UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

JENNIFER ZYNDA, et al.

Plaintiffs,

v

STEVE ARWOOD, in his official 

capacity as Acting Director of the 

Michigan Department of Talent and 

Economic Development, and 

SHARON MOFFETT-MASSEY, in 

her official capacity as Director of 

the Unemployment Insurance 

Agency.

Defendants.

No. 2:15-cv-11449

HON. ROBERT H. CLELAND

DEFENDANTS’ REPLY TO 

PLAINTIFFS’ RESPONSE 

TO SECOND MOTION TO 

DISMISS PURSUANT TO 

FED. R. CIV. P. 12(b)(1)

/

DEFENDANTS’ REPLY TO PLAINTIFFS’ RESPONSE 

TO SECOND MOTION TO DISMISS

PURSUANT TO FED. R. CIV. P. 12(b)(1)

Bill Schuette

Attorney General

Kimberly K. Pendrick (P60348)

Peter T. Kotula (P41629)

Shannon W. Husband (P60352)

Attorneys for Defendants

Labor Division

3030 W. Grand Blvd., Ste. 9-600

Detroit, MI 48202

(313) 456-2200

pendrickk@michigan.gov

Dated: January 7, 2016

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TABLE OF CONTENTS

Index of Authorities...................................................................................ii

I. Zynda’s Amended Complaint involves allegations of 

computerized fraud findings that the Agency voluntarily 

discontinued. ....................................................................................1

II. This case is moot because there is no actual case or 

controversy or injury likely to be redressed. ...................................3

A. There is no requirement that a party admit liability to 

render a matter moot. .............................................................3

B. The UIPL provides assurance to the Court that the 

matter is moot and leaves Zynda with no relief.....................6

Conclusion and Relief Requested..............................................................8

Certificate of service (e-file) ......................................................................9

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ii

INDEX OF AUTHORITIES

Page

Cases

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC) Inc., 

528 U.S. 167 (2000). ...............................................................................5

Knox v. SEIU, Local 1000, 

132 S. Ct. 2277 (2012) ........................................................................5, 6

Sasnett v. Litscher, 

197 F.3d 290 (7th Cir. 1999) ..........................................................3, 4, 6

Walling v. Helmerich & Payne, Inc., 

323 U.S. 37 (1944) ..............................................................................5, 6

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BRIEF IN SUPPORT OF REPLY

I. Zynda’s Amended Complaint involves allegations of 

computerized fraud findings that the Agency voluntarily 

discontinued.

Zynda's Amended Complaint is based upon the Agency’s use of a 

computer system (MiDAS) to detect fraud. The Agency has voluntarily 

discontinued the use of MiDAS to determine fraud and implemented 

review (and determination) by Agency personnel. (Dkt. No. 23-1.) Yet

when confronted with the Agency’s second motion to dismiss, Zynda

now claims that the use of Agency staff to review claims does not suffice

to satisfy the relief requested because Agency staff may use “fraud 

finding decision trees” which they assert is akin to “robo-adjudications.”

(Zynda Response, Dkt. 25, pg. 11-12.) However, Zynda does not allege 

that individualized review would violate due process, and it does not. 

In effect, Zynda attempts to re-work the complaint allegations to 

survive the Agency’s mootness challenge.

Nevertheless, the crux of Zynda’s Amended Complaint, including 

claims of self-incrimination and excessive fines, was that MiDAS made 

restitution/fraud determinations without affording individualized 

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review by Agency personnel. Zynda criticizes the Agency for not 

involving staff in the fraud determination process by alleging:

• Fraud determinations were made “without ever having 

a live person make the determination.” (Dkt. No. 13,

pg. 2 of 31, ¶ 2);

• “The determination is automated and made by a 

computer without the benefit of any investigatory 

review, or human input or evaluation . . . .” (Dkt. No. 

13, pg. 20 of 31, ¶ 80);

• The fraud determinations violate self-incrimination by 

presuming fraud when claimants “do not return the 

computer-generated questionnaire—without a hearing, 

without human review, and without any factual basis 

to support a finding of fraudulent intent.” (Dkt. No. 13, 

pg. 23 of 31, ¶ 97)(emphasis added); and

• Excessive fines are “assessed by the computer system 

against all claimants accused of misrepresentation 

regardless of the facts or circumstances of the case.” 

(Dkt. 13, pg. 23 of 31, ¶100.)

Further, Zynda’s prayer for relief requests individual review of any 

claimant file involving “robo-adjudicated” fraud. (Dkt. No. 13, pg. 28 of 

31, ¶¶ D and E.)

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The Agency’s discontinuance of MiDAS to determine fraud has 

thus rendered Zynda’s allegations moot. Accordingly, the Court should 

dismiss the Amended Complaint.1 

II. This case is moot because there is no actual case or 

controversy or injury likely to be redressed. 

A. There is no requirement that a party admit liability to 

render a matter moot.

Zynda alleges that the Agency must admit that MiDAS violated 

due process in order for the Court to find mootness, citing Sasnett v. 

Litscher, 197 F.3d 290 (7th Cir. 1999) as support. But, Zynda’s reliance 

is misplaced. In Sasnett, prisoners challenged a regulation that they 

were not allowed to wear crosses. Sasnett, 197 F.3d at 291-292. After 

the court ruled that the regulation violated the Religious Freedom 

Restoration Act, the state prison issued a new regulation allowing 

inmates to wear crosses. Id. However, even though the state prison 

voluntarily changed its practice, it continued litigation by asking the 

Supreme Court to review the district court’s decision invalidating the 

 

1 To the extent the Court determines any allegations are not moot based 

upon the discontinuance of MiDAS to make fraud determinations, the 

Agency relies upon its original Motion to Dismiss for dismissal of the 

remaining claims. (Dkt. No. 10.)

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initial regulation. Id. On review, the Court raised concerns that the 

state prison would reinstate the old regulation. Id. The Court looked at 

the state prison’s vigorous defense of the old regulation due to security 

concerns and continued litigation. Id. The Court determined that these 

actions suggest a high likelihood that the state prison would return to 

the old regulation unless the court enjoined the regulation. Id. at 291. 

As a result, the Court concluded that an actual controversy still existed 

despite the change to the regulation. Id. 

Contrary to Zynda’s assertion, the Sasnett court did not hold that 

an admission of liability was required. It merely viewed the state 

prison’s defense of the regulation and continued pursuit of an appeal as 

an indication that the prior regulation was likely to be resumed. Id. 

Unlike Sasnett, the court here has reasonable assurance that the 

Agency will not resume use of MiDAS to make fraud determinations. In 

addition to the Agency’s voluntarily discontinuance of the practice, the 

Department of Labor Unemployment Insurance Program Letter (UIPL) 

instructs all state agencies not to utilize the computer to make fraud 

determinations. (Dkt. No. 22; Ex. 1, Supplemental Authority.) The 

issuance of, and Agency’s compliance with, the UIPL meets the test for 

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assuring that the “allegedly wrongful behavior could not reasonably be 

expected to recur.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. 

(TOC) Inc., 528 U.S. 167, 189 (2000). 

Zynda also cites to Knox v. SEIU, Local 1000, 132 S. Ct. 2277 

(2012) (the union’s continued defense of the legality of political fees gave 

the court concern that the union would attempt to collect these fees in 

the future) and Walling v. Helmerich & Payne, Inc., 323 U.S. 37 (1944)

(challenge to a split-day wage plan where the Court felt the voluntarily 

discontinuance did not moot the issue where the employer was free to 

resume the plan). Both of these cases involve the Court’s assessment of 

the potential resumption of the challenged activity. Knox, 132 S. Ct. at 

2287 and Walling, 323 U.S. at 43. As with Sasnett, the Knox and 

Walling cases are devoid of any assurance to the Court that the conduct 

would not resume. While admissions of liability may be one factor in 

determining whether the challenged activity is likely to resume, it is not 

determinative. 

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B. The UIPL provides assurance to the Court that the 

matter is moot and leaves Zynda with no relief.

Zynda urges this Court to read the Agency’s assertions that the 

October 2015 UIPL is non-binding as an indication the Agency does not 

intend to comply with the directive. This is simply meritless. The 

Agency assertion was in response to Zynda’s erroneous statement that

the UIPL is a “binding interpretation of the relevant federal laws at 

issue in this case.” (Dkt. No. 21; Supplemental Authority, pg. 2.) There 

is nothing in the UIPL that criticizes the Agency for its use of a

computer system to determine fraud. The specific issue before this

Court, if this matter survives summary disposition, is whether the 

Agency violated Zynda’s state and federal constitutional rights—not 

whether the Agency has complied with a subsequently issued UIPL. 

However, even though the UIPL is not binding federal law, the 

Agency has indicated in an affidavit that it will comply with its terms. 

(Dkt. No. 23-1.) As noted by Ms. Burns, should the Agency not comply 

with the UIPL, it would lose federal funding. Id. As a result, Zynda’s 

allegations concerning the use of the MiDAS system have been rendered

moot.

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Further, Zynda claims that despite the voluntary discontinuance 

of MiDAS, there is additional relief the Court could provide. However, 

the relief requested is inappropriate for the following reasons:

• The request for declaratory relief is unavailable under 

the Declaratory Judgment Act. See Motion to Dismiss, 

Dkt. No. 10, Argument VIII, pg. 61-63 of 64.

• Only prospective injunctive relief is recoverable against 

Defendants. See Motion to Dismiss, Dkt. No. 10, 

Argument III, pgs. 36-38 of 64. 

• Zynda’s allegations that they are deterred from seeking 

future benefits is insufficient to establish an injury to 

obtain injunctive relief. See Supplemental Brief, Dkt. 

No. 20, Argument I, pg. 2

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CONCLUSION AND RELIEF REQUESTED

The Agency respectfully request that this Honorable Court enter 

an order dismissing Plaintiffs’ Amended Complaint based on mootness.

Respectfully submitted,

Bill Schuette

Attorney General

/s/ Kimberly K. Pendrick

Kimberly K. Pendrick (P60348)

Peter T. Kotula (P41629)

Shannon W. Husband (P60352)

Assistant Attorneys General

Attorneys for Defendants

Labor Division

3030 W. Grand Blvd., Ste. 9-600

Detroit, Michigan 48202

(313) 465-2200

pendrickk@michigan.gov

Dated: January 7, 2016

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CERTIFICATE OF SERVICE (E-FILE)

I hereby certify that on January 7, 2016, I electronically filed the 

above document(s) with the Clerk of the Court using the ECF System, 

which will provide electronic copies to counsel of record. 

/s/ Kimberly Pendrick

Assistant Attorney General

Attorney for Defendants

Labor Division

3030 W. Grand Blvd., Ste. 9-600

Detroit, MI 48202

(313) 456-2200

pendrickk@michigan.gov

P60348

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