UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

 

JENNIFER ZYNDA, et al. 

Plaintiffs,

v.

STEVE ARWOOD, et al.

Defendants. 

 /

Case No. 15-11449

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART

DEFENDANTS’ MOTION TO DISMISS

Plaintiffs, who are various individual unemployment-benefit claimants along with

an association and a union (Sugar Law Center, and the International Union, United

Automobile, Aerospace, and Agricultural Implement Workers of America (“UAW”)), filed

suit alleging various Constitutional and statutory violations arising from Michigan’s

administration of its unemployment benefits program. (Dkt. #1, Pg. ID 2.) Before the

court is Defendants’ Motion to Dismiss Plaintiffs’ Complaint Pursuant to Federal Rules

of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. # 10.) In response, Plaintiffs timely

amended their Complaint as a matter of course (Dkt. # 13) and filed a response (Dkt. #

17). Defendants have filed their reply. (Dkt. # 20.) The matter has been fully briefed and

the court concludes a hearing on the motion is unnecessary. See E.D. LR7.1(f)(2). For

the reasons stated below, the court will grant in part and deny in part Defendants’

Motion to Dismiss. 

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I. BACKGROUND 

Michigan’s Unemployment Insurance Agency (“UIA”) incorporates a fraud

detection system. Plaintiffs comprise three groups: 1) seven individual unemploymentbenefit claimants who have had varying levels of interaction with the fraud detection

system, either while receiving benefits or at some point after they returned to

employment; 2) the Sugar Law Center, a legal-aid organization that provides legal

services to low-wage and unemployed workers, including assistance with

unemployment-benefit programs; and 3) UAW, a labor organization with members who

claim to have been affected by UIA’s fraud detection system. (Dkt. # 13, Pg. ID 155-64.)

Defendants, sued in their official capacity, are the Acting Director of the Michigan

Department of Talent and Economic Development (Steve Arwood), and the Director of

UIA (Sharon Moffett-Massey). (Id. at Pg. ID 154-55.) 

UIA has implemented fraud-detection software that scans past and present

claimants’ records and searches for inconsistencies in the data that might indicate

fraud. (Dkt. # 13, Pg. ID 150, 165). In part, the data originate from a claimant’s

application for benefits and also bi-weekly updates on earnings that unemploymentbenefit recipients must submit to UIA in order to continue receiving payments. (Defs.’

Mot. 7-8.) Employers also independently submit information about employees, for

example, describing why an employee was discharged. (Dkt. # 13, Pg. ID 156.) To

obtain benefits, a claimant must meet certain wage and work eligibility requirements and

show that he was neither fired for misconduct nor voluntarily left employment without

good cause. (Id. at Pg. ID 165)

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If the fraud-detection software finds a discrepancy, either between the claimantand employer-submitted information or potentially in a claimant’s bi-weekly reports,

UIA’s system generates and sends a questionnaire to the claimant. (Id. at Pg. ID 166.)

This questionnaire helps the Agency detect incidents of fraud by asking the following

two questions: 1) “Did you intentionally provide false information to obtain benefits you

were not entitled to receive?”; and 2) “Why did you believe you were entitled to

benefits?” (Id. at Pg. ID 167.) Claimants are required to respond to the fraud

questionnaire quickly, as UIA must receive the completed form in ten days. (Id. at Pg. ID

168.) Additionally, the questionnaire form contains no specific information about the

claimant or any alleged or possible misrepresentation. (Id. at Pg. ID 167.) 

Plaintiffs aver that if UIA does not receive a response or the software deems the

response unsatisfactory, then “the Agency’s computer system robo-adjudicates the

fraud issue and automatically determines that the claimant has knowingly and

intentionally misrepresented or concealed information to unlawfully receive benefits.”

(Id.) A number of consequences flow from this result. Upon an accusation of fraud, a

claimant is no longer allowed to receive assistance from the Agency-administered

Advocacy Assistance Program that otherwise would aid the claimant. (Id.) The claimant

also receives a “Notice of Determination” terminating benefits and stating, “[y]our

actions indicate you intentionally misled and/or concealed information to obtain benefits

you were not entitled to receive.” (Id.) Enclosed with the notice is a “Restitution (List of

Overpayment)” that informs the claimant of the amount he now owes UIA. (Id. at Pg. ID

169) That amount is the value of the benefit received or sought by the claimant plus a

fourfold penalty (Plaintiffs refer to it as “quintuple”) (Id.). The notice does not contain any

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specific information about the alleged misrepresentation, or any particularized

explanation for the termination of benefits. (Id. at Pg. ID 168-169.) Claimants have thirty

days to appeal the determination to an ALJ. (Id. at Pg. ID 169.) If no appeal is taken, the

determination becomes final and UIA, in some cases, initiates wage garnishment and

tax return seizures in order to satisfy the claimant’s debt. (Id. at Pg. ID 153.) 

Plaintiffs allege that the agency, at times, fails to send fraud questionnaires and,

upon receiving no response, issues automatic fraud determinations without any basis

for believing the claimant received the questionnaire. (Id. at Pg. ID 151.) They also

allege that flaws in UIA’s system cause returned questionnaires to be ignored or result

in tabulation errors that cause the software to make erroneous fraud determinations. (Id.

at 152.) When such errors occur, Plaintiffs assert, there is no attempt by UIA to

determine, before benefits are terminated, whether the identified discrepancy was a

result of administrative error, good faith dispute, or misrepresentation by the employer.

(Id.)

 Plaintiffs have now filed the instant federal action under 42 U.S.C. § 1983,

arguing that the UIA’s fraud determination system violates various constitutional and

federal statutory rights. 

II. STANDARD

A. Federal Rule of Civil Procedure 12(b)(1) 

Federal Rule of Civil Procedure 12(b)(1) allows for dismissal for “lack of

jurisdiction over the subject matter.” When a defendant challenges subject matter

jurisdiction pursuant to this Rule, the plaintiff has the burden of proving jurisdiction in

order to survive the motion. Mich. S. R. R. Co. v. Branch & St. Joseph Ctys. Rail Users

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Ass’n Inc., 287 F.3d 568, 573 (6th Cir. 2002). In determining whether the court has

subject-matter jurisdiction, the court must assume that the complaint’s allegations are

true, as construed in the light most favorable to plaintiff. 3D Systems, Inc. v.

Envisiontec, Inc., 575 F. Supp. 2d 799, 802-03 (E.D. Mich. 2008). 

A Rule 12(b)(1) motion may challenge the sufficiency of the pleadings (a facial

attack) or the factual existence of subject matter jurisdiction (a factual attack). “In the

case of a factual attack, a court has broad discretion with respect to the evidence to

consider in deciding whether subject matter jurisdiction exists, including evidence

outside the pleadings, and has the power to weigh the evidence and determine the

effect of that evidence on the court’s authority to hear the case.” Cartwright v. Garner,

751 F.3d 752, 759-60 (6th Cir. 2014) (citing United States v. Ritchie, 15 F.3d 592, 598

(6th Cir. 1994))

B. Federal Rule of Civil Procedure 12(b)(6) 

A complaint is dismissed for “failure to state a claim upon which relief can be

granted” only when, construing the complaint in the light most favorable to the plaintiff

and accepting all factual allegations as true, “it is clear that no relief could be granted

under any set of facts that could be proved consistent with the allegations.” Sistrunk v.

City of Strongsville, 99 F.3d 194, 197 (6th Cir. 1996). 

III. DISCUSSION

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Plaintiffs’ claims are based on a number of alleged violations, Constitutional and

statutory, arising from UIA’s practice of sending fraud questionnaires and the

administration of their fraud detection system. Plaintiffs contend that these practices (1)

deprive claimants of their right to due process under the Fifth and Fourteenth

Amendments to the Constitution because the fraud questionnaires and determination

notices provide no notice of the allegations brought against them, and that this lack of

notice, among other systemic problems, deprives claimants of a fair hearing; (2) deprive

claimants of their due process rights because the punitive, quintuple penalties imposed

by this administrative system are actually criminal penalties requiring the full panoply of

due process rights; (3) deprive claimants of the privilege against self-incrimination under

the Fifth Amendment because the fraud questionnaires ask claimants to admit to fraud

and threaten the termination of benefits for failure to respond and waive the right; (4)

violate the Eighth Amendment’s prohibition on excessive fines because large fines are

assessed without consideration of individual claimants’ conduct; (5) violate the

Fourteenth Amendment right to equal protection because there is no rational basis for

the UIA system’s presumption that claimants, not employers, have made the alleged

misrepresentation; (6) violate the Fourth Amendment prohibition of unreasonable

seizures because the State’s practice of garnishing wages and intercepting tax returns

constitutes a seizure “without a warrant and without due process of law,” (Pls.’ Compl. ¶

111); (7) violate the Social Security Act, 42 U.S.C. § 300 et seq., by depriving claimants

of the right to a fair hearing and to be paid benefits promptly when due. Plaintiffs also

allege various analogous state constitutional claims.

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The arguments laid out in Defendants’ Motion to Dismiss can be grouped into

two categories. First are the arguments that, if correct, would deprive this court of

subject matter jurisdiction and are best considered under Rule 12(b)(1). Defendants

contend (1) that the claims are barred by the Eleventh Amendment, (2) that Defendants

are not “persons” under § 1983 and therefore cannot be sued, (3) that the court should

exercise its discretion to abstain from exercising jurisdiction over this case under the

Burford doctrine, and (4) that all of the Plaintiffs lack standing to bring this action. The

second set of arguments directly attack Plaintiffs’ claims, and should be considered

under Rule 12(b)(6). Defendants argue that Plaintiffs’ claims based on (1) the selfincrimination privilege of the Fifth Amendment, (2) the excessive fines clause of the

Eighth Amendment, and (3) the Fourth Amendment, and (4) the Social Security Act all

fail to state a claim. Defendants do not here challenge Plaintiffs’ due process or equal

protection claims.

 The court will first consider Defendants’ jurisdictional arguments and second

their arguments on the merits.

A. Jurisdictional Arguments 

1. Eleventh Amendment Immunity 

 Defendants argue that Plaintiffs’ claims are barred by the Eleventh Amendment

because these claims against state officials are, in essence, claims against the state of

Michigan. The Eleventh Amendment proscribes lawsuits “against one of the United

States by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. The

Amendment bars suits against the state by citizens of that state, as well. Hans v.

Louisiana, 134 U.S. 1 (1890). Additionally, even when the state is not the named party,

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a suit against a state official is also prohibited when “the action is in essence one for the

recovery of money from the state.” Ford Motor Co. v. Dept. of Treasury, 323 U.S. 459,

464 (1945) overruled on other grounds by Lapides v. Bd. of Regents of Univ. Sys. of

Ga., 535 U.S. 613 (2002). That is, when “the judgment sought would expend itself on

the public treasury or domain,” it is a suit against the state. Pennhurst State Sch. &

Hosp. v. Halderman, 465 U.S. 89, 101 n. 11 (1984).

There are, however, exceptions. One was established in Ex parte Young: the

Eleventh Amendment does not prohibit federal courts from issuing injunctions ordering

prospective relief against state officials to prevent future constitutional violations. Barton

v. Summers, 293 F.3d 944, 948 (2002) (citing Ex parte Young, 209 U.S. 123, 159-160

(1908)). Even an injunction that would require the state to spend substantial sums of

money may not be barred, so long as the injunction is prospective. See Nelson v. Miller,

170 F.3d 641, 646 (1999). That is not to say, however, that the Eleventh Amendment

will countenance any relief granted by a federal court simply because it is styled as an

injunction. The injunction must be forward looking, but the difference between

injunctions appropriately ordering prospective relief and those improperly awarding

retroactive remedies “will not in many instances be that between night and day.”

Edelman v. Jordan, 415 U.S. 651, 667 (1974). 

In Edelman, the Supreme Court clarified the dividing line between allowable,

prospective relief and retroactive relief barred by the Eleventh Amendment. Plaintiffs in

that case challenged the state’s failure to comply with federal law in administering the

Aid to the Aged, Blind, and Disabled (“AABD”) program. That program was the product

of a state-federal partnership, but the state law implementing the program was in

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conflict with processing deadlines imposed by federal law. The district court declared

the state law invalid and entered an injunction requiring compliance with the federal time

limits. However, one portion of the injunction required state officials to “release and

remit AABD benefits wrongfully withheld to all applicants for AABD” who had applied

while the federal deadlines were in place but were subjected to delays caused by the

state law. Id. at 656. The court of appeals upheld this portion of the injunction because it

was in the form of “equitable restitution” and not monetary damages. Id. at 665. 

The Supreme Court rejected this reasoning. The Court did “not read Ex parte

Young or subsequent holdings of th[e] Court to indicate that any form of relief may be

awarded against a state officer, no matter how closely it may in practice resemble a

money judgment payable out of the state treasury, so long as the relief may be labeled

‘equitable’ in nature. The Court’s opinion in Ex parte Young hewed to no such line.” Id.

at 666. The Eleventh Amendment will tolerate an injunction that “requires payment of

state funds . . . as a necessary consequence of compliance in the future with a

substantive federal-question determination.” Id. at 668 (emphasis added). However,

styling relief as “injunctive” or “equitable” cannot save a remedy that is truly a backwardlooking award of compensatory damages. The Supreme Court made clear that an

award “measured in terms of monetary loss resulting from past breach of a legal duty on

the part of the defendant officials” is barred by the Eleventh Amendment. Id. 

This is the variety of relief these Plaintiffs seek. They request that the court

“[o]rder defendants to return any state or federal tax return or wages garnished or

intercepted” by the state. (Pls.’ Compl. at ¶ E.) Relief styled as such an “order to return”

money is not “prospective.” It compensates Plaintiffs for a past wrong, and the amount

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owed would be “measured in terms of monetary loss resulting from past breach of a

legal duty on the part of defendant officials.” See Edelman, 415 U.S. at 668. This claim

for relief is barred by the Eleventh Amendment.

Also of concern is Plaintiffs’ request that the court order UIA to “[r]eopen the

unemployment case file of any claimant who was accused of and/or robo-adjudicated as

fraud [sic] by the Agency’s automated system and provide each claimant with an

individualized review of their [sic] case before the assessment of punitive fines occurs.” 

In Carten v. Kent State University, 282 F.3d 391, 396 (6th Cir. 2002), the Sixth

Circuit held that a claim for reinstatement as a student in a public graduate school

program from which the student had been expelled is prospective injunctive relief

allowed under Ex parte Young. The Carten court reasoned that “claims for

reinstatement state a violation that continues during the period the plaintiff is excluded

from the benefits to which he is entitled.” Id. This rationale, which this court is bound to

apply, embraces the instant claims to the extent that a Plaintiff asks the court to order

reinstatement of his current and continuing eligibility for unemployment benefits. Relief

cast in this way falls within the Ex parte Young exception to Eleventh Amendment

immunity under Carten. However, to the extent such sought relief would require

Defendants to reopen a case and compensate a Plaintiff for previously unpaid benefits,

this is prohibited retroactive relief barred by the Eleventh Amendment. 

However, Plaintiffs are permitted to proceed with such declaratory and injunctive

requests as are truly prospective. This includes seeking an order that Defendants

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establish and maintain procedures for detecting and acting upon incidents of fraud that

meet Constitutional standards.1

2. Section § 1983 “Persons”. 

The Eleventh Amendment analysis relates closely to Defendants’ argument that

they are not “persons’ under § 1983. In Will v. Michigan Department of State Police, the

Supreme Court recognized that “a state official in his or her official capacity, when sued

for injunctive relief, would be a person under § 1983 ‘because official-capacity actions

for prospective relief are not treated as actions against the State.’” 491 U.S. 58, 71 n. 10

(1989) (citing Kentucky v. Graham, 473 U.S. 159, 167 n. 14 (1985)). Defendants argue

that because some of the relief requested by Plaintiffs is retrospective in nature, Will

does not apply. As the court has determined that Plaintiffs’ claims for retrospective relief

are barred, all that is left in this action are prospective claims for relief. Thus Will is

applicable and Plaintiffs may proceed against Defendants on their prospective claims

for relief. 

3. Burford Abstention

Defendants also urge the court to abstain from hearing this case under Burford v.

Sun Oil Corp., 310 U.S. 315 (1943). The Burford doctrine requires that “[w]here timely

and adequate state-court review is available, a federal court sitting in equity must

1

 Defendants also argue —in passing, it appears, but in any event fruitlessly—

that Plaintiffs’ request for attorney’s fees is barred by the Eleventh Amendment. It is not.

A court may indeed order a state to pay attorney’s fees to a successful civil rights

plaintiff pursuant to 42 U.S.C. § 1988. Hutto v. Finney, 437 U.S. 678 (1978).

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decline to interfere with the proceedings or orders of state administrative agencies: (1)

when there are ‘difficult questions of state law bearing on policy problems of substantial

public import whose importance transcends the result in the case then at bar’; or (2)

where the ‘exercise of federal review of the question in a case and in similar cases

would be disruptive of state efforts to establish a coherent policy with respect to a

matter of substantial public concern.’” New Orleans Pub. Serv., Inc. v. Council of New

Orleans, 491 U.S. 350, 361 (1989) (“NOPSI”) (quoting Colo. River Water Conservation

Dist. v. United States, 424 U.S. 800, 814 (1976)). At core, the Burford doctrine is meant

to prevent federal courts from “resolving issues of state law and policy that are

committed in the first instance to expert administrative resolution.” Adrian Energy Assoc.

v. Michigan Pub. Serv. Comm’n, 481 F.3d 414, 423 (2007). 

The Burford doctrine is not apt here. Resolution of this case would not require the

court to adjudicate “difficult questions of state law,” or balance complex local concerns.

Unlike a claim that a state has misapplied its own regulatory scheme by failing to

consider some relevant state-law factor, the claim presented in this case involve federal

Constitutional law. 

Defendants’ Burford argument essentially amounts to a complaint that resolving

this case in Plaintiffs’ favor would invalidate portions of a state regulatory system. That

possibility does indeed exist. “[T]here is, of course, no doctrine requiring abstention

merely because resolution of a federal question may result in the overturning of a state

policy.” Zoblocki v. Redhail, 434 U.S. 374, 379 n. 5 (1978). Additionally, “[w]hile Burford

is concerned with protecting complex state administrative processes from undue federal

interference, it does not require abstention whenever there exists such a process, or

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even when there is a ‘potential for conflict’ with state regulatory law or policy.” NOPSI,

491 U.S. at 362 (quoting Colo. River Water Conservation Dist., 424 U.S. at 815-816).

This action posits that there exist state functions established or managed in a way

inconsistent with federal constitutional standards; it will not in any way require the court

to jigger with the inner workings of a permissible state scheme. The court must reject

the Burford abstention argument. 

4. Standing

The last of Defendants’ jurisdictional arguments is that Plaintiffs lack standing.

The Constitution limits the scope of federal courts’ judicial power to “cases” and

“controversies.” U.S. Const. art. III, § 2. The doctrine of standing serves to sift the cases

and separate those that are properly within the scope of the judicial power from those

that are not. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Standing requires

injury in fact, causation fairly traceable to the defendants’ conduct, and redressability.

Id. at 560-61. When the plaintiff is the object of the challenged action “there is ordinarily

little question that the action or inaction has caused him injury, and that a judgment

preventing or requiring the action will redress it.” Id. at 561-62. 

In this case there are a seven individual Plaintiffs, the UAW union, and the Sugar

Law entity, all of whom allege standing to challenge UIA’s system for detecting

fraudulent unemployment-benefits claims. In cases challenging a government practice

or policy on its face, the presence of one party with standing is sufficient. Bowsher v.

Synar, 478 U.S. 714, 721 (1986); ACLU of Ky. v. Grayson County, Ky., 591 F.3d 837,

843 (6th Cir. 2010). Plaintiffs’ claims that do not seek retroactive relief are best

understood as facial challenges. Plaintiffs ask, in effect, for the court to declare the

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fraud questionnaire procedure unconstitutional, declare that the amount of process

provided before the imposition of fines is constitutionally deficient, and strike the portion

of Mich. Comp. Laws § 421.54 that provides for the “quintuple” fraud penalty as an

excessive fine. To be entitled to this type of injunctive relief, Plaintiffs would need to

prevail on a facial challenge to the UIA’s practices. See United States v. Salerno, 481

U.S. 739, 745 (noting that a showing that a statute may operate unconstitutionally under

some circumstances is insufficient to render it wholly invalid); Warshak v. U.S., 532 F.3d

521, 531 (6th Cir. 2008) (“[I]njunctive relief should be no more burdensome to the

defendant than necessary to provide complete relief to the plaintiffs.”). In light of the

court’s Eleventh Amendment analysis, and in a facial challenge environment, the court

concludes that at least some of the individual Plaintiffs, UAW, and Sugar Law have

standing to bring this action. In the interest of judicial economy, the court will not provide

an exhaustive standing analysis for each individual plaintiff.

The court is satisfied that at least Plaintiff Zynda has standing to bring this suit;

the analysis as to individual Plaintiffs, or any Plaintiff for that matter, need go no further.

Plaintiff Zynda applied for and began receiving benefits in late 2012. Due to a

discrepancy in the way she and her employer described her separation, she was

accused of fraud. Plaintiff Zynda appealed the fraud charge to an ALJ and won a

favorable outcome. However, in March, 2015, UIA sent her another fraud questionnaire

and has begun again the fraud determination process. As of the start of this litigation,

Plaintiff Zynda was still wading through UIA’s fraud determination process. (Dkt. # 13,

Pg. ID 162-63.)

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While Defendants are correct to note that “past exposure to illegal conduct does

not in itself show a present case or controversy regarding injunctive relief . . . if

unaccompanied by an continuing, present adverse effects,” City of Los Angeles v.

Lyons, 461 U.S. 95, 102 (1983), Plaintiff Zynda is presently feeling the impact of

Defendants’ allegedly deficient process for making fraud determinations. Plaintiffs allege

that UIA provides insufficient notice to claimants about why their eligibility is being

questioned and why they are being accused of fraud. This, in turn, makes it difficult or

impossible for those accused of fraud to prepare to respond to the allegations and

deprives them of a right to a fair hearing and due process. It is beyond dispute that

injuries to constitutional rights, such as the right to due process, are sufficient to confer

standing. E.g., Wright v. O’Day, 706 F.3d 769, 771-72 (6th Cir. 2013). Additionally, a

litigant can suffer an injury-in-fact from the denial of due process regardless of the effect

that more process would have on the outcome of the particular determination at issue.

Id. at 772 (citing Goldberg v. Kelly, 397 U.S. 254, 256 n. 2 (1970)). That Plaintiff Zynda

has not yet had an adverse decision rendered against her does not lessen the alleged

denial of due process under which she is currently laboring. 

UAW also has standing to bring this action. An organization may have standing

to sue in a representative capacity when its members have suffered an injury sufficient

to satisfy Article III. E.g., UAW v. Brock, 477 U.S. 274, 281 (1986). The Supreme Court

has articulated a three-part test to determine whether an organization may sue on

behalf of its members:

[A]n association has standing to bring suit on behalf of its members when:

(a) its members would otherwise have standing to sue in their own right;

(b) the interest it seeks to protect is germane to the organization’s

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purpose; and (c) neither the claim asserted nor the relief requested

requires the participation of individual members in the lawsuit. 

Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343 (1977). Defendants

challenge UAW’s ability to meet the first and third prongs of this test.

As to the first prong, the UAW alleges that “individual UAW members have been

accused of fraud under the agency’s system and other members face the prospect of

future accusation, adjudication or garnishments . . . .” (Dkt. # 13, Pg. ID 164.) At the

motion to dismiss stage, the court “presumes that general allegations embrace those

specific facts that are necessary to support the claim.” Lujan v. National Wildlife

Federation, 497 U.S. 871, 889 (1990). Defendants argue that “[t]he Complaint fails to

assert that any of the Plaintiffs are UAW members and that any such member suffered

an invasion of their legally protected interest.” (Defs.’ Mot. 23.) This argument

misunderstands what is required at the pleading stage. UAW need not ensure that one

of the individual Plaintiffs is also one if its injured members, nor at this early stage of the

litigation does UAW need to identify a specific member who has been injured. See U.S.

Student Ass’n Found. v. Land, 585 F. Supp. 2d 925, 934 (E.D. Mich. 2008) (citing

Kardules v. City of Columbus, 95 F. 3d 1335, 1346 (6th Cir. 1996)). UAW has met its

burden by pleading the existence of injured members. If Plaintiffs allegations are taken

as true, as they must be, there are unemployed persons in Michigan who are currently

suffering the present, continuing effects of being cut off from unemployment benefits

due to fraud determinations for which they did not receive the constitutional minimum of

process due them. At this stage, UAW is not required to find and produce members who

fall within this class; it is enough that UAW alleges their existence. 

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And lastly, the court agrees that Sugar Law has standing to bring this action, as

well. Unlike UAW, Sugar Law alleges an injury to the organization itself and is not

attempting to sue in a representational capacity. While organizations cannot establish

standing based on an abstract harm to their ideological interests, the injury arising from

the expenditure and diversion of resources “constitutes far more than simply a setback

to the organization’s abstract social interests.” Havens Realty Corp. v. Coleman, 455

U.S. 363, 379 (1982). “The Supreme Court and this Circuit have found that a drain on

an organization’s resources . . . constitutes a concrete and demonstrable injury for

standing purposes.” Miami Valley Fair Hous. Ctr., Inc. v. Connor Grp., 725 F.3d 571,

576 (6th Cir. 2013). This is an injury to the organization itself, and does not implicate

“associational standing,” which is derived from an injury felt by the organization’s

members. See MX Grp., Inc. v. City of Covington, 293 F.3d 326, 332-33 (6th Cir. 2002).

Here, Sugar Law asserts standing on its own behalf. 

The facts in the Complaint and in affidavits attached to Plaintiffs’ Response

regarding Sugar Law’s receipt of case referrals are essential to understanding its theory

of standing. The court is entitled to consider such material when a defendant attacks the

factual basis for the court’s jurisdiction. See Adkisson v. Jacobs Eng’g Grp., Inc., 790

F.3d 641, 647 (6th Cir. 2015). The court rejects Defendants’ argument that the court

should exclude the exhibits Plaintiffs attached to their response, as those exhibits

address the factual basis for Plaintiffs’ standing. 

Defendants attack that factual basis by arguing that “any alleged causation

between denial of benefits to specific claimants and Sugar Law’s ‘administrative burden’

is tenuous, at best.” (Defs.’ Mot. 22.) Sugar Law’s explanation of how and why it

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receives cases, if proven, establishes a sufficient causal link between the fraud

determinations at issue and Sugar Law’s increased work. 

Sugar Law is a legal-aid organization that provides services to low wage and

unemployed workers and regularly handles unemployment appeals. (Compl. at ¶¶ 55-

56.) Another organization, the State of Michigan’s Advocacy Program, is generally the

first stop for claimants and employers who are looking for help at unemployment

hearings. (Aff. of Tony Paris ¶¶ 6, 9, Dkt. # 17-8, Pg. ID 299-300.) The Advocacy

Program refers claimants to other legal-service providers, like Sugar Law, when a

claimant does not qualify for their assistance due to the types of issues involved in his

appeal. (Id. at ¶ 9.) And, as noted earlier, the State’s Advocacy Program declines to

assist clients who are accused of fraud. (Id. at ¶ 10.) As a result, many of the individuals

affected by the alleged erroneous fraud determinations are disqualified from receiving

the Advocacy Program’s assistance and are, in turn, referred to Sugar Law for

assistance. (Id. at ¶¶ 10, 11.)

Before the implementation of the computerized fraud detection system, Sugar

Law “received very few calls involving fraud appeals from the State of Michigan’s

Program or otherwise.” (Id. at ¶ 15.) Since implementation in 2013, Sugar Law has

received hundreds of calls from claimants involving fraud issues. (Id. at ¶ 17.) Sugar

Law attorney Tony Paris, the only attorney handling unemployment cases, avers that

before 2013, he spent less than twenty-five percent of his time fielding questions about

unemployment insurance benefits. (Id. at ¶ 20.) Since 2013, he has spent the majority

of his time dealing only with fraud charges and helping claimants appeal such

allegations. (Id.) Additionally, Sugar Law represents that it has had to hire a contract

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attorney to help process clients, has installed a new phone messaging system to keep

up with referral calls, and devotes legal interns’ time to these cases. (Id. at ¶ 21.) 

It is, allegedly, not only the number of fraud determinations that creates a burden

on Sugar Law, but also the way UIA’s system notifies claimants of fraud allegations.

Because the fraud notifications do not include a particularized statement of the basis for

the fraud allegation, Sugar Law must spend additional time during intake attempting to

determine what might be the problem with any particular claimant’s application. (Id. at ¶

23.) Not only does this make claim processing more costly, it also, allegedly, lengthens

the administrative hearing process. (Id.) On top of this, Sugar Law maintains that

claimants often receive notice of a hearing only a week or two prior to the hearing date,

requiring the organization to expedite consideration of a claimant’s case. (Id. at 24.)

The court is satisfied that Sugar Law has carried its burden at this stage of the

litigation. “At the pleading stage, general factual allegations of injury resulting from the

defendant’s conduct may suffice, for on a motion to dismiss we presume that general

factual allegations embrace those specific facts necessary to support the claim.” Sierra

Club v. EPA, 781 F.3d 299, 305 (6th Cir. 2015). Plaintiffs have pleaded more than just

general facts. They have offered specific facts that, if proved true, show that the high

error rate in fraud determinations has lead Sugar Law to divert significant resources to

these types of claims. It is also apparent that if the fraud detection system is determined

to deprive claimants of due process, either by providing insufficient notice or because of

the risk of error and failure to implement procedural safeguards, corrective changes

would lessen Sugar Law’s burden. Better notice provisions would streamline Sugar

Law’s intake and review process, and more accurate initial fraud determinations would

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lessen the number of cases referred to the organization. Thus, the causation and

redressability prongs of the standing analysis are met as well.

In cases where the relief requested is in the form of prospective injunctive relief,

the plaintiff must also show that there is an ongoing harm or real and immediate threat

of repeated injury. Los Angeles v. Lyons, 461 U.S. 95, 102 (1983). Here, without a

change to the fraud detection system, Sugar Law will continue to devote significant

resources to attempting to address claims that are a result of Defendants’ conduct.

Thus, Sugar Law has standing to request declaratory and injunctive relief.

B. Merits Arguments 

1. The Fifth Amendment Right Against Self-Incrimination

Defendants argue that Plaintiffs’ self-incrimination claims fail because mandatory

state reporting requirements do not violate the Fifth Amendment. Further, they argue

that even if such reporting requirements do implicate the Fifth Amendment, the

Michigan Employment Security Act, Mich. Comp. Laws § 421.9, contains an immunity

provision such that Plaintiffs can be compelled to produce testimonial evidence without

fear of criminal prosecution, thus nullifying any Fifth Amendment concerns. Plaintiffs, in

turn, argue that the fraud questionnaires do not impose run-of-the-mill reporting

requirements, but instead are questions targeted at a group suspected of criminal

activity and threaten grave consequences for failure to incriminate oneself. As to

immunity, Plaintiffs contend that the terms of the immunity statute do not protect

claimants when answering fraud questionnaires, and that the penalties levied as a result

of these fraud determinations are themselves criminal penalties implicating the Fifth

Amendment.

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There is no question that any organized society must impose burdens on its

members from time to time. California v. Byers, 402 U.S. 424, 427 (1971).

Pharmaceutical manufacturers are required to disclose information about the content

and use of the medications they produce, people who deal in securities must make

certain reports to oversight agencies, and nearly all of us must file a tax return, under

oath, each year revealing many aspects of our private behavior. Each of these duties

requires self-reporting that carries with it some chance of criminal liability arising from

the information disclosed. Accordingly, on numerous occasions, the Supreme Court has

decided whether a self-reporting requirement carries too high a risk of self-incrimination.

Statutes requiring registration of sawed-off shotguns or other illegal weapons, Haynes v.

United States, 390 U.S. 85 (1968), the reporting of gambling proceeds for taxation,

Gross v. United States, 390 U.S. 62 (1968), and registration of membership in the

Communist Party, Albertson v. Subversive Activities Control Bd., 382 U.S. 70 (1965),

have all been found to violate the Fifth Amendment privilege. Other reporting statutes

have been found constitutional, such as those requiring a driver to stop and identify

himself after an accident. California v. Byers, 402 U.S. 424 (1971). 

From these cases and others, it is clear that the Fifth Amendment Privilege is not

violated by all self-reporting requirements, especially those that are essential to the

execution of an important regulatory scheme. The Supreme Court and other federal

courts have established a number of guideposts for courts in determining whether a

self-reporting requirement offends the privilege against self-incrimination. Byers, 402

U.S. at 428-431; U.S. v. Alkhafaji, 754 F.2d 641, 643-46 (6th Cir. 1985). This Circuit has

emphasized three factors: (1) whether the required disclosure was directed at the public

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at large, as opposed to being extracted from a “highly selective group inherently suspect

of criminal activity”; (2) whether the claim of constitutional protection was “asserted in an

essentially non-criminal and regulatory area of inquiry,” or in an area “permeated with

criminal statutes, where response to any of the form’s questions in context might involve

the petitioners in the admission of a crucial element of the crime”; and (3) whether

“compliance with the requirement would create a substantial likelihood of prosecution.”

Alkhafaji, 754 F.2d at 643 (quoting Albertson, 382 U.S. at 79). Addressing these points

of analysis in turn, the court finds that Plaintiffs’ Complaint states a Fifth Amendment

claim. 

The reporting requirement at issue is imposed on a “highly selective group

inherently suspect of criminal activity.” First one must understand exactly which “group”

is subject to the requirement. Defendants would argue that it is unemployment-benefit

recipients in general that are subject to the disclosure requirement, and because being

unemployed and receiving state and federal funds is not criminal, those receiving the

questionnaire are not part of a highly selective group or inherently suspect of criminal

activity. This argument would hold water if the reporting requirement at issue were the

initial eligibility questions contained in the unemployment-benefit application materials

dealt with by all potential recipients. But that is not the case. The fraud questionnaire is

sent only to a subset of the whole, those who are already suspected of perpetrating

fraud. 

Byers is instructive here. 402 U.S. at 431. In that case the Supreme Court

scrutinized a statute requiring drivers involved in car accidents to stop and identify

themselves, thereby preventing “hit and runs.” The Court noted that even when

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considering the subset of drivers who have been involved in accidents, this is not a

“highly selective group” that are “inherently suspect or criminal activities.” It is not a

criminal offense to be involved in a car accident; the other driver may be at fault, or the

accident may occur exogenously, with neither driver at fault. Most accidents occur

without any criminal liability arising even when one person is at fault; they are merely

negligent as a matter of tort law. Id. That is not the case with respect to the fraud

questionnaire. The single factor distinguishing those who are subject to the selfreporting requirement from those who are not is that the former are suspected of

committing fraud. This is apparent because, as Plaintiffs allege, a fraud determination

issues whenever a claimant fails to respond to the questionnaire. The first of the two

questions on the form also betrays the State’s suspicion because it seems to assume

that, at the very least, the claimant made a misrepresentation. (Dkt. #13, Pg. ID 167

(“Did you intentionally provide false information to obtain benefits you were not entitled

to receive?”).) While the question is susceptible to interpretation, and although it does

not quite reach the obviousness of “when-did-you-stop-beating-your-wife?”, it does

appear that the only issue the question seeks to resolve is whether there was an

intentional misrepresentation. Indeed, the form does not offer the claimant a box to

check indicating that he did not make an intentional misrepresentation; instead he may

only note such an explanation in the “other” section of the form. (Id.) The same would

be true if he wanted to indicate that there was accidental provision of false information;

or to explain the provision of false information not intended to obtain benefits to which

he was not entitled; or the provision of information that he only later understood to be

false.

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The second factor asks the court to consider whether the claim of constitutional

protection is asserted in an essentially non-criminal and regulatory area of inquiry, or in

an area permeated with criminal statutes in which responding in context might require a

person to admit a crucial element of a crime. 

This factor does not favor Plaintiffs. The unemployment insurance system is

“essentially non-criminal and regulatory,” as its purpose is to help individuals who have

fallen on hard times, not catch them in criminal conduct. Although the statute does

incorporate criminal liability when the system is abused, it is not “permeated” with

criminal statutes. The court cannot say, nonetheless, that the questionnaire could not

“involve [a claimant] in the admission of a crucial element of the crime.” Alkhafaji, 754

F.2d at 643. The statute specifies hefty civil and criminal fines for those that defraud or

fail to comply with the unemployment system. Mich. Comp. Laws § 421.54 (“Section

54”). Michigan cases hold that “Section 54 of the Employment Security Act is directed at

[1] the making of a false statement [2] with an intent to defraud to obtain or increase a

benefit.” People v. Robinson, 296 N.W.2d 99 (Mich. Ct. App. 1980). If a person who was

in fact guilty of the crime answered the questionnaire honestly, it would amount to an

admission to each element of the crime. This places the claimant in the midst of a

trilemma offering one choice from among perjured denial, truthful self-incrimination, or

silence resulting in the loss of important financial benefits. Thus, while the

unemployment system is essentially regulatory and not criminal, the nature of the

questions at issue focus on the criminal elements of the unemployment scheme,

heightening the risk of a Fifth Amendment concern. 

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The final consideration is whether compliance with the disclosure requirement

would create a substantial risk of prosecution. This factor favors Plaintiffs. Section 54

lays out the criminal liability that attaches to fraudulent unemployment-benefit claims.

Mich. Comp. Laws § 421.54 (allowing for imprisonment for up to two years). While the

parties have made no representations to the court concerning the criminal prosecution

rates in this area of the law (other than to point out that no Plaintiff has been

prosecuted), the authorization of prosecution in the statute indicates a “risk” of

prosecution. 

As noted in their brief, Defendants appear to prefer the four part test articulated

in State ex rel. Osburn v. Cole, 173 W.Va. 596, 602 (1983). First, this court looks to

decisions of the Sixth Circuit and defers to its guidance, not that of the West Virginia

Supreme Court. Second, the Sixth Circuit test and the West Virginia test are

substantially similar, except that the West Virginia test considers whether the

“information sought by the government was neutral, [or] was directed at specific criminal

activity.” Id. at 600. Were the court to consider this factor, the court would find that it

weighs against Defendants. The request in the questionnaire is not neutral, but

decidedly accusatory: “Did you intentionally provide false information to obtain benefits

you were not entitled to receive?” A neutral question concerning a discrepancy in the

claimants application might ask “Who is your employer?” The question at issue

assumes that a misrepresentation has been made, and asks only whether the

misrepresentation was intentional. Additionally, the information sought is not neutral, it

is tailored to the elements of the crimes laid out in Section 54. The two questions

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amount to directly asking the claimant whether he is guilty of a crime. Viewed in the light

most favorable to the Plaintiffs, the tenor of the questionnaire is accusatory, not neutral. 

Thus the court finds that, based on Plaintiff’s allegations, the questionnaires used

by the UIA to determine whether claimants have committed fraud do not comport with

the Fifth Amendment under Byers and its progeny. This, however, does not end the

analysis.

A grant of immunity that is coextensive with the scope of the privilege against

self-incrimination is sufficient to compel testimony over the a claim of the privilege.

Kastigar v. United States, 406 U.S. 441, 453 (1972). This is so because the Fifth

Amendment privilege attaches only when the witness reasonably believes a disclosure

could be used in a criminal prosecution. Id. at 444. If a witness is immunized, a fear of

prosecution is not reasonable. Defendants argue that such an immunity statute exists in

this case. (Defs.’ Mot. at 32.) The statute provides:

No person shall be excused from testifying or from producing books,

records or papers in any investigation, or upon any hearing, when ordered

to do so by the commission, or its duly authorized agents, upon the

ground that the testimony or evidence, documentary or otherwise, may

tend to incriminate him or subject him to criminal penalty; but no person

shall be prosecuted or subjected to any criminal penalty for, or on account

of, any transaction made or thing concerning which he is compelled, upon

the claiming of his privilege to testify. 

Mich. Comp. Laws § 421.9. 

Witnesses who fall within this statute receive transactional immunity for conduct

to which they testify. Plaintiffs, however, argue that Mich. Comp. Laws § 421.9 applies

only when a claimant is “ordered” to testify by the UIA, and that the questionnaires are

not an order within the meaning of the statute. 

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Plaintiffs argument is supported by Michigan case law. Though there appear to

be no Michigan cases interpreting § 421.9, the language of this statute is repeated

verbatim in other immunity statutes that Michigan courts have interpreted. In People v.

Parsons, 371 N.W.2d 440 (Mich. Ct. App. 1985), the Michigan Court of Appeals

considered Mich. Comp. Laws § 205.3(a), which grants immunity to witnesses in tax

evasion cases who testify “when ordered to do so by the commissioner”; this is the

same language found in the immunity statute at issue. That court was thus tasked with

interpreting the word “ordered.” The court noted that the statute authorized the

commissioner to issue subpoenas, and that this was the only “order” the commissioner

was authorized to give. Parsons, 371 N.W.2d at 443. The court concluded, “but as the

statute does not mention other situations in which the commissioner may order a person

to testify, we have no grounds for extending the transactional immunity provisions to

such situations.” Section 421.9 is the same. The statute states, “[a]ny member of the

commission or its duly authorized agents may issue a subpoena . . . .” Mich. Comp.

Laws. § 421.9. The statute mentions no other methods by which the commissioner or

his agents may order a witness to come before the commission. Thus, the court agrees

that the word “order” in the following sentences of the statute refer to the commissioners

power to issue subpoenas. Because the fraud questionnaires are not subpeonas they

do not constitute an “order” within the meaning of § 421.9. The immunity statute,

therefore, does not resolve the Fifth Amendment concerns raised by the fraud

questionnaire, and the court will not dismiss this claim.2

 

2

 Because the court is satisfied that the immunity statute does not apply to

claimants when responding to fraud questionnaires, the court need not address the

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B. Excessive Fines Under the Eighth Amendment

Defendants also ask the court to dismiss Plaintiffs’ claim that the “quintuple fraud

penalty is a grossly disproportionate excessive fine both on its face and as applied to

the individual plaintiffs.” At the outset, because the court has already determined that

Plaintiffs’ individual retroactive claims for relief are barred by the Eleventh Amendment,

all that is left is the request for prospective injunctive relief concerning reformation of the

UIA’s fraud determination system. With respect to the Eighth Amendment claim,

Plaintiffs ask the court to strike the portion of Mich. Comp. Laws § 421.54 that provides

for the quintuple fraud penalty. This form of relief would require Plaintiffs to prevail on a

facial challenge to the UIA’s practices. See United States v. Salerno, 481 U.S. 739, 745

(noting that a showing that a statute may operate unconstitutionally under some

circumstances is insufficient to render it wholly invalid); Warshak v. U.S., 532 532 F.3d

521, 531 (6th Cir. 2008) (“injunctive relief should be no more burdensome to the

defendant than necessary to provide complete relief to the plaintiffs”). Were Plaintiffs to

prevail on their as-applied challenges, the relief arising from those individual claims

would be relief “measured in terms of monetary loss resulting from past breach of a

legal duty on the part of defendant officials,” the exact type of relief barred by the

Eleventh Amendment. See Edelman v. Jordan, 415 U.S. 651, 668 (1974); see also

supra Part III.A.1 (Eleventh Amendment analysis). Therefore in light of the court’s

Eleventh Amendment analysis, Plaintiff’s Eighth Amendment claim will be construed as

a facial challenge.

related question concerning whether the monetary penalties imposed by the UIA are in

fact criminal penalties. 

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In United States v. Bajakajian, 524 U.S. 321 (1998), the Supreme Court

established the standard for evaluating claims under the Excessive Fines Clause. “[A]

punitive forfeiture violates the Excessive Fines Clause if it is grossly disproportional to

the gravity of a defendant’s offense.” Id. at 334. The Sixth Circuit has held that “the

amount of the fine must bear some relationship to the gravity of the offense that it is

designed to punish.” United States v. Madison, 226 F. App’x 535, 548 (6th Cir. 2011).

“Relevant factors to consider include the nature of the offense and its relation to other

criminal activity, the potential fine under the advisory Guidelines range, the maximum

sentence and fine that could be imposed, and the harm cause by the defendant’s

conduct.” United States v. Parenteau, 805 F. Supp. 2d 438 (6th Cir. 2011). The second

and third factors are irrelevant in this case because Plaintiffs challenge the statute on its

face and Defendants concede that there is no discretion as to the penalty amount.

(Defs.’ Mot. 38.) If any penalty is to be accessed it must be in the amount illegally

obtained in addition to four times that amount. (Id. at 38 (citing Mich. Comp. Laws §

421.54(b)(ii).)

Considering the nature of the offense and the harm caused, the fraud penalty is

not excessive. In Bajakajian, the Supreme Court held that forfeiture of $357,144 was

excessive in part because the underlying offense was Bajakajian’s mere failure to report

that he was transporting more than $10,000 outside of the country. United States v.

Bajakajian, 524 U.S. 321, 337-38 (1998). The $357,144 he was transporting was legally

obtained, was to be used for a legal purpose, and had he simply reported the money he

would have been able lawfully to remove it from the United States. The court noted that

the only harm to the government was informational, in that it did not know the money

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was leaving the country. Incidents of unemployment benefit fraud are not of the same

nature. Fraudulent claims against the public fisk do more harm than technical,

informational violations of law. There is of course the monetary harm to the limited pool

of funds available to be paid out to claimants, but there is also the more general harm to

the administration and integrity of the program. Additionally, the State has a strong

interest in preventing fraud as a general matter, thus the measure of deterrence that is

provided helps to justify the penalty. And lastly, an appreciable portion of the fine is

remedial in nature, reimbursing the State for the amount lost and the administrative

costs associated with recovering the money. 

Further, other courts in this district have approved of penalties in fraud cases

where the ratio of the actual damages to the penalty was much higher than 1:5 (which

assumes one can fairly characterize dollar-for-dollar reimbursement of ill-gotten money

as a “penalty”), or 1:4 under § 421.54. In U.S. ex rel Smith v. Gilbert Realty Co., Inc,

840 F. Supp. 71 (E.D. Mich. 1993), the court considered a penalty levied under the

False Claims Act. In that case a landlord of residential apartments made seven false

statements and wrongly endorsed fifty-one rental checks to a local housing authority,

with the amount of actual damages amounting to $1,630. Because the False Claims Act

allows for penalties to be assessed for each misrepresentation, his penalties for the

fifty-eight false claims amounted to $290,000. The district court found this to be

excessive, but approved of a penalty of $35,000, which amounts to an approximate 1:21

ratio of the actual damages to the penalty. There exists a sensible inverse relationship

between the dollar amount of the illicit conduct and the ratio of penalties: the smaller the

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dollar amounts at issue, the more easily can a challenge to high penalty ratios—and a

resulting excessive-fines argument—be defeated. 

Given the impact fraud has on the administration of public programs, and having

in mind the ratio approved of in Smith, a 1:5 penalty ratio does not come anywhere near

a level of constitutional concern. Plaintiffs’ Eighth Amendment claims will be dismissed.

C. The Fourth Amendment Claim 

Defendants’ argue that the Fourth Amendment does not apply to the type of civil

forfeiture at issue here, such that Plaintiffs’ Fourth Amendment claims must be

dismissed. (Defs.’ Mot. 39-41.) The Supreme Court has consistently applied the Fourth

Amendment where the government seizes or seeks forfeiture in satisfaction of a fine or

debt owed to the government. See e.g. U.S. v. James Daniel Good Real Property, 510

U.S. 43, 49 (1993); G.M. Leasing Corp. v. U.S., 429 U.S. 338, 352 n.18 (1977). In tax

cases, where the government is acting to collect revenue, the Court has noted that the

Fifth Amendment due process and the Fourth Amendment reasonableness analyses

both apply and largely overlap. G.M. Leasing, 429 U.S. at 352 n.18 (“These cases, of

course, center upon the Due Process Clause rather than the Fourth Amendment, but

the constitutional analysis is similar and yields a like result.”) Contrary to Defendants’

argument, the fact that the Michigan legislature granted seizure authority is inapposite.

(Defs.’ Mot. 40). The question is whether that grant (and thus the UIA’s action) comply

with the due process and reasonableness standards of the Constitution. Defendants, in

their motion to dismiss, do not challenge the factual, substantive arguments advanced

by Plaintiffs for why UIA’s fraud determination system offends the Fourth and Fifth

Amendments of the Constitution. Because the Fourth Amendment does govern the

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seizure of property in satisfaction of a debt owed to the government, dismissal of these

claims, at this stage of litigation, would not be appropriate.

D. Claims Under The Social Security Act

Defendants assert that Plaintiffs’ claims under the Social Security Act must be

dismissed because the Act does not create a private right of action enforceable in a 

§ 1983 suit. (Defs.’ Mot. 41.) The Supreme Court has held “that it is only violations of

rights, not laws, which give rise to § 1983 actions.” Gonzaga v. Doe, 536 U.S. 273, 283

(2002) (emphasis in original) (citing Blessing, 520 U.S. 329, 340 (1997)). “[I]t is rights,

not the broader or vaguer ‘benefits’ or ‘interests,’ that my be enforced . . . .” Id. at 274

(emphasis in original). Such a right must be “unambiguously conferred.” Id. In Blessing,

the Supreme Court outlined a three factor approach to determining whether a statute

creates a federally protected right that is enforceable against the states: 

First, Congress must have intended that the provision in question benefit

the plaintiff. Second, the plaintiff must demonstrate that the right

assertedly protected by the statute is not so “vague and amorphous” that

its enforcement would strain judicial competence. Third, the statute must

unambiguously impose a binding obligation on the States. In other words,

the provision giving rise to the asserted right must be couched in

mandatory, rather than precatory terms.

520 U.S. at 340-41. 

However, the Supreme Court has already recognized that § 303(a)(1) of the

Social Security Act does create an enforceable right, Cal. Dep’t of Human Res. Dev. v.

Java, 402 U.S. 121 (1971), and this court is no position to reconsider this question of

law. The Court mandates that when “precedent of [the Supreme] Court has direct

application in a case, yet appears to rest on reasons rejected in some other line of

decisions, the [inferior court] should follow the case which directly controls, leaving to

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th[e Supreme] Court the prerogative of overruling its own decisions.” Tenet v. Doe, 544

U.S. 1, 10-11 (2005) (citing Rodriguez de Quijas v. Shearson/American Express, Inc.,

490 U.S. 477, 484 (1989); U.S. v. Hill, 440 F.3d 292, 299 n.3 (2006). This admonition is

directly applicable to the instant case. In Java, the Court entertained an action under §

303(a)(1) brought by a class of claimants and enjoined the enforcement of a state

statute that the Court held violated the “when due” provision of that section. Though

Gonzaga and Blessing came after the Java decision and raise the bar for finding an

enforceable private right, the Supreme Court has not overruled Java. While it does

appear doubtful that, applying the Blessing standard, § 303(a)(1) would be found to

create an enforceable right, this court must “leav[e] to th[e Supreme] Court the

prerogative of overruling its own decisions.” Tenet, 544 U.S. at 11; see also Gann v.

Richardson, 43 F. Supp. 3d 896 (S.D. Ind. 2014) (holding the same concerning §

303(a)(1)). Therefore, the court will not dismiss Plaintiffs § 1983 claims arising under the

“when due” provision of the Social Security Act. 

IV. CONCLUSION

For the foregoing reasons, IT IS ORDERED that Defendant’s Motion to Dismiss

(Dkt. # 10) is GRANTED as to Plaintiffs’ Eighth Amendment claim and DENIED as to all

other claims. 

 s/Robert H. Cleland 

ROBERT H. CLELAND

UNITED STATES DISTRICT JUDGE

Dated: March 29, 2016

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I hereby certify that a copy of the foregoing document was mailed to counsel of record

on this date, March 29, 2016, by electronic and/or ordinary mail.

s/Lisa Wagner 

Case Manager and Deputy Clerk

(313) 234-5522

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