United States District Court, Northern District of Illinois, E.D
February 8, 1983
CARMEN CAMACHO AND STEVEN FLOWERS, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
WILLIAM M. BOWLING, DIRECTOR, ILLINOIS DEPARTMENT OF LABOR; C. THOMPSON ROSS, ADMINISTRATOR OF BUREAU OF UNEMPLOYMENT SECURITY; AGALIECE MILLER, COMMISSIONER OF DIVISION OF UNEMPLOYMENT INSURANCE; SACHTLEBEN, CHIEF OF THE APPEALS SECTION; ILLINOIS DEPARTMENT OF LABOR, DEFENDANTS.
The opinion of the court was delivered by: Roszkowski, District Judge.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Before the court is a civil rights class action which challenges
the practices of the State of Illinois in its administration of
unemployment insurance benefits. The plaintiffs claim that the
Illinois Department of Labor has a practice of raising issues at
the administrative appeals hearing which were not appealed from
and for which claimants received no notice. The plaintiffs
contend that this practice violates Section 303(a)(3) of the
Social Security Act, 42 U.S.C. § 503(a)(3), and deprives the
plaintiffs of property (unemployment benefits) without the due
process of law guaranteed under the Fourteenth Amendment to the
Constitution of the United States. A bench trial of the liability
issue*fn1 was conducted on
May 4, 1982. For the reasons stated herein, the court finds in
favor of the plaintiff class.*fn2
Jurisdiction of the court is properly invoked pursuant to
28 U.S.C. § 1343. This opinion constitutes the court's findings of
fact and conclusions of law as is required by Federal Rule of
Civil Procedure 52.
I. THE UNEMPLOYMENT INSURANCE PROGRAM
Title III of the Social Security Act, 42 U.S.C. § 501 et
seq., established the Unemployment Compensation program. The
program is administered and implemented through state
governmental bodies. The Illinois program operates under the
guidelines found in the Illinois Unemployment Insurance Act,
Ill.Rev.Stat. ch. 48 §§ 300 et seq., (1981). Under the Act,
the Director of the Illinois Department of Labor is responsible
for administering the Illinois Unemployment Insurance System. The
procedures generally followed in administering the program are as
a. Initial Application for Benefits
Under the system as it is presently structured, applicants for
unemployment insurance benefits must appear personally at the
local unemployment office to apply for benefits. At the time of
this initial application, each claimant completes an application
form and then receives a benefits right interview.
During the interview, a state employee will explain the
eligibility requirements to the claimant. Among the requirements
discussed is the requirement that the claimant be able to work,
be available for work, and be actively seeking work.*fn3 This
requirement is generally referred to as the "A & A" requirement.
At the interview, which is conducted either one-on-one or in
groups with the aid of audio visual equipment, the claimants also
receive a booklet entitled "You and the Facts About Unemployment
Insurance." The booklet, 32 pages in length, makes these
disclosures about the A & A requirement:
You are eligible for benefits for any week only if
you meet ALL of the following conditions and are NOT
subject to disqualification:
During the week, you were ABLE to work, AVAILABLE for
work and actively LOOKING for work on a full-time
The law states that you must be AVAILABLE FOR WORK
during any week for which you claim benefits. This
means, during the week, you must have been willing
and ready to accept a suitable job. . . .
The law states you must be actively looking for work
on your own initiative. While the State Job Service
(at one of whose offices you must register) will make
every effort to help you find a job, you will be
expected to inform your unemployment insurance office
1. Where you applied for work.
2. The kind of work you have been seeking.
3. Your prospects of being hired.
Keep a record of the dates and places you apply for
work. If your period of unemployment
becomes extended, you may have to consider "lowering
your sights" to improve your chances of finding work.
The booklet also informs the claimant of other relevant rules
including potential grounds for disqualification, procedures
for appeal of adverse rulings, and amount of benefits to which a
person may be entitled.
After the claimant completes the application, the agency hands
the claimant a "Ben-437 form." The form, entitled "IMPORTANT
NOTICE," again reiterates the significance of the A & A
requirement. The form, in full, provides:
You have just filed your claim for unemployment
insurance benefits. IN ORDER TO RECEIVE BENEFITS YOU
MUST BE ACTIVELY LOOKING FOR WORK. The Employment
Service, with whom you are required to register
unless otherwise notified, will make every effort to
help you find a job. However, you must also look for
a job yourself. Upon request, you will be expected to
furnish this office with information regarding (1)
where you have applied for work, (2) the kind of work
you have been seeking, and (3) your prospects for
IT IS ADVISABLE TO KEEP A RECORD OF THE DATES AND
PLACES YOU APPLY FOR WORK.
As the period of your unemployment becomes
extended, you will be expected to give consideration
to the acceptance of work outside of your customary
occupation or for prevailing wages which may be lower
than you received in your last regular job.
Other conditions which you must meet to receive
benefits are explained in a booklet, YOU AND THE
FACTS ABOUT UNEMPLOYMENT INSURANCE. If you do not
have a copy ask for one at the claims counter or the
Unless the claimant is exempt, the Local Office will instruct
the claimant to register with the Illinois Job Service.
Registration with the local employment service office is also a
prerequisite to eligibility for benefits.
After the interview, the claimant is mailed form "BIS 653".
(See Appendix 1)*fn4. The form covers a two week period. In
completing the form, the claimant certifies that he was available
and looking for work. The form asks the claimant to list in
detail the potential employers contacted, the date of contact,
the person contacted, the method of contact, the type of work
sought, and the results of the contact. After the local office
mails the BIS 653 to the claimant, it begins to process the
b. Processing the Application
The local office will review the completed application to
determine whether the claimant is eligible for benefits. If this
preliminary examination indicates eligibility, the local office
mails a notice of the claim to the claimant's former employer.
The employer is entitled to object to the claim if it believes
the applicant is ineligible. If there is an employer objection,
the claimant will be summoned back to the local office and the
objection will be discussed with a claim's adjudicator.
If there is no objection, the claimant is authorized to receive
up to 26 weeks of unemployment compensation provided that the
claimant continues to satisfy all eligibility requirements.
c. Monitoring For Continued Eligibility
The local office also monitors eligible claimants to be sure
that they continue to satisfy all requirements. This continuing
review is achieved primarily through the BIS 653 form. Every two
weeks, the claimant files a new BIS 653 that certifies continuing
eligibility and documents in detail the claimant's availability
for work and efforts to find work during the two week period
covered by the form.
If local office personnel question the accuracy or sufficiency
of the information on
the form, the office instructs the claimant to report to the
office for an interview with a claims adjudicator. The office may
also, in some circumstances, schedule periodic interviews with a
At the follow up interviews, the claims adjudicator will insure
that the office's files are current and that the information
contained therein is accurate. The claims adjudicator will also
inquire into the claimant's continuing satisfaction of the A & A
The claims adjudicator will then decide whether the claimant is
still eligible for benefits. The decision is rendered in writing,
setting forth the basis of the decision. The written
determination also informs the party of the right to appeal the
decision to a referee. Either the claimant or an employer is
entitled to appeal an adverse ruling.
A party also has a right to request the claims adjudicator to
reconsider his decision before the claimant brings the appeal.
Where reconsideration is requested, the claims adjudicator again
gives written reasons for his ruling. Either the claimant or an
employer may appeal an adverse reconsideration ruling.
d. The Appeal Hearing
An adverse ruling by the claims adjudicator at any stage of the
application process may be appealed.
The appeals process begins with notice to the claimant of the
right to appeal. The claims adjudicator's written determination
contains standardized language which informs the party that they
"may file an appeal, in person or by mail." The time limits for
filing an appeal are stated. The written determination also
informs the party that he will have the opportunity to present
evidence at the appeal.
The claimant is also instructed to report to the local office
on the claimant's regular report day and to continue to file the
biweekly BIS 653 forms during the pendency of the appeal.
After the local office receives the notice of appeal, it sets a
hearing date and notifies the claimant of the date by mail.
At the appeal the referee will conduct a hearing which first
addresses the claims adjudicator's reasons for denying the
benefits. The reason or reasons for the denial may or may not
include the A & A issue. Where A & A is noted as an issue on
appeal, the referee will address it first. If it is not an issue
on appeal, the agency's internal procedural manual advises the
referee to first address the written reasons for the denial. If
those reasons are found to be meritless, the manual instructs the
referee to then inquire into the A & A issue. The net effect is
that any claimant wishing to establish eligibility through an
appeal will have to overcome the A & A issue whether or not it
was specifically noted as a basis for denial of benefit in the
adjudicator's written decision.
The BIS 653 forms, which the claimant has been filing every two
weeks to document his A & A are not physically before the referee
at the appeals hearing. Nor are the forms available for the
claimant to review at or prior to the hearing. The agency does
have a policy, however, of granting continuances of appeals if
the claimant needs to gather evidence of availability for work.
The continuance must be requested, however, and the agency does
not have an established policy of informing all claimants as a
matter of course that they have the option of a continuance
should they find that they are without necessary documentation.
The court finds, as a factual matter, that the failure to
notify claimants that the A & A issue may be raised on appeal has
the effect of placing some claimants before the referee
unprepared to address the issue. This fact is well illustrated by
the experience of two of the named plaintiffs in the action,
Steven Flowers and Carmen Camacho.
II. EXPERIENCES OF NAMED PLAINTIFFS WITH THE UNEMPLOYMENT
a. Steven Flowers
On or about June 6, 1979, Steven Flowers filed a claim for
Illinois unemployment insurance
benefits and was found to be monetarily eligible to receive
At the time of his application, Mr. Flowers received a booklet
entitled, "You and the Facts about Unemployment Insurance" (BEN
224). Mr. Flowers read the booklet and generally understood it.
Mr. Flowers was told by the claims adjudicator that he had to be
looking for work and able to work and that he would be ineligible
for benefits if he was not looking for work and was not able to
work. He was also told that he had to register with the Illinois
Job Service and would be ineligible for benefits if he did not
register with the Illinois Job Service.
At the initial hearing, however, the claims adjudicator
decided that Mr. Flowers had voluntarily left his employment and
therefore was ineligible for benefits. The adjudicator's written
On 9-30-78, the claimant voluntarily left Southern
Illinois University. Although he left for medical
reasons he did not inform his employer of his
illness, therefore he voluntarily left work without
good cause. The claimant is ineligible for benefits
from 6-3-79 thru 7-28-79 or until he is no longer
No other reason was given for the disqualification.
The written determination also informed Mr. Flowers of his
right to appeal. The standardized language at the bottom of the
APPEAL RIGHTS: IF YOU DISAGREE WITH THIS
DETERMINATION, you may file an appeal, in person or
by mail. Your appeal must be FILED in this office
within nine (9) days after the date of this notice if
it was mailed to you, or within seven (7) days after
the date of this notice if it was given to you. Any
appeal submitted by mail must bear a postmark date
within the applicable time limit for filing. If the
last day for filing your appeal is a Saturday or
Sunday, or any other day the office is closed, the
appeal may be filed on the next day the office is
DO NOT WAIT FOR YOUR REGULAR REPORT DAY.
If you file an appeal, a hearing will be held before
a referee who will give you an opportunity to present
evidence. You will be notified in advance of the time
and location of the hearing.
If you file an appeal, continue to report to your
unemployment insurance office on your regular report
day as long as you remain unemployed or until you are
IF YOU DO NOT FULLY UNDERSTAND WHY YOU HAVE BEEN
DENIED BENEFITS FOR ANY PERIOD, OBTAIN AN EXPLANATION
AT THE UNEMPLOYMENT INSURANCE OFFICE WHERE YOU FILE
Mr. Flowers filed a timely appeal from the claim adjudicator's
determination and contested the finding of voluntary leaving.
While awaiting his appeal, Mr. Flowers completed and mailed to
the local office, every two weeks, BIS 653 forms certifying his
compliance with A & A requirements. At no time was the
information Mr. Flowers reported on the BIS 653 forms questioned
by agency personnel prior to the appeal.
A "Notice of Hearing" was mailed to Mr. Flowers. Pursuant to
said notice, Steven Flowers appeared before the referee on August
The referee first inquired into the circumstances surrounding
Mr. Flowers' departure from his employment. Testimony established
that Steven Flowers was injured in an automobile accident and his
doctor had instructed him not to return to work. Satisfied that
Mr. Flowers' departure from his job was not voluntary and was
with good cause, the referee then turned his attention to the A &
A issue as the State's procedural manual instructs.
The referee questioned Mr. Flowers' about his efforts to seek
new employment after his doctor had approved his return to work.
Referee: Okay did you make any personal contacts uh
with potential employers
Mr. Flowers: Yes I have
Referee: Okay have you got a list of the ones you
Mr. Flowers: Uh I had uh, I put them on my
certifications forms uh each two weeks that I had
to fill out certification forms I listed 4
employers for employers that I had went to see
Referee: Four employers per two weeks
Mr. Flowers: Right every two weeks
Referee: Okay can you tell me where you went looking
Mr. Flowers: Yes uh First National Bank
Referee: When did you go to First National
Mr. Flowers: Uh I don't remember exactly. I know it's
on the certification forms
Referee: Unfortunately we very rarely see them.
They're at the local offices. So I
Mr. Flowers: They never asked me anything about uh
whether or not I had went to see employers or not
because every two weeks I had uh different four
employers that I had went to see you know asking
Mr. Flowers: And uh I went on an interview yesterday
which was at the Anti-Cruelty Society, 27 W. Grand
and uh I went to Illinois Bell, Harris Bank uh
Jewel Food Store, Dominicks, I went to Agar Meat uh
on 27th. See I went to everywhere I go when I go
out I always ask the manager or someone in the
store uh where ever I go you know whether or not
they have anything available.
Referee: And you were released by your doctor for
work on uh October of 78 right
Mr. Flowers: Yes he told me I was ready to go back to
Referee: Okay did he put any restrictions on you
Mr. Flowers: No
Mr. Flowers also testified that he limited his search for work
to those jobs which would pay at least $3.50 an hour.
On August 16, 1977, the Referee found that Mr. Flowers was
ineligible for benefits. The Referee set aside the claim
adjudicator's determination that Mr. Flowers left work without
good cause. The Referee found that Mr. Flowers "has convincingly
established with sufficient credible evidence that his reason for
leaving work . . . (was) medical restrictions on his employment."
The Referee nevertheless denied Mr. Flowers' claim to benefits
because he had not satisfied the A & A requirements. The referee
The claimant left work voluntarily with good cause.
The claimant has convincingly established with
sufficient credible evidence that his reason for
leaving work that is, because of medical restrictions
on his employment.
The claimant has not satisfied the requirements of
Section 5000 of the Illinois Unemployment Insurance
Act. He has not conducted a work search calculated to
return him to the labor force in view of his extended
period of unemployment and he has unduly restricted
his availability for work since he requires a higher
wage to accept work than he was earning in his
b. Carmen Camacho
On May 29, 1977, Carmen Camacho filed her initial application
for unemployment insurance benefits and was found to be
monetarily eligible to receive benefits.
After the eligibility determination, Ms. Camacho's employer
objected to the payment of benefits and contended Ms. Camacho
had been fired for misconduct. The local office then asked Ms.
Camacho to return to the local office for an interview with a
claims adjudicator to determine the reasons for her termination.
The claim adjudicator decided after conducting the interview,
that Ms. Camacho had been fired for misconduct and he imposed the
then required statutory six-week disqualification upon her. The
adjudicator's written determination provided:
On 5/26/77 the claimant was discharged from Acco
Int., because she used abusive
language toward her supervisor, a violation of a
company rule. Since the claimant acted in violation
of the rules and in a way which was injurious to the
employer's interest, she was discharged for
misconduct connected with her work.
The claimant is ineligible for benefits from 5/29/77
through 7/9/77 or until she is no longer unemployed.
No other reason was given for the disqualification.
The written determination also informed Ms. Camacho of her
right to appeal. The standardized notice of appeal language used
was identical to that found in Mr. Flowers' written
Ms. Camacho filed a timely appeal*fn5 from the claims
adjudicator's determination and contested the finding of
misconduct. While awaiting her appeal, Ms. Camacho completed and
mailed to the local office, every two weeks, BIS 653 forms
certifying her compliance with A & A requirements. At no time was
the information Ms. Camacho reported on the BIS 653 forms
questioned by agency personnel prior to the appeal.
On July 26, 1977, a "Notice of Hearing" was mailed to Ms.
Camacho. One continuance of the hearing date was granted. On
September 12, 1977, Ms. Camacho appeared before the referee.
The referee first considered whether misconduct was the reason
for Ms. Camacho's discharge. The foreperson who supervised Ms.
Camacho testified Ms. Camacho's production output had slowed and
that this was the primary reason for the termination. Satisfied
that productivity, not misconduct, caused Ms. Camacho's
discharge, the referee then turned his attention to the A & A
issue as the state's procedural manual instructs.
The referee questioned Ms. Camacho about her efforts to seek
new employment during the period of May 29, 1977 through June 18,
1977. Ms. Camacho recalled the names of four businesses she had
sought employment with, but the referee's questioning revealed
that Ms. Camacho had contacted these businesses after the
relevant period. When the referee asked for the names of other
businesses, Ms. Camacho responded that she had looked at another
factory, but could not remember the name. The referee twice more
asked Ms. Camacho to identify any prospective employer she
contacted between May 29, 1977 and June 18, 1977. She could not.
The referee also asked Ms. Camacho whether she had registered
with the Illinois State Employment Service as is required. Ms.
Camacho answered "No."
On November 2, 1977, the referee ruled that Ms. Camacho was
ineligible for benefits. In his written conclusions, the referee
reversed the claim adjudicator's finding of misconduct. The
benefits were nevertheless denied because "[t]he claimant failed
to establish a reasonable compliance with the active search for
work provision of Section 500C of the Act during the (relevant)
III. THE CLASS CLAIMS
The plaintiff class asserts two claims. First, the plaintiffs
contend that the appeals procedure fails to give adequate notice
that A & A issues may be considered by the referee in violation
of procedural due process and Section 303(a) of the Social
Security Act. Second, the plaintiffs contend that the appeals
procedure violates equal protection because it has the effect of
penalizing appealing claimants by requiring them to twice prove
their A & A — once before the claim's adjudicator and then again
before the appeal referee. Plaintiffs contend that non-appealing
claimants are subjected to this burden of proof only once.
IV. NOTICE ISSUES
a. Due Process and the Social Security Act
The Fourteenth Amendment to the United States Constitution
no State shall "deprive any person of life, liberty, or property
without due process of law."*fn6 The cornerstones of due
process, in its procedural sense, are notice and opportunity for
fair hearing. Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780,
786, 28 L.Ed.2d 113 (1971); Smith v. Dallas County Bd. of Educ.,
480 F. Supp. 1324 (E.D.Ala. 1979).
Section 303(a)(3) of the Social Security Act affords an
identical protection, requiring "[o]pportunity for a fair
hearing, before an impartial tribunal, for all individuals whose
claims for unemployment compensation are denied."
42 U.S.C. § 503(a)(3). Whether the statutory "fair hearing" requirement has
been met is tested by the same standards as constitutional
procedural due process. Ross v. Horn, 598 F.2d 1312, 1318 n. 4
(3d Cir. 1979), cert. denied, 448 U.S. 906, 100 S.Ct. 3048, 65
L.Ed.2d 1136 (1980). Cf. Wilkinson v. Abrams, 627 F.2d 650, 664
(3d Cir. 1980); Carmona v. Sheffield, 475 F.2d 738, 739 (9th Cir.
1973). Thus, if the court finds that the appeals process violates
procedural due process, it follows that the appeals process also
violates Section 303(a)(3).
The due process requirement of notice, in the administrative
context, "requires that interested parties be given a reasonable
opportunity to know the claims of adverse parties and an
opportunity to meet them. North Alabama Express, Inc. v. United
States, 585 F.2d 783, 786 (5th Cir. 1978), citing FCC v.
Pottsville Broadcasting Co., 309 U.S. 134, 143, 60 S.Ct. 437,
442, 84 L.Ed. 656 (1940); Morgan v. United States, 304 U.S. 1,
18, 58 S.Ct. 773, 776, 82 L.Ed. 1129 (1938); Intercontinental
Industries, Inc. v. American Stock Exchange, 452 F.2d 935, 941
(5th Cir. 1971), cert. denied, 409 U.S. 842, 93 S.Ct. 41, 34
L.Ed.2d 81 (1972). Adequate notice should "specify the nature
of the facts and evidence on which the agency proposes to take
action. Such notice enables the affected party to prepare an
informed response which places all the relevant data before the
agency." Hess & Clark, Division of Rhodia, Inc. v. Food and
Drug Administration, 495 F.2d 975, 983 (D.C.Cir. 1974). See also
Ferguson v. Thomas, 430 F.2d 852, 856 (5th Cir. 1970) ("[in
the context of teacher termination] minimum procedural due
process requires that (a) he be advised of the cause or causes
for his termination in sufficient detail to fairly enable him to
show any error that may exist"); Wolff v. McDonnell,
418 U.S. 539, 564, 94 S.Ct. 2963, 2978, 41 L.Ed.2d 935 (1974) ("Part of
the function of notice is to give the charged party a chance to
marshall the facts in his defense and to clarify what the charges
are, in fact").
Two cases that stand for the proposition that a party must be
notified in advance of the precise issues to be raised at a
hearing are In re Ruffalo, 390 U.S. 544, 88 S.Ct. 1222, 20
L.Ed.2d 117 (1968) and Navato v. Sletten, 560 F.2d 340 (8th Cir.
In Ruffalo, an attorney received notice of thirteen separate
charges that would be raised in his disbarment proceedings.
During the proceedings, the testimony suggested that a heretofore
undetected ethical violation may have also been committed. The
committee then proceeded to inquire into the newly discovered
ground as well as the original thirteen. In its final order
disbarring the attorney, the committee relied in part upon the
new ground. The United States Supreme Court, upon review, held
that the "absence of fair notice as to the reach of the grievance
procedure and the precise nature of the charges deprived
petitioner of procedural due process." 88 S.Ct. at 1226.
In Navato, a residency committee in a teaching hospital
informed an intern that a disciplinary hearing would be held. The
committee orally notified the intern that there had been numerous
his performance, including lack of concern about patients,
scheduling too many patients, poor record keeping and poor
judgment. At the disciplinary hearing, however, the committee
also inquired into other charges, including the intern's alleged
fostering of discontent among other residents. The committee
placed the intern on probation and also ruled that the intern
would be required to repeat six months of training. The court, in
evaluating the subsequently brought due process challenge, noted
that "since the right to be heard is of little value unless one
is informed as to the matter which is pending, procedural due
process requires that some kind of prior notice be given." 560
F.2d at 340. The Eighth Circuit held that adequate notice was not
given in the case.
He was given no notice that the Committee would
consider his alleged "incitement" of discontent with
the program among fellow residents, his alleged
failure to cooperate in the establishment of an on
call schedule at a local hospital in 1972, and his
reported statement to secretarial staff that he
wished to be terminated from the program to avoid
payback provisions in his contract. Nor was he given
any opportunity to respond to these allegations.
Under these circumstances, we hold that he was not
given the minimum procedural due process to which he
560 F.2d at 346.
Ruffalo and Navato establish that adequate notice must identify
the precise issues to be raised so that a specific, responsive,
and complete defense may be presented. The court finds that such
notice was not present in this case.
Under the appeals system as it is presently structured, the
claimant is forced to confront issues that are not identified as
issues for appeal. Ms. Camacho received notice that her alleged
misconduct would be at issue; Mr. Flowers was told that his
voluntary departure would have to be explained. As in Ruffalo and
Navato, neither party was informed of the issue which would
ultimately decide their claim. The inadequate notice rendered the
hearing on the A & A issue meaningless because neither party was
prepared to address the issue.
The failure to inform is even more egregious in the setting of
this case. Not only does the system fail to inform the claimant
that the A & A issue will be raised, but to the contrary, it
suggests to the claimant that the A & A issue has been favorably
put to rest. Week after week the claimant files his BIS 653 form
without objection by the government. This suggests to the
claimant that the information he has provided satisfies the A & A
requirements. Only after the hearing has begun and the claimant
stands before the referee does he learn that the issue is still
Worse yet, the claimant also learns that the BIS 653 forms
which he has dutifully filed and which contain the specific
information he needs to present his case is not before the
referee and is not available at the hearing for his inspection.
This court acknowledges that the present case is different from
Ruffalo and Navato in two arguably significant respects. Unlike
the plaintiffs in Ruffalo and Navato, who received absolutely
no notice of the issue ultimately dispositive, the plaintiffs herein
received an early and repeated notice that A & A was a
significant prerequisite to benefit eligibility. It is undisputed
that the local office informs the claimant of the A & A
requirement on at least two occasions during the initial
application. It is also beyond question that the literature
distributed to the claimant at the time of the application
highlights the A & A requirement, thereby emphasizing its
continuing importance. The evidence also established that
claimants are advised to keep records of potential employers they
have contacted so they can document their compliance with the A &
A requirement. The defendants therefore argue that the claimants
have a form of "constructive notice" that the A & A issue will be
The present case may also be different from Ruffalo and
Navato because defendants have a policy of permitting
continuances of the appeals hearing upon request.
Thus, a claimant surprised by the A & A issue at the appeal can
request a continuance.
The court believes, however, that these two differences are not
significant and cannot provide a basis for distinguishing the
present case from Ruffalo and Navato.
Addressing the continuance policy first, an unannounced policy
of permitting continuances upon request does not cure the
procedural unfairness inherent in the system. While the
well-educated, the resourceful, or the represented*fn7 may
inquire into the possibility of a continuance, the less
resourceful claimants will not. The claimants are never informed
of the option. Furthermore, the claimants cannot be held to have
constructive knowledge of a policy which is unannounced and
unpublished. The right to procedural due process is not reserved
solely for those who possess the acumen to explore the
possibility for continuance.*fn8
A closer question is presented, however, by the office's policy
of repeatedly informing the claimant that A & A is a significant
issue. The original interview, the booklet "You and the Facts
About Unemployment Insurance," and the bi-weekly filing of the
BIS 653 form all serve to underscore the importance of the A & A
The court believes, however, that a general awareness of A &
A's importance in the overall benefits scheme does not serve to
notify the claimant that he or she should be prepared to prove
their compliance with A & A at the specific appeals hearing. Not
one of the various notices, pamphlets, interviews, or forms
informs the claimant in a clear, straight-forward manner that A &
A can be raised at the appeals hearing whether or not it is
mentioned in the claim adjudicator's written determination.*fn9
The law requires specific notice of the precise issues to be
determined at a particular hearing. The generalized notice
defendants presently provide is simply inadequate.
Support for the conclusion that generalized notice is
inadequate is found in two district court opinions. The first,
Pregent v. New Hampshire Dept. of Employment Security,
361 F. Supp. 782 (1973), vacated*fn10 417 U.S. 903, 94 S.Ct. 2595, 41
L.Ed.2d 207 (1974), involved facts virtually identical to the
present case. In Pregent, the claimant sought unemployment
benefits. Like the class members in the present case, the
claimant was informed of the A & A requirement, both orally and
in a pamphlet entitled "Rights and Obligations." After receiving
benefits for a short period of time, the state certifying officer
declared the plaintiff ineligible because he had turned down an
offer of employment as a night watchman. The claimant refused the
job because he alleged that it was dangerous. The certifying
officer's written determination listed this specific job refusal
as the only reason for denial of benefits. After receiving the
written determination, the claimant brought his timely appeal
before the State Appeal Tribunal. The Appeal Tribunal denied the
claimant benefits on the new ground that he had failed to look
for work other than industrial work. New Hampshire state law,
like Illinois law, permitted the Appeal Tribunal to raise any
relevant issue. Upon the claimant's request, the Appeal Tribunal
reopened its inquiry, but again based ineligibility on a new
ground, this time finding that the claimant had only contacted
two potential employers. In holding that the practice violated
federal statutory and constitutional law, the Court stated that
"[t]he purpose of timely and adequate notice is to allow a party
to prepare a specific case to meet the specific charges leveled
against him." 361 F. Supp. at 796. The court held that "[t]imely
and adequate notice of all issues, both factual and legal, that
are to be raised at the pretermination hearing or at any
subsequent Appeal Tribunal hearing must be given to the claimant
so that he can be prepared to meet them at the hearing." 361
F. Supp. at 796-97 (Emphasis in text).
Steinberg v. Fusari, 364 F. Supp. 922 (D.Conn. 1973)
vacated*fn11 419 U.S. 379, 95 S.Ct. 533, 42 L.Ed.2d 521 reh.
denied 420 U.S. 955, 95 S.Ct. 1340, 43 L.Ed.2d 433 (1975), is
also in point. In Steinberg, the Connecticut unemployment
compensation benefits program provided that claimants were to
report bi-weekly to the local office to pick up unemployment
compensation checks. Upon reporting, the claimant filled out a
form which certifies his continuing availability for work and his
reasonable effort to find work. The claimant then entered a
claims line and presented the completed form to the clerk. If
the clerk raises no question, the claimant was routinely given
his benefit checks for the two week period at issue. If the clerk
raises an issue of possible disqualification, he sent the
claimant to the "Fact Finding Examiner" for a seated interview.
The examiner then proceeded to determine the claimant's
eligibility. Of necessity, questions would often arise during
the seated interview which involved third party information, for
example, whether a certain employer was actually contacted. The
examiner would attempt to contact the third-party during the
interview. If the third party could not be reached, the examiner
might still proceed to make a determination on eligibility.
In striking the seated interview procedure, the court relied in
part on the system's failure to provide adequate notice as
procedural due process requires. The court stated "[c]laimants
are provided with virtually no advance notice of the interview,
or the precise issues involved, and consequently have no
opportunity to either prepare their arguments or present
witnesses on their behalf." Id. at 935. The Court concluded,
. . whatever the minimal requirements of Fourteenth
Amendment due process in this context, the "seated
interview" system does not provide them. At the very
least, claimants are entitled to some advance notice
of the hearing and precise issues to be considered,
with the concomitant opportunity to present evidence
and bring counsel.
Id. at 936 (Emphasis supplied).
The Pregent and Steinberg holdings requiring specific and
precise notice are supported by the United States Supreme Court's
more general discussions of procedural due process.
In Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47
L.Ed.2d 18 (1976), the Court held that pretermination hearings
were not required in social security disability proceedings. In
the course of its analysis, the Court observed that "due process
is flexible and calls for such procedural protections as the
particular situation demands." 96 S.Ct. at 902. To help lower
courts resolve due process questions raised in an administrative
setting, the Court suggested that three factors be balanced.
. . our prior decisions indicate that
identification of the specific dictates of due
process generally requires consideration of three
distinct factors: First, the private interest that
will be affected by the
official action; second, the risk of an erroneous
deprivation of such interest through the procedures
used, and the probable value, if any, of additional
or substitute procedural safeguards; and finally, the
Government's interest, including the function
involved and the fiscal and administrative burdens
that the additional or substitute procedural
requirement would entail.
96 S.Ct. at 903 (Emphasis supplied). These three factors,
applied to the present case, most persuasively suggest that the
Illinois Unemployment Compensation appeals procedure violates
procedural due process.
First, the private interest a claimant has in receiving
unemployment benefits is great. When a claimant is unemployed,
the source of steady income which supports family, health, and
home has disappeared. Unemployment replaces, in some small way,
that vital source of income. Its significance to the claimant
cannot be overstated.
Second, the risk of erroneous deprivation is high. The court,
admittedly, cannot accurately forecast the number of erroneous
deprivations which actually do occur. The court can, however,
confidently gauge the very serious risk of error in a system
which places an unprepared, possibly uneducated, claimant before
a referee who demands specific times and dates which relate to
events the claimant is led to believe have been favorably put to
rest. The cases of the named plaintiffs, Mr. Flowers and Ms.
Camacho, are results of the unfairness and risk which inhere in
the existing system.
The final factor to be considered is one which weighs most
heavily in favor of the plaintiffs. That same factor also
represents what is, in this court's opinion, the most inexcusable
aspect of the existing appeals structure. The notice problem
which paralyzes the claimants' effectiveness could be effectively
remedied at virtually no cost to the government. Two sentences
inserted into the claims adjudicator's standardized written
determination would serve to inform the claimant that A & A could
be raised at the referee's hearing. For example, this warning
could be added to the standardized form:
In addition to reviewing the claims adjudicator's
written reasons for the denial of benefits, the
referee may also inquire into your continuing
compliance with the requirement that you be able to
work, available for work, and actively seeking work.
Please bring any records or lists of potential
employers contacted during the relevant period so
that you will be able to document your continuing
compliance with this requirement.
Such a warning would adequately notify the claimant yet create
absolutely no cost for the government.*fn12
The three factors
in Mathews v. Eldridge therefore support plaintiffs' case and
dictate that better and more adequate notice be given claimants
in the appeals process.
b. Due Process and Constructive Notice
In addition to the constitutional shortcomings in defendants'
constructive notice argument, the court believes that the
doctrine of constructive notice actually works in favor of the
plaintiffs. It surprises the court that, on the one hand,
defendants contend that claimants should be held to have
constructive notice that A & A may be raised at appeal even
though not a single agency document informs the claimant of this
fact. Yet, on the other hand, defendants choose to ignore that
the appeals referee who is demanding specific information from
claimants is an arm of the Illinois Department of Labor, an
agency which has already received the precise information
demanded in the claimants regularly filed BIS 653 forms. The
court believes, that if constructive notice doctrine is
applicable to this case at all, the doctrine dictates that the
appeals referee should be held to have constructive notice of the
information contained in the BIS 653 forms.
Other organizations, such as private corporations or
partnerships, are held to have constructive notice of the
collective knowledge of all the employees and departments within
the organization. See generally Matter of Pubs. Inc. of
Champaign, 618 F.2d 432 (7th Cir. 1980); U.S. v. T.I.M.E.-D.C.,
Inc., 381 F. Supp. 730 (W.D.Va. 1974). Furthermore, a government
agency, like the Department of Labor, is permitted in
administrative proceedings to take judicial notice of information
submitted to the agency when such notice suits the purposes of
the agency. See Market Street R. Co. v. Railroad Comm.,
324 U.S. 548, 561-562, 65 S.Ct. 770, 89 L.Ed. 1171 (1945); Wisconsin v.
Federal Power Commission, 201 F.2d 183, 186-87 (1952), cert.
denied, 345 U.S. 934, 73 S.Ct. 795, 97 L.Ed. 1362 (1952); P.
Saldutti & Son, Inc. v. United States, 210 F. Supp. 307, 313
In at least one reported decision, the Seventh Circuit has
ruled that one branch of a governmental agency will be held to
have constructive knowledge of information received by another
branch of that same agency. In McPartlin v. Commissioner of the
Internal Revenue Service, 653 F.2d 1185 (7th Cir. 1981), a civil
division of the IRS was required to send certain notices to the
taxpayers' last known address. The criminal division of the IRS,
as well as the IRS' Kansas City Missouri Service Center, had been
apprised that the taxpayers had recently moved. This knowledge,
however, was never communicated to the agents assigned to
investigate the taxpayers' possible civil tax liabilities.
Consequently, notices eventually sent concerning civil tax
deficiencies were sent to the wrong address. By the time the
taxpayers learned of the civil deficiency, the time in which to
file a petition for redetermination of the deficiency before the
Tax Court had passed. The Seventh Circuit held that under the
circumstances, the notice was not sent to the taxpayers' last
known address and that the civil agents should have checked with
the other branches. The Court noted that one of the
considerations it relied upon in its decision was
that a taxpayer should not be expected to appreciate
the separate responsibilities of the Commission's
service centers and his offices located within the
service centers. This is particularly true when the
Commissioner has apparently not sought to inform
taxpayers by way of numerous channels of
communication at his disposal — e.g. tax forms and
informational publications — that a change of address
should be communicated by a taxpayer at a certain
office of the Commission.
653 F.2d at 1190 n. 8.
It strikes this court as inherently unfair for the appeals
referee to deny benefits because of a claimant's inability to
recall specific dates and locations when that information is
already within the agency. Like the taxpayers in McPartlin, the
claimants cannot be expected to appreciate the different
divisional responsibilities within the Department of Labor. Mr.
Flowers' hearing, in particular, demonstrated that the claimants
view the agency as a single entity. Mr. Flowers repeatedly stated
that the information sought was in the BIS 653 form which the
agency already had and he assumed that the referee also possessed
that information. Again drawing upon McPartlin, the Department of
Labor, like the IRS, has not used its "numerous channels of
communication" (forms and interviews) to inform claimants that
the BIS 653 forms will not be available at the appeal hearing.
Under these circumstances, which are quite similar to McPartlin,
the court believes that the referee should be held to have
constructive notice of the information contained in the BIS 653
forms. The referee therefore will not be permitted to deny
benefits because the claimant cannot remember specific job
contacts if the requisite specificity is already provided in the
BIS 653 form. On this second ground, the court also rests its
For these reasons, the court finds that the appeals procedure
violates Fourteenth Amendment procedural due process and Section
303(a) of the Social Security Act.
V. EQUAL PROTECTION
Plaintiffs also contend that the present appeals structure
unlawfully requires appealing claimants to twice prove their
compliance with the A & A requirements. First, the appealing
claimant must prove A & A compliance before the claims
adjudicator; then the appealing claimant must prove A & A
compliance a second time before the referee at the appeals
hearing. In contrast, a non-appealing claimant must prove A & A
compliance only once, i.e. before the claims adjudicator.
Plaintiffs contend this unequal treatment of appealing claimants
violates the equal protection guaranteed by the Fourteenth
Amendment of the United States Constitution.
Equal protection, in a general sense, guarantees that similarly
situated individuals will be dealt with in a similar manner by
the government. Louisiana ex rel. Francis v. Resweber,
329 U.S. 459, 67 S.Ct. 374, 91 L.Ed. 422 reh. denied 330 U.S. 853,
67 S.Ct. 673, 91 L.Ed 1295 (1947); Louisville Gas & Electric Co.
v. Coleman, 277 U.S. 32, 48 S.Ct. 423, 72 L.Ed. 770 (1928);
Barbier v. Connolly, 113 U.S. 27, 5 S.Ct. 357, 28 L.Ed. 923
In the administrative context, equal protection has come to
mean that unfair and inconsistent application of administrative
requirements will not be tolerated. See White v. Roughton,
530 F.2d 750, 753-4 (7th Cir. 1976); Hornsby v. Allen, 326 F.2d 605,
610 (5th Cir. 1964). After a careful review of the appeals
process, the court detects no equal protection violation.
To the extent that all claimants are considered to be
similarly situated, the government may nevertheless draw
distinctions which result in different treatment so long as the
distinction has a reasonable basis or relationship to a
legitimate governmental purpose. Baxstrom v. Herold,
383 U.S. 107, 86 S.Ct. 760, 15 L.Ed.2d 620 (1966); Weber v. Aetna
Casualty & Surety Co., 406 U.S. 164, 92 S.Ct. 1400, 31 L.Ed.2d
768 (1972); United States v. Burnison, 339 U.S. 87, 70 S.Ct. 503,
94 L.Ed. 675 (1950).
A reasonable basis exists for requiring appealing claimants to
establish their A & A at the appeals hearing. At the initial
hearing, the claims adjudicator is merely looking for some reason
that would indicate ineligibility. Once an obvious bar to
benefits is discovered, it makes little sense to require that
adjudicator to determine whether all the other requirements have
or have not been met. If the adjudicator were forced to consider
each and every eligibility requirement, precious governmental
resources would be wasted. For this reason, the administrative
process accords a degree of finality only to those issues
actually considered and decided by the claims adjudicator. If, on
appeal, it becomes apparent that the adjudicator's decision on
the eligibility requirement actually considered was for some
reason incorrect, then the appeals referee is entitled to inquire
into other eligibility requirements. In a sense, the other
grounds are being fully inquired into for the first time at the
de novo appeals hearing. Such a system has a reasonable basis in
that it prevents waste of time and resources by reaching only
those issues which need to be reached for a decision.
The court notes that plaintiffs are unable to present a single
decision to directly support their equal protection theory. Those
decisions upon which plaintiffs rely for reasoning by analogy are
easily distinguished from the present case. The courts in White
v. Roughton, 530 F.2d 750, 753-54 (7th Cir. 1976) and Hornsby v.
Allen, 326 F.2d 605 (5th Cir. 1964), criticized the
administrative body's failure to develop written standards and
rules for decision making. In those cases, the administrative
bodies had engaged in ad hoe, subjective decision-making without
written rules or guidelines. That certainly has not occurred
here. In Buckner v. Maher, 424 F. Supp. 366, 374 (D.Conn. 1976)
aff'd sub nom. Maher v. Buckner, 434 U.S. 898, 98 S.Ct. 290, 54
L.Ed.2d 184 (1977), the Court condemned the agency's demand that
claimants provide information which was both irrelevant and
impossible to prove. The A & A requirement in the present case,
however, is relevant and can be proven with
information documenting the time and place of contacts with
For these reasons the court finds that the present appeals
system does not violate equal protection.
VI. THE ESTOPPEL ISSUE
Plaintiffs also argue that the claims adjudicator's favorable A
& A determination should be deemed a final determination and that
the referee should be estopped from reconsidering the question.
They contend that the lack of finality in the administrative
process subjects them to unlawful harassment by relitigation of
issues which have been finally decided.
Estoppel requires satisfaction of four elements:
1. The issues sought to be precluded must be the same
as that involved in the prior action;
2. The issue must have been actually litigated;
3. It must have been determined by valid and final
4. The determination must have been essential to the
In re McMillan, 579 F.2d 289, 291-92 (3d Cir. 1978) (emphasis
supplied). To the same effect, see Butler v. Stover Bros.
Trucking Co., 546 F.2d 544, 551 (7th Cir. 1977); Bickham v.
Lashof, 620 F.2d 1238, 1244 (7th Cir. 1980); Speaker Sortation
Systems v. U.S. Postal Services, 568 F.2d 46, 48 (7th Cir. 1978).
The short answer to plaintiffs' argument is provided in the
finality element. The claims adjudicator's decision simply is not
a final adjudication. The administrative process foresees an
appeal to the referee for a de novo hearing. The referee is not
bound by the determinations below. Application of estoppel under
these circumstances is therefore inappropriate.
In accordance with this opinion, the court hereby enters
judgment in favor of the plaintiff class on the liability issue.
The relief which is appropriate under the circumstances will be
considered in the second portion of this case.*fn13
It is so ordered.