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Gann v. Richardson

United States District Court, S.D. Indiana, Indianapolis Division

September 3, 2014

JESSICA GANN, TOMIKA HICKS, TRACEY CLARK, FAYE E. MILES, PAULETTA C. PRYOR, MARY AUSTIN, Plaintiffs,
v.
JOSHUA RICHARDSON, JOHN DOE, Defendants

Page 897

For JESSICA GANN, on behalf of herself and others similarly situated, TOMIKA HICKS, on behalf of herself and others similarly situated, TRACEY CLARK, on behalf of herself and others similarly situated, FAYE E. MILES, on behalf of herself and others similarly situated, PAULETTA C. PRYOR, on behalf of herself and others similarly situated, MARY AUSTIN, on behalf of herself and others similarly situated, Plaintiffs: Geoffrey S. Lohman, William R. Groth, FILLENWARTH DENNERLINE GROTH & TOWE LLP, Indianapolis, IN; William Martain Krowl, KROWL LAW, LLC, Evansville, IN.

For JOSHUA RICHARDSON, Individually and in his official capacity as Deputy Commissioner of the Indiana Department of Workforce Development, Defendant: David A. Arthur, OFFICE OF THE ATTORNEY GENERAL, Indianapolis, IN.

Page 898

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

SARAH EVANS BARKER, United States District Judge.

This cause is before the Court on Defendants' Motion to Dismiss for Failure to State a Claim and for Lack of Jurisdiction [Docket No. 34], filed on September 13, 2013. The parties stipulated to the dismissal of Count One of Plaintiffs' Amended Complaint on July 11, 2014, leaving only Count Two subject to this motion to dismiss. For the reasons set forth below, Defendants' motion is GRANTED.

Factual and Procedural Background

The Termination of Benefits

Plaintiffs are a group of Indiana bus drivers, Head Start teachers, and teachers' aides. Because their jobs coincided with the school calendar, these employees were annually and temporarily laid off during the summer months. Compl. ¶ 5.[1] Customarily, they applied for, and received, unemployment insurance benefits from the Indiana Department of Workforce Development (" DWD" ) for these temporary lay-offs. Compl. ¶ 7. The United States provides funding for the states' unemployment benefit programs pursuant to the Social Security Act. While the federal government imposes some requirements on state programs as conditions of continued funding, the participating states are entitled to set their own criteria for eligibility. See 42 U.S.C. § 503.

In 2011 and 2012, the Indiana legislature amended the state's unemployment insurance eligibility law to provide that those employees who are on a vacation or planned break from work are not " unemployed" for purposes of receiving state benefits. Ind. Code § 22-4-3-5.[2] Pursuant to the changes in the statute, DWD determined that Plaintiffs were not eligible for the unemployment benefits they applied for in the summer of 2012, and it accordingly terminated their benefits--doing

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so without according the affected workers an opportunity for a prior, individualized hearing. Compl. ¶ 10. Several of the employees whose benefits were terminated filed timely administrative appeals, and on December 28, 2012, the review board upheld DWD's interpretation of the statute and its corresponding denial of benefits. Compl. ¶ 13. Plaintiffs brought a claim in this Court containing two counts. Count One alleges that Defendant Joshua Richardson, acting in his capacity as the Deputy Commissioner of DWD, deprived them of due process by denying them benefits without providing a hearing and, relatedly, violated the " fair hearing" provision of Section 303(a)(3) of the Social Security Act, 42 U.S.C. § 503(a)(3).[3] See Compl. ¶ 23. Count Two alleges that Defendants' actions violated the " when due" provision of Section 303(a)(1) of the Social Security Act, 42 U.S.C. § 503(a)(1).[4]

The Indiana Suit

After Defendants had moved to dismiss the present case and the parties had briefed the motion,[5] the Indiana Court of Appeals issued a decision in a related matter. In D.B. v. Review Board of Indiana Department of Workforce Development, 2 N.E.3d 705 (Ind.Ct.App. 2013), the Court of Appeals upheld the DWD review board's interpretation of the 2011 and 2012 statutory changes, pursuant to which the board had determined that a group of school bus drivers--including several of the plaintiffs in this case--did not qualify as " unemployed" during the Anderson school system's summer break. 2 N.E.3d at 715. The court concluded: " [S]chool employees who are not working as a result of a scheduled school closure--including those who are not working during the period between academic years--and who have reasonable assurance of continued employment after the closure concludes, are excluded from collecting unemployment compensation." Id. (citing Indianapolis Pub. Sch. v. Review Bd. of Ind. Emp't Sec. Div., 473 N.E.2d 155, 157-58 (Ind.Ct.App. 1985)). The Indiana Supreme Court subsequently denied transfer of the case, rendering the Court of Appeals' interpretation of state law final. See 4 N.E.3d 1188 (Ind. 2014).

Procedural Developments

In recognition of the impact of the Indiana Court of Appeals' decision on this matter, we issued an Order to Show Cause on June 20, 2014, directing Plaintiffs to show why the claims contained in Count One of their complaint should not be dismissed. Docket No. 44. In particular, we desired to give Plaintiffs an opportunity to distinguish their factual allegations from the holding of the Court of Appeals with respect to a " property" entitlement to unemployment benefits under the due process clause. Id. at 3-4. Plaintiffs responded by stipulating to the dismissal of Count One--a dismissal we acknowledged on July 18, 2014. Docket No. 46.

Remaining before us is Defendants' September 13, 2013 motion to dismiss, which originally addressed both counts but has been mooted with respect to Count One. See Docket No. 34.

Legal Analysis

Standard of Review

As we discuss below, Defendants argue both that Plaintiffs lack standing to raise

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their claim under the Social Security Act and that Count Two fails to state a claim upon which relief can be granted. Their motion thus implicates Rule 12(b)(1) and Rule ...


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