Court Opinion

ID: 9495059
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:53:31.87251+00
Date Added: 2024-06-11T17:56:47.521608
License: Public Domain

EASTERBROOK, Circuit Judge,
concurring.
This case is shot through with procedural issues, some concerning subject-matter jurisdiction. Neither the parties nor the district judge said “boo” about any of them. Following that lead, my colleagues let all pass in silence. Yet jurisdictional questions should not be swept under the rug. What one can say for the parties’ assumption (and the majority’s silence) is that they are following the Supreme Court’s,example, for it has resolved on the merits a series of cases in which one or more of the same problems lurked in the background. See, e.g., King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968); Rosado v. Wyman, 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970); California Department of Human Resources v. Java, 402 U.S. 121, 91 S.Ct. 1347, 28 L.Ed.2d 666 (1971); Fusari v. Steinberg, 419 U.S. 379, 95 S.Ct. 533, 42 L.Ed.2d 521 (1975); Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 97 S.Ct. 1898, 52 L.Ed.2d 513 (1977). In Jenkins v. Bowling, 691 F.2d 1225, 1228 (7th Cir.1982), we wrote that these years of neglect by the Supreme Court made the issues “too well settled to be questioned by us”. But times have changed since 1982. The Justices now devote greater attention to the issues that arise in cooperative programs such as unemployment insurance, and while this appeal was under advisement the Court granted certiorari in a case that poses one of the questions that we deemed “well settled” in 1982 — whether 42 U.S.C. § 1983 allows a court to order a state official to act in a particular way, when the relevant federal statute names cessation of federal funding as the only remedy. See Gonzaga University v. Doe, cert. granted, — U.S. -, 122 S.Ct. 865, 151 L.Ed.2d 738 (2002) (argued April 24, 2002). So it is time to think about a few issues that for too long have been ignored.
Rene Zambrano applied for unemployment insurance in Wisconsin and was turned down on the basis of Wis. Stat. § 108.02(15)(k)(14), known as the Cannery Rule. This law makes it hard for a person engaged in seasonal agricultural employment to obtain unemployment benefits when the season ends; Wisconsin’s legislature likely thought that the employee would find work in another state whose agricultural products mature on a different schedule. Benefits are available only if the worker received $200 in wages from a different Wisconsin employer, in a different calendar quarter. This tests whether the applicant has an enduring connection to the state’s labor force. Zambrano contends that the Cannery Rule violates three laws with superior authority: § 303(a)(1) of the Social Security Act, 42 U.S.C. § 503(a)(1), known as the When Due Clause; 26 U.S.C. § 3304(a)(10), part of the Federal Unemployment Tax Act; and the Equal Protection Clause of the Fourteenth Amendment. My colleagues hold *972that the Cannery Rule is compatible with the Constitution and the two federal statutes. I agree with their substantive analysis and thus explore only the question whether Zambrano’s claims should be here in the first place.
1. No federal law requires any state to have an unemployment-insurance program, or to follow any particular rules if the state chooses to have a program. But the federal government does provide tax breaks for employers and reimbursements for state treasuries if states adopt programs with certain features. Section 303 of the Social Security Act conditions reimbursement of the state’s administrative expenses on certification by the Secretary of Labor that the state’s law meets these conditions. (Employers pay for the benefits; the federal assistance covers overhead.1) The Secretary “shall make no certification for payment to any State unless he finds that the law of such State ... includes provision for ... [s]uch methods of administration ... as are found by the [Secretary] to be reasonably calculated to insure full payment of unemployment compensation when due”. In other words, the national government won’t cover the costs of slapdash implementation. Like other buyers, the Treasury wants to get what it pays for. One would suppose, given the language of the When Due Clause, that the right way to contest a certification is to sue the Secretary of Labor under the Administrative Procedures Act, 5 U.S.C. §§ 701-06, and that the right remedy if the plaintiff prevails is an order revoking the certification, and thus suspending federal funding until the state gets its act in gear. But Zambrano sued a state official, not the Secretary (who as far as I know is unaware that her certification of Wisconsin’s program has been questioned), and seeks benefits rather than an order suspending reimbursement. The one remedy that a court cannot provide is suspension of funding, because the Secretary of Labor, as a non-party, cannot be bound by the judgment.
What the Justices said about this when they briefly considered a related issue in Rosado is: The more remedies, the merrier. Does federal law forbid a specific-performance or back-benefits remedy against the state official? Only by foreclosing a given remedy, Rosado stated, may Congress preclude relief to the beneficiary of a social-welfare program (in Rosado, Aid for Families with Dependent Children). See 397 U.S. at 420-22, 90 S.Ct. 1207. This view is of a piece with J.L Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964); Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970), and other decisions of the time that blithely created private rights of action for damages even if Congress had left enforcement to public officials and named specific remedies.
A lot of water has passed under the bridge since then, and the question is no longer whether the statute precludes a private right of action, but whether the law creates one. See, e.g., Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975); Touche Ross & Co. v. Redington, *973442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979); Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979); Aaron v. SEC, 446 U.S. 680, 100 S.Ct. 1945, 64 L.Ed.2d 611 (1980); Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994). When the defendant is a state official, § 1983 gets part of the way there, see Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980) — but the general language of § 1983 must not be used to sidestep limitations built into another federal statute. See, e.g., Blessing v. Freestone, 520 U.S. 329, 117 S.Ct. 1353, 137 L.Ed.2d 569 (1997); Golden State Transit Corp. v. Los Angeles, 493 U.S. 103, 110 S.Ct. 444, 107 L.Ed.2d 420 (1989). Section 1983 allows courts to enforce personal rights, but a statute may influence behavior without creating “rights.” Conditional funding is an example. It does not create “rules,” let alone “rights,” for a state is free to turn down the money and escape the strings. The When Due Clause does not create rights in favor of workers or impose duties on states to pay particular benefits; it just tells the Secretary of Labor which states’ administrative overhead may be reimbursed.
What is at stake is not just the difference between public and private enforcement, or the difference between loss of subsidy and new substantive eligibility criteria — though these differences may. be substantial. The main question is whether the courts will play by the rules that Congress has laid down. Enforcement through threats of funding cutoff is cumbersome. A Secretary of Labor with only one tool, an unwieldy hammer, may be reluctant to use it. Which may be exactly the point; the states’ advocates in Congress may have succeeded in limiting remedies in order to increase states’ leeway in operating unemployment-insurance systems. Other cooperative programs have a different structure. For example, the Individuals with Disabilities Education Act, another federal program that attaches conditions to grants, has a clause, 20 U.S.C. § 1403(a), requiring states that take the money to consent to suits by private persons. By requiring states to give up their immunity under the eleventh amendment, and by authorizing private suits elsewhere in the idea, Congress differentiated the idea from the unemployment insurance system. See Oak Park Board of Education v. Kelly E., 207 F.3d 931 (7th Cir. 2000). Congress put a lot more cash into •idea grants than into unemployment-overhead grants,2 so it was able to extract larger concessions. Wisconsin may be willing to give up the modest federal subvention to retain the Cannery Rule, though litigation of the kind exemplified by this suit would deny the state that choice. Zambrano wants us to say that it just does, not matter what enforcement mechanisms Congress writes down. I see no reason why courts should strip the legislature of options in this way. Judges hobble legislators when they treat different statutory structures as if all said the same thing. Changing the conditions on which states have agreed to participate in a federal program — by adding private to public enforcement and adding different remedies in the process — also has little to recommend it as an original matter.
The Social Security Act has two provisions like the clause in the idea, see 42 U.S.C. §§ 1320a-2, 1320a-10, but neither applies to the chapter containing the *974When Due Clause. In the absence of such provisions, the eleventh amendment blocks retrospective monetary relief. See Regents of the University of California v. Doe, 519 U.S. 425, 117 S.Ct. 900, 137 L.Ed.2d 55 (1997); Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974); Paschal v. Jackson, 936 F.2d 940 (1991). And although, as Rosado observed, an order requiring a state to abide prospectively by the terms of a grant that it has accepted does not encounter constitutional obstacles, it does create other problems — foremost among them the problem of interpreting a discretionary norm in the absence of the discretion-holder. The When Due Clause forbids a federal grant unless the state has adopted “[s]uch methods of administration ... as are found by the [Secretary] to be reasonably calculated to insure full payment of unemployment compensation when due”. This is a double dose of discretion — first through the vague term “reasonably calculated” and second through naming the person to make that decision.
It is the Secretary of Labor, not a judge, who must determine whether a given state’s apparatus is “reasonably calculated to insure full payment of unemployment compensation when due”. The Secretary has approved Wisconsin’s system, and her decision is entitled to the formidable protection of the Chevron doctrine. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Yet my colleagues do not ask whether the Secretary abused her discretion when concluding that Wisconsin’s plan fit the elastic phrase “reasonably calculated”. Instead they proceed as if these words were addressed to judges and the decision were ours. This is how the parties and the district court proceeded, how we approached the topic in earlier cases involving this language. See, e.g., Pennington v. Didrickson, 22 F.3d 1376 (7th Cir.1994), subsequent decision, Pennington v. Doherty, 138 F.3d 1104 (7th Cir.1998). It would be the normal way to proceed, if the When Due Clause were a rule creating personal rights (as it must be for § 1983 to come into play). See Adams Fruit Co. v. Barrett, 494 U.S. 638, 110 S.Ct. 1384, 108 L.Ed.2d 585 (1990). But here it is unsound, for the When Due Clause creates no personal rights and instead poses a question calling for exercise of the Secretary’s discretion. To proceed otherwise is to warp the statutory scheme.
2. Employers’ costs of underwriting their portion of an unemployment-insurance system normally would be deductible from income as ordinary and necessary business expenses. The Federal Unemployment Tax Act makes unemployment insurance more attractive by extending tax credits for cértain outlays if the state program to which the employer contributes meets federal criteria. One' of these is that only an employee’s fraud or misconduct may reduce “wage credits” or “benefit rights”. 26 U.S.C. § 3304(a)(10). Zam-brano contends that the Cannery Rule “violates” § 3304(a)(10). My colleagues hold that it does not. But I don’t see how it is possible for a state program to “violate” a federal law giving tax credits if such-and-such occurs, and I therefore do not understand how this statute can be enforced (against the state, no less) via § 1983. If Wisconsin’s program does not satisfy § 3304(a)(10), then employers must settle for deductions rather than credits, and the threat of paying more to the national government may induce employers to pressure the state to revise its rules. (What employers would ask the legislature to do depends on whether the additional expense to expand ex-workers’ benefits would exceed the marginal value of tax credits compared with tax deductions.) But § 3304(a)(10) does not impose any legal obligations on states, so there is no rule *975that can be enforced under the approach of Thiboutot. At least one could say, of Zam-brano’s claim under the When Due Clause, that Wisconsin must live up to the promises it made to get federal bucks; but so far as § 3304(a) is concerned Wisconsin made no pledges and received no funds. How then could § 3304(a)(10) invalidate Wisconsin’s Cannery Rule?
Indeed, I do not see why there is a case or controversy between Zambrano and Wisconsin about § 3304(a)(10). What skin is it off his nose whether his former employer gets a credit rather than a deduction? Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984), holds that people lack standing to litigate about strangers’ taxes. The problem is one of redressability: A judicial order increasing a third party’s taxes may or may not lead to the relief the plaintiff seeks. If the court were to declare that employers in Wisconsin are limited to tax deductions, rather than tax credits, this would not lead by any direct path to a change in the Cannery Rule, though it might set off a round of lobbying in the state legislature. Anyway, whatever bone Zambrano may have to pick with his former employer (for taking tax credits) or the Commissioner of Internal Revenue (for allowing those credits), he has not sued either of these entities. He has sued the Secretary of Wisconsin’s Department of Workforce Development. If Zambrano is a bystander to any tax dispute between the employer and the Commissioner, the Secretary is a bystander once removed. See ASARCO Inc. v. Radish, 490 U.S. 605, 615, 109 S.Ct. 2037, 104 L.Ed.2d 696 (1989) (no standing if redressability depends on choices of third parties not before the court); Lujan v. Defenders of Wildlife, 504 U.S. 555, 568-71, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). But cf. Bryant v. Yellen, 447 U.S. 352, 100 S.Ct. 2232, 65 L.Ed.2d 184 (1980).
Having said this, I must acknowledge that yet again the Supreme Court has assumed otherwise. Wimberly v. Missouri Labor Relations Commission, 479 U.S. 511, 512, 107 S.Ct. 821, 93 L.Ed.2d 909 (1987), holds that “26 U.S.C. § 3304(a)(12) does not prohibit a State from disqualifying unemployment compensation claimants who leave their jobs because of pregnancy, when the State imposes the same disqualification on all claimants who leave their jobs for a reason not causally connected to their work or their employer.” The Justices assumed throughout the opinion that § 3304(a) “allows” or “prohibits” certain provisions of state legislation. And as the opinion’s caption reveals, the contestants were a worker and a state agency, rather than an employer and the tax collector. Wimberly does not suggest that there is anything unusual about this lineup, and the opinion does not mention standing or redressability. Thus it is easy to understand why Wisconsin did not protest Zambrano’s invocation of § 3304 and why my colleagues do not advert to the Article III problem— but it is real nonetheless. Jurisdictional questions lurking in the record, but unmentioned by a court, remain open to decision. Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 119 & n. 29, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984); United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37-38 & n. 9, 73 S.Ct. 67, 97 L.Ed. 54 (1952); R.R. Donnelley & Sons Co. v. FTC, 931 F.2d 430, 433 (7th Cir.1991). See also Webster v. Fall, 266 U.S. 507, 511, 45 S.Ct. 148, 69 L.Ed. 411 (1925). I do not think it a breach of duty for an appellate court to emulate the Justices with respect to a jurisdictional issue, especially one that flies beneath the parties’ radar. But it should be noticed next time.
3. Even the equal protection claim comes with a procedural millstone. The *976sole defendant is a state official, in her official capacity. Yet an official-capacity suit is one against the state itself, Kentucky v. Graham, 473 U.S. 159, 167, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985), and § 1983 does not authorize suits against states. See Arizonans for Official English v. Arizona, 520 U.S. 43, 69, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997); Will v. Michigan Department of State Police, 491 U.S. 58, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989). That disposes of Zambrano’s claim for damages representing the benefits he sought. Footnote 10 to Will, 491 U.S. at 71 n. 10, 109 S.Ct. 2304, tells us that states are “persons” for purposes of prospective relief, though it is not clear what prospective relief Zambrano (who represents only himself and not a class) could be entitled to. Yet Wisconsin does not stand on the limited scope of § 1983 and does not assert its immunity under the eleventh amendment. This is not the kind of jurisdictional problem that the court must notice even when the defendant is content to have the plaintiffs claim resolved in a federal tribunal. See Lapides v. University of Georgia, — U.S. -, 122 S.Ct. 1640, 152 L.Ed.2d 806 (2002) (overruling Ford Motor Co. v. Indiana Department of the Treasury, 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389 (1945)); Wisconsin Department of Corrections v. Schacht, 524 U.S. 381, 393, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998) (Kennedy, J., concurring).

. In exceptional circumstances the federal government provides some money for benefits. When a state has very high unemployment and extended benefits are authorized, the federal government pays half. From 1995 through 1997 Wisconsin’s residents received a total of $17,000 under this program. Second, when a state extends its benefit period beyond 26 weeks, the federal Treasury pays some of the costs. Wisconsin has not received a nickel under this program since 1987 (and its last substantial grant came in 1981). Finally, Congress authorizes ad hoc subsidies from time to time. In the main, however, the statement in the text dominates: The federal grant covers only states’ administrative expenses.

. Wisconsin received more than $117 million in idea funds in fiscal year 2001. It received only $56.8 million in unemployment-related funds. In 2001 Wisconsin distributed $791 million in regular unemployment benefits, so the federal reimbursement is less than 7% of total program costs.