Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 76-C-2294 -- Joel M. Flaum, Judge.
Before Fairchild, Chief Judge, and Swygert and Cummings, Circuit Judges.
Plaintiffs in this class action are Chicago public school teachers seeking federal unemployment benefits for a three week layoff in June 1976. They claim that this period preceded the end of the 1975-76 academic year. We reverse.
On June 7, 1976 teachers employed by the Chicago Board of Education were informed that due to the lack of operating funds their teaching responsibilities were to terminate as of that date rather than June 29, the scheduled date established pursuant to state statutes. Public school teachers were not covered at this time under the Illinois Unemployment Compensation Act, Ill.Rev.Stat. ch. 48, § 300-780 (1975).*fn1 Unemployment benefits were provided, however, under federal law, under the Special Unemployment Assistance Program, hereinafter SUA.*fn2 As stated in 26 U.S.C. § 3304, Part A, § 201 of the Act, this was a temporary federal program for workers who were unemployed during a period of aggravated unemployment and who were not otherwise eligible for unemployment allowances under any other law. The program was to be carried out jointly by the state and federal governments with the federal government providing the funds. The administration of granting benefits was placed in the hands of the state agency pursuant to an agreement between the state and the Secretary of Labor and claims for and payment of SUA compensation were to be controlled by the applicable state law.*fn3 The program thus provided for state officials procedurally acting under state law, with federal law controlling substantive entitlements where inconsistent with state law. Federal regulations implementing the program set up a procedure for Department of Labor review of state determinations as to SUA entitlement.*fn4
Applications for SUA benefits by Chicago public school teachers were made, for the 16 working days lost, to the Illinois Bureau of Employment Security, Division of Unemployment Insurance. The Bureau initially made an inquiry to the United States Department of Labor as to the eligibility of these teachers and received a telegram from the Department indicating that the end of the school year depended upon applicable state law. The Bureau thereafter made the determination that the schools had officially closed on June 7, 1976 and that teachers who had commitments to return in the fall were ineligible to receive benefits under 26 U.S.C. § 3304, Part A, § 203(b), which provided:
(b) An individual who performs services in an instructional, research, or principal administrative capacity for an educational institution or agency shall not be eligible to receive a payment of assistance or a waiting period credit with respect to any week commencing during the period between two successive academic years (or, when the contract provides instead for a similar period between two regular but not successive terms, during such similar period if-
(1) such individuals performed services in any such capacity for any educational institution or agency in the first of such academic years or terms; and
(2) such individual has a contract to perform services in any such capacity for any educational institution or agency for the later of such academic years or terms.
In making its determination that June 7 was the end of the school year and that the following three weeks fell within the statute, the Bureau placed emphasis on the absence of a recall date before the end of the school year and on the fact that students received credit for the entire school term.
In lieu of taking an administrative appeal, as provided for under state law, plaintiffs filed a two-count complaint in district court against the Director of Labor of the State of Illinois and various state officials within that department and against the Secretary of Labor of the United States and federal officials within the United States Department of Labor, alleging that defendants violated both the federal Act and the Fourteenth Amendment. Plaintiffs sought a declaratory judgment, preliminary and permanent injunction, and mandamus relief compelling the defendants to determine that plaintiffs were eligible for unemployment compensation benefits under the federal program. After denying various preliminary motions, including a request for preliminary injunction, reported at 421 F. Supp. 1261 (N.D.Ill.1976), the district court granted defendants' motion for summary judgment. It is from this judgment that plaintiffs appeal.
The issue for our consideration, as we view it, is whether the three week period, prior to the originally prescribed end of the school year, in which the teachers did not work, constitutes a period of unemployment for which the federal Act was intended to supply benefits or was a period between two successive academic years within the meaning of 26 U.S.C. § 3304, Part A, § 203(b). The teachers who are in this class on appeal are teachers who were laid off for three weeks in advance of the end of the school year of 1976 but who did have a commitment for the 1976-77 academic year. They contend that this was a period of unemployment and that they are eligible for SUA benefits. The state defendants take the position that this was a period "between two successive academic years" within the meaning of the Act. The federal defendants claim that they are not proper parties to this action since their duty to review the state determination did not arise in view of plaintiffs' failure to exhaust state administrative remedies. Additionally, they claim that the question as to when the school year ended is a question of state law and that even if the department did undertake a review, it could not and would not change the state's determination. We conclude that the three-week period the teachers were separated from their work was a period of unemployment under the federal Act and not a period covered by the exclusion in 26 U.S.C. § 3304, Part A, § 203(b).
In granting defendants' motion for summary judgment and in its decisions denying plaintiffs' motions for preliminary injunction and summary judgment, the district court viewed the question of plaintiffs' entitlement to SUA benefits as a question of state law and within the expertise of the state agency to determine when the school year ended, so as to apply the "between two successive academic years" standard. The court stated in its opinion denying the preliminary injunction:
But the critical issue is not whether the court perceives payment of SUA benefits to these teachers as reasonable or permissible. On the contrary, the issue is whether having authorized the state agency to make the necessary eligibility determinations consistent with state law, the Bureau determination in the case is in plain conflict with the ascertainable legislative intent. ...