —— — — . —

2

specifically, on the unemployment insurance program of

the State of Maryland, which is administered by the Mary.

land Department of Employment Security under the State

Act.1 Although the provision in the Maryland law which

postpones the payment of benefits pending adjudication of

an appeal from an initial determination by an examiner’

does not employ the identical language of Section 13358 of

the California unemployment insurance law which is under

attack, the legislative objectives of the two provisions are

similar and any final judicial decision construing the Cali

fornia statute directly affects administrative implementa.

tion of the Maryland Statute. The State of Maryland, with-

out opining on the merits of the specific controversy be-

tween the principal litigants which culminated not only in

1 (Unemployment Insurance Law of Maryland) Laws of Mary-

land, Second —— Session, Dec., 1936, c. 1, Maryland Ann.

Code, Art. 95A, Section 1, et seq. (1969).

2(a) The pertinent provisions of the Maryland gy scheme

are contained in Maryland Ann. Code, Art. 95A, Sec. 7, Claims for

Benefits, subsection (i) (1969) :

“Benefits shall be promptly paid in accordance with a deter-

mination except that, if the record of the proceeding on the claim

indicates that a disqualification has been alleged or may exist,

such benefits shall not be paid prior to the expiration of the period

for appeal. If pursuant to a determination benefits are payable

in any amount as to which there is no dispute, such amount of

benefits shall be 1 regardless of any appeal. The

commencement of a pr ing for judicial review shall not op-

erate as a supersedeas or stay unless the Board of Appeals shall

so order. If a determination of an examiner allowing benefits is

affirmed by a referee, or if a determination of a special examiner

or a decision of a referee allowing benefits is affirmed by the

Board of Appeals, such benefits shall be promptly paid regardless

of any further appeal.” (Emphasis added. )

(b) In contrast with California’s ten-day appeal period, Maryland

70501 A. — period. Maryland Ann. Code, Art. 95A, Sec.

e) .

That being: If an appeal is filed, benefits with respect

to the period prior to the final decision on the appeal shall be paid

only after such decision” [followed by enumerated exceptions not

applicable here and thus not set forth]. Calif. Stats. 1953, c. 308,

p. 1509, Sec. 1335.

the District Court’s criticism of California’s particular ad-

ministrative modus operandi of Section 1335 but its total

invalidation, finds more substantial legal questions created

put left unresolved by the lower tribunal than resolved by

it, all of which causes a morass for any state attempting to

legislate workable procedural machinery in supplementa-

tion of the aims of the Federal Social Security Act.“ Be-

cause Maryland believes that any judicial inquiry into the

legality of a state’s established administrative machinery

for the payment of benefits in a unique field such as that of

unemployment insurance should be initiated, if at all, in

a spirit of resolution and not dissolution, and concluded,

if at all, with meaningful adjudication, accompanied by

specific guidelines and procedures adaptable to the admin-

istrative realities of unemployment insurance as opposed

to the administrative exigencies of general welfare and

relief programs, it urges the granting of the Appellants’

quest for plenary review and oral argument in this Court.

ARGUMENT

I.

MINIMUM STANDARDS OF JUSTICE DICTATE THAT ANY FINAL

ADJUDICATION OF THE NONCONFORMITY OF THE CALIFORNIA

LAW TO THE FEDERAL REQUISITES OF THE SOCIAL SECURITY

ACT SHOULD REFLECT EXHAUSTIVE CONSIDERATION OF THE

POSITION OF THE SECRETARY OF LABOR.

With the exception of initial acknowledgment that the

California unemployment compensation program had been

certified by the Secretary of Labor under the provisions of

the Social Security Act, the opinion of the three-judge

district court holding Section 1335 to be defective on statu-

tory grounds is noticeably devoid of any consideration of

the official administrative position of the Secretary of Labor

‘Act of August 14, 1935, c. 531, 49 Stat. 620, as amended, 42

U.S. C. §301-1305.

4

insofar as the existence in state unemployment compensa.

tion laws of a system of adjudication of contested claims

which allows postponement of benefits pending final ad

judication. It is Maryland’s considered position that any

final holding of nonconformity by the judiciary should, at

the very least, be flanked with the benefit of the expertise

of the very federal agency which has as one of its primary

objectives the scrutinizing of a state’s “methods of ad.

ministration” so as not to run afoul of federal standards’

A decision of such importance to the national administra.

tion of state unemployment compensation laws should not

be one delivered in vacuum, especially when it is recognized

that the federal agency prepared and took draft bills to

the various state legislatures to enable and induce them

to pass unemployment insurance laws providing for com-

pensation in accordance with federal requirements.‘ Al.

though the majority opinion of this Court in Rosado v.

Wyman, 397 U.S. 397, 420 (1970), one of the many contro-

versies finding its way to this Court dealing with the com-

patibility of state social services programs with the Aid

for Dependent Children Provisions of the Social Security

Act rejected the argument that a federal court was with-

549 Stat. 626, 42 U.S.C., Sec. 503 (a) (1) provides: “The Secre-

tary of Labor shall make no certification for payment to any State

unless he finds that the law of such State, approved by the Secretary

of Labor under the Federal Unemployment Tax Act, includes pro-

vision for—

(1) Such methods of administration (including after January

1, 1940, methods relating to the establishment and maintenance

of personnel standards on a merit basis, except that the Secretary

of Labor shall exercise no authority with respect to the selection,

tenure of office, and compensation of any individual employed

in accordance with such methods) as are found by the Secretary

of Labor to be reasonably calculated to insure payment of

unemployment compensation when due. (Emphasis added.)

See Justice Butler’s dissenting opinion in Steward Mach. Co. v.

Davis, 301 U.S. 548, 616 at 618 (1937) ; see, generally, House R.

No. 615, 74th Congress, Ist Session; Senate Report No. 628, 74th

Congress, Ist Session (1935).

5

out power to review state welfare provisions or prohibit

the use of federal funds by the states in view of the fact

that Congress had lodged in the Department of Health,

Education and Welfare administrative powers to cut off

federal funds for noncompliance with statutory require-

ments, nevertheless, in remanding the case to the district

court, specifically instructed the court that its review of

any revised program adopted should take into account the

views of HEW. While the Rosado Court expressed great

reluctance to find Congressional intent to foreclose judi-

cial review of the state’s administration of the HEW pro-

gram, the Court may wish to re-evaluate its position on that

issue insofar as the position of the Secretary of Labor as

overseer of state unemployment compensation programs.

Although the Maryland administration may be drawn to

the logic of Mr. Chief Justice Berger and Mr. Justice Black,

who, in commenting on the majority position of this Court’s

sanctioning judicial review in the A.F.D.C. welfare line

of cases concluded that “judicial pre-emption of the agen-

cys (HEW) rightful responsibility can only lead to the

collapse of the enforcement scheme envisioned by Con-

gress,"? it is neither necessary nor the purpose of this

brief to venture into the merits of that position, since this

Court in Dandridge v. Williams, 397 U.S. 471, 481-482

(1970), another of the A.F.D.C. regulated state welfare

benefit controversies, placed direct reliance on the position

of the Secretary of Health, Education and Welfare as to the

approval of the Maryland State welfare plan in ruling that

the particular Maryland regulation under attack was not

prohibited by the Social Security Act. See also the con-

curring opinion of Mr. Justice Douglas, King v. Smith, 392

US. 309, 334 (1968), wherein reluctance was expressed to

follow the statutory route travelled by the majority in con-

* Rosado v. Wyman, 397 U.S. 397, at 434 (1970).

cluding that an Alabama statewide regulation promulgated

in administration of its federally funded A. F. D.C.

was in conflict with the Social Security Act of 1935, in

view of the “long-standing administrative construction”

by HEW which had approved other state A.F.D.C. plang

containing the provision under attack.

Judicial review and further hearing by this Court,

coupled with exploration of the position of the Secre.

tary of Labor on a question of such national import-

ance to the administration of the states’ unemployment

insurance programs, is certainly preferable to a lower court

decision markedly absent serious consideration of the

Secretary’s position.

II.

INVALIDATION BY THE DISTRICT COURT OF SECTION 1335

OF THE CALIFORNIA STATUTE ON BOTH CONSTITUTIONAL

GROUNDS OF DUE PROCESS INFRINGEMENT AND STATUTORY

GROUNDS OF NONCONFORMITY WITH THE SOCIAL SECURITY

ACT COMPELS FULL REVIEW BY THIS COURT.

The opinion of the district court found Section 1335 of

the California Code defective on due process infringement

grounds on the basis that the California law fails to pro-

vide for pre-termination hearing procedures contrary to

the principles recently laid down by this Court in Goldberg

v. Kelly, 397 U.S. 254, 266-271 (1970). In fact, it is this

broad swath approach by the district court directing state

unemployment insurance administrators to incorporate by

reference the pre-termination hearing procedures enun-

ciated in Goldberg, supra, which were formulated in the

atmosphere of the peculiar setting of administrative co-

ordination of welfare payments into the equally unique

field of unemployment insurance administration, all with-

out consideration to the innumerable differences in the two

programs not only in underlying social and economic

7

y but in administrative objectives that, unless

clarified by this Court, threatens to make havoc of each

state’s administration of its program. What guidelines does

any state unemployment insurance administrator now fol-

low to assure constitutional conformity of a pre-termination

hearing? The opinion of the district court is sorely de-

ficient in answers to such questions. This Court decided

Goldberg on a very narrow issue of due process as dic-

tated by the posture in which the case came on before the

Court. A reading of the three-judge lower court decision re-

ported as Kelly v. Wyman, 294 F. Supp. 893, 902 (D.C.

S.D.N.Y., 1968), reveals that the district court sharpened

the issue to one of singular due process constitutionality

as opposed to statutory interpretation for conformity with

the Social Security Act only because the Social Security

Act did not apply to the majority of the original and inter-

vening plaintiffs who instituted the action. The constitu-

tional issue of due process infringement may not be

reached if review initially directs itself to the more funda-

mental issue of whether or not a state law’s mere inclu-

sion, per se, of a stay of benefit payments which is handled

with normal dispatch within the administrative capabil-

ities of its particular program (in California’s case, a

median period of seven weeks) is necessarily violative of

Section 503(a)(1) of the federal Act requiring a state

program capable of insuring payment of benefits “when

due.” Should this Court conclude that a state’s imple-

mentation of a Section 1335 provision is not inconsistent

with the national ideology of running a state program

“reasonably calculated to insure full payment of unem-

ployment compensation when due,” the rationale behind

the pre-termination hearing requisites called for by Gold-

berg on due process grounds may be considered by this

Court as inapplicable where the act of nonpayment of

benefits because not then “due” within the meaning of

Section 503(a)(1) cannot be equated to an act of ter.

mination of such benefits within the meaning of

The lower court’s holding that Section 1335 is violative of

due process guarantees should not escape extensive judicial

review when the district court conjunctively found nop.

conformity invalidation.

The approach of the district court in painting over the

statutory grounds with broad strokes of due process, ie,

by grounding its decision in terms of California’s seven

week median time lapse (a constitutional approach) as the

basic criteria for finding nonconformity with the federal

standard of “when due” (the statutory approach), creates

the most nebulous of criteria and leaves unanswered the

most obvious of innumerable questions, e.g., where be-

tween one day and seven weeks does conformity and non-

conformity suddenly become apparent?

III.

THE DECISION OF THE DISTRICT COURT PLACES THE MORE

FUNDAMENTAL ISSUE BEFORE THIS COURT OF WHETHER OR

NOT THE CONCEPT OF DUE PROCESS PROTECTED BY THE

FOURTEENTH AMENDMENT TO THE UNITED STATES CONSTI.

TUTION, COUPLED WITH THE FEDERAL STANDARDS PROVIDED

FOR IN THE SOCIAL SECURITY ACT, SO PREEMPT THE QUES.

TION OF POSTPONEMENT OF BENEFITS PENDING POSSIBLE

DISQUALIFICATION SO AS TO DEPRIVE THE VARIOUS STATE

LEGISLATURES OF THE RIGHT TO SET UP A SYSTEM OF AD.

JUDICATION OF CONTESTED CLAIMS WHICH INVOLVE POST.

PONEMENT OF BENEFITS.

Much of the preceding discussion foreshadows the cru-

cial issue which this case squarely places before the Court,

that is, the right of a state to formulate reasonable admin-

istrative procedures in discharge of its dual role as a

fiduciary of tax revenues which are to be used to promote

the national concepts of an unemployment insurance pro-

and an arbitrator seeking fairness in the claimant-

employer relationship.

As this Court, speaking through Justice Cardozo, re-

marked in Steward Mach. Co. v. Davis, 301 U.S. 548, at

593 (1937), wherein the constitutionality of the unemploy-

ment insurance tax provisions of the 1935 Social Security

Act was established:

“A wide range of judgment is given to the several

states as to the particular type of statute to be spread

upon their books.”

and, at 595:

“A state looking for a credit must give assurance

that her system has been organized upon a base of

rationality.”

And, continuing, in Carmichael v. Southern Coal Co.,

Carmichael v. Gulf States Paper Corporation, 301 U.S. 495,

at 510 (1937), through Mr. Justice Stone:

“This restriction upon the judicial function, in pass-

ing on the constitutionality of statutes, is not artificial

or irrational. A state legislature, in the enactment of

laws, has the widest possible latitude within the limits

of the Constitution. In the nature of the case it cannot

record a complete catalogue of the considerations which

move its members to enact laws. In the absence of

such a record courts cannot assume that its action is

capricious, or that, with its informed acquaintance

with local conditions to which the legislation is to be

applied, it was not aware of facts which afford reason-

able basis for its action. Only by faithful adherence

to this guiding principle of judicial review of legisla-

tion is it possible to preserve to the legislative branch

its rightful independence and its ability to function.”

10

The basic question of the right of the states to establish

and administer benefit rights, benefit amounts, payment

programs, waiting periods, tax rates and tax

all or most of which have been either directly or by infer.

ence recognized in Carmichael v. Southern Coal Co., Car.

michael v. Gulf States Paper Corporation, 301 U.S. 495

(1937), are all indirectly involved in this case as this Court

must draw definitive lines so as to protect the right of the

states to administer their programs within the very gen-

eral and inexplicit language of the federal standards and

of the United States Constitution. Maryland recognizes

that the law is dynamic but is reluctant to concede that due

process in whatever form and the federal standards of the

Social Security Act, however broad, encroach upon the

right of a state to administer its unemployment insurance

program complementing national objectives with a wide

range of discretion.

The decision of the California district court may signify

future attacks on a wide front on state unemployment in-

surance laws and this Court’s timely guidance is needed to

impede legal erosion of the very foundations supporting a

state’s right to administer with broad discretion its local un-

employment insurance law.

Consideration of this most basic issue by the Court can

best be achieved through the exercise of extensive review

by this Court.

11

CONCLUSION

It is respectfully submitted that the judgment of the

California three-judge district court raises substantial legal

ns of national importance warranting plenary judi-

dal review, including briefs on the merits and oral argu-

ment, before this Court.

Respectfully submitted,

Francis B. Burcu,

Attorney General of Maryland,

Louis B. PRICE,

Special Assistant Attorney

General of Maryland,

For State of Maryland,

Amicus Curiae.

James N. PHILLIPs,

General Counsel, Maryland

Department of Employment

Security,

Of Counsel.