Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 85 C 6327 Paul E. Plunkett, Judge.
Before ESCHBACH, RIPPLE and KANNE, Circuit Judges.
ARGUED OCTOBER 23, 1996 *fn1
This is a successive appeal. Luella Pennington, the class representative in this sec. 1983 case, seeks injunctive relief from the operation of one of the provisions of the Illinois Unemployment Insurance Act ("IUIA"), 820 ILCS 405/100 et seq. In Pennington v. Didrickson, *fn2 22 F.3d 1376 (7th Cir.) ("Pennington I"), cert. denied, 115 S. Ct. 613 (1994), we held that Illinois' method of determining a base period, on which entitlement to benefits was calculated, was not an eligibility requirement, but an administrative provision, of the program. Accordingly, we concluded that the provision was subject to the "when due" clause of section 303(a) of the Social Security Act ("SSA"), 42 U.S.C. sec. 503(a). We therefore remanded the case to the district court to determine whether section 237 of the IUIA, which sets forth the formula by which Illinois calculates the base period, complies with SSA sec. 303(a) by ensuring the greatest promptness in paying unemployment benefits. See 22 F.3d at 1387-88. The district court, after accepting further submissions from the parties, concluded that section 237 violates the "when due" clause of the SSA. For the reasons that follow, we affirm the judgment of the district court.
Because this case is a successive appeal, we shall assume a familiarity with the facts set forth in our previous opinion, see Pennington I, 22 F.3d at 1378-81, and limit our rendition here to a repetition of those matters most pertinent to the resolution of this appeal.
The plaintiffs are claimants for unemployment insurance benefits under the IUIA, Illinois' unemployment insurance program. Their claims have been either delayed or denied because of the manner in which the IUIA defines the term "base period." Section 237 of the IUIA defines "base period" as "the first four of the last five completed calender quarters immediately preceding the benefit year." *fn3 820 ILCS 405/237. For example, for an individual who filed for benefits in June of 1993 (during the second quarter of 1993), the resulting base period under the IUIA would be the four calendar quarters of 1992. Pennington I, 22 F.3d at 1378. The first quarter of 1993 would be the lag quarter, and the second quarter of 1993 would be the filing quarter.
In Pennington I, we held that the base period was not an eligibility requirement, as the district court had held it to be and as IDES had maintained. Rather, it is an administrative provision subject to the "when due" clause of the SSA. Section 303(a)(1) of the SSA, the "when due" clause, provides that a state's unemployment insurance law must provide for "'such methods of administration . . . as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due.'" Pennington I, 22 F.3d at 1378 (quoting 42 U.S.C. sec. 503(a)(1)). The Secretary's regulations amplify this statutory provision: The state must implement "such methods of administration as will reasonabl[y] insure the full payment of unemployment benefits to eligible claimants with the greatest promptness that is administratively feasible." 20 C.F.R. sec. 640.3(a). Had we accepted Illinois' contention in Pennington I that the definition of base period was an eligibility requirement rather than an administrative provision, section 237 would not have been subject to the "when due" clause. See 22 F.3d at 1381 & n.4.
Having determined that the designation of a base period was an administrative provision subject to the "when due" clause, we reversed and remanded the case to the district court to determine, based on the evidence it had and on any further submissions from the parties, "whether section 237 insures the greatest promptness in paying unemployment benefits that is administratively feasible, making all factual findings that it deems necessary to the resolution of that issue." Id. at 1388. To make this determination, we held that it was necessary for the district court "to decide whether section 237's base period strikes a reasonable balance between the plaintiff class's interest in prompt payment of unemployment insurance benefits and the state's interest in minimizing the costs of eliminating delay and in preventing fraudulent claims." Id. at 1387 (internal quotation and citation omitted).
The district court, both in the original proceeding and on remand, had a voluminous record containing evidence and testimony about Illinois' current wage record system and about the plaintiff class' various alternative proposals. Under the current system, section 237 requires an examination of the first four of the five previously completed quarters to determine whether sufficient insured work ...