APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 76-1932)
Before Aldisert and Gibbons, Circuit Judges, and Gerry,*fn* District Judge.
This is an appeal from the order of the district court which granted the United States Secretary of Labor's motion for summary judgment and denied the cross-motion of the plaintiff class for summary judgment. This court has subject matter jurisdiction of the claims of the plaintiff class against the Secretary of Labor pursuant to 28 U.S.C. § 1331.*fn1
At issue on this appeal is the validity of a regulation promulgated by the Secretary of Labor ("Secretary") concerning the administrative appeal procedures utilized by state governments in state unemployment compensation programs which receive federal financial assistance. The appellants consist of a class of all persons ("Wilkinson class") who have filed or will file appeals to the Pennsylvania Unemployment Compensation Board of Review ("Board of Review") from referee decisions denying them unemployment compensation benefits and who will wait in excess of 60 days from the initiation of their appeal until a final decision of the Board of Review.*fn2 They challenge a regulation of the Secretary which states that such second level appeals within state unemployment compensation programs must be decided "with the greatest promptness that is administratively feasible." 20 C.F.R. § 650.3(a). The Wilkinson class contends that this regulation condones or fosters undue delays in the processing and decision of second level administrative appeals in state unemployment compensation programs. Plaintiffs raise three basic arguments: (1) that the regulation promulgated by the Secretary is invalid because it lacks a rational basis and because it fails to comport with the purpose of the Social Security Act, 42 U.S.C. § 501-504, insofar as that Act applies to state unemployment compensation programs; (2) that the Secretary is obligated by § 303 of the Act, 42 U.S.C. § 503, to promulgate regulations establishing specific timeliness criteria for the prompt processing of second level unemployment compensation appeals; and (3) that the Secretary's current regulation, and his failure to promulgate a more definite regulation, has deprived the Wilkinson class members of due process rights guaranteed by the fifth amendment. The Secretary argues that this case is moot because there are no longer any delays in the processing of second level appeals in Pennsylvania. Alternatively, the Secretary argues in favor of the validity of his current regulation.
We conclude that this case is not moot. Our review of the Secretary's current regulation convinces us that it is rationally founded and consistent with the purposes of the Social Security Act. Moreover, the regulation is not infirm under the Due Process clause. In our view, neither the Social Security Act nor the Due Process clause requires the Secretary to promulgate the more specific regulations urged upon us by the appellants. We will therefore affirm the order of the district court which granted the Secretary's motion for summary judgment and denied the cross-motion by the Wilkinson class for summary judgment.
A. The Social Security Act ("Act") establishes a federal program designed to assist states in the administration of their unemployment compensation programs. Under the Act, 42 U.S.C. §§ 501-504, states whose programs satisfy certain requirements set forth in the Act qualify for federal funding. These funds are used to pay the costs of administering the state's unemployment compensation program. Id. § 502. The Secretary of Labor is responsible for monitoring funding to the states. No grant may be made to a state for a fiscal year unless the Secretary certifies the amount to be paid. 42 U.S.C. § 502(a). The Secretary may not certify payment of federal funds unless he first determines that the state's program conforms to federal requirements. In particular, § 303(a) of the Act, 42 U.S.C. § 503(a), requires that the state provide certain procedural safeguards for individuals submitting claims for benefits under the state's unemployment compensation program. That section provides in pertinent part:
(a) The Secretary of Labor shall make no certification for payment to any State unless he finds that the law of such State, approved by the Secretary of Labor under the Federal Unemployment Tax Act, includes provision for
(1) Such methods of administration . . . as are found by the Secretary of Labor to be reasonable calculated to insure full payment of unemployment compensation when due; and
(3) Opportunity for a fair hearing, before an impartial tribunal, for all individuals whose claims for unemployment compensation are denied . . . .
42 U.S.C. § 503(a)(1), (3). The Secretary is required to stop certifying payments if he finds that the state in administering its program fails to "comply substantially" with these procedural requirements. 42 U.S.C. § 503(b)(2). No further certification of payments may be made until the Secretary is satisfied that the failure has been corrected. Id. § 503(b).
Pennsylvania, which receives federal funding for its unemployment compensation program pursuant to the Act, provides two levels of administrative review for individuals whose claims for unemployment compensation are denied. Pa.Stat.Ann. tit. 43, §§ 751 et seq. After an initial determination denying benefits is made by the Department of Labor and Industry of the Commonwealth of Pennsylvania ("Department") on the basis of submitted written information, id. § 821, an unsuccessful claimant may appeal this determination to a referee of the Board of Review. At this stage, known as a first level appeal, the claimant is given an "opportunity for a fair hearing," id. § 822, which includes an evidentiary hearing with the rights to be present with counsel, to present evidence, and to cross-examine witnesses. 34 Pa.Code § 101.86. The referee, in a written decision, will then affirm, modify or reverse the Department's fact findings and determination. Pa.Stat.Ann. tit. 43, § 822. Although further administrative review is not required as a prerequisite to federal funding under § 303 of the Act, 42 U.S.C. § 503, Pennsylvania, as is the case with many states, provides for a second level appeal from the referee's decision directly to the Board of Review.*fn3 The Board of Review may affirm, modify or reverse the decision of the referee, either on the basis of the record below or after taking additional evidence. Pa.Stat.Ann. tit. 43, § 824. An aggrieved claimant may then seek judicial review in the Commonwealth Court of Pennsylvania. 42 Pa.Cons.Stat.Ann. §§ 763, 5105(a)(2); 34 Pa.Code §§ 90, 101.111, 101.112. Any determination of the Department, referee, or Board of Review from which an appeal is not taken becomes the final administrative determination. Pa.Stat.Ann. tit. 43, § 829.
The regulation under attack here is one of several dealing with the promptness with which states must complete their administrative review of claims for unemployment compensation benefits to comply with the procedural safeguards required by § 303 of the Act, 42 U.S.C. § 503. 20 C.F.R. §§ 650.1-650.5. These regulations state that the Secretary interprets §§ 303(a)(1) and (a)(3) to require, as a condition of funding, that a state establish provisions mandating the issuance of decisions in administrative appeals affecting benefit rights with the "greatest promptness that is administratively feasible." 20 C.F.R. § 650.1(b).*fn4 The regulations further state that the Secretary's interpretation applies to both first and second level administrative appeals. 20 C.F.R. § 650.1(d). Thus, the regulations require that second appeals be decided with the "greatest promptness that is administratively feasible." With respect to first level appeals, the Secretary has provided specific guidelines concerning state compliance with the Secretary's requirements. Id. § 650.4(b). The regulations do not establish specific percentage criteria for second level appeals.
B. This appeal arises out of two companion suits filed as class actions in the Eastern District of Pennsylvania, each seeking declaratory and injunctive relief against those officials of the Commonwealth of Pennsylvania ("Commonwealth defendants") and the United States Department of Labor (referred to variously as "federal defendants" or "Secretary") who are involved in the administration of Pennsylvania's unemployment compensation program. Hower v. Smith, No. 76-2063 (E.D.Pa., filed July 1, 1976); Wilkinson v. Abrams, No. 76-1932 (E.D.Pa., filed June 30, 1976). Hower challenged the defendants' administration of Pennsylvania's first level unemployment compensation appeals before the referee. Wilkinson, from which this appeal is taken, attacked the defendants' administration of Pennsylvania's second level appeals before the Board of Review. Specifically, these two cases challenged the failure of the Commonwealth defendants to render prompt decisions at both the first and second levels of administrative review and the failure of the Secretary to promulgate regulations which would adequately insure that the Commonwealth defendants promptly processed appeals at both levels. The Hower class complained that the Secretary's current regulations relating to first level appeals were ineffective because they did not require one hundred percent compliance within any particular period of time. The Wilkinson class contended that insofar as the regulations related to second level appeals, they were insufficient because they provided no specific percentage guidelines at all. Both the Hower and Wilkinson classes challenged the actions of the Commonwealth and federal defendants on statutory and constitutional grounds.
The claims against the Commonwealth defendants in both cases have been settled as a result of stipulations of dismissal entered into between the Commonwealth defendants and the Hower and Wilkinson plaintiffs. These stipulations, which were approved by the district court and adopted as court orders on April 25, 1977, provided specific timetables for rendering decisions in first and second level appeals. The stipulations further provided that once these timetables were complied with for six consecutive months, the stipulations would expire. Until such time, the court would retain jurisdiction over the actions between the stipulating parties.
By February, 1978, the Commonwealth defendants had achieved compliance with the terms of the Hower stipulation.*fn5 On August 7, 1978, the district court granted a motion by the Commonwealth defendants, in which the Hower plaintiffs had joined, to recognize the expiration of the Hower stipulation. Because the stipulated schedule for processing second level appeals was found to be unrealistically optimistic, the stipulation in the Wilkinson case was amended in February, 1979 ("Amended Stipulation"). The Amended Stipulation altered the original timetable to require that the Board of Review decide sixty-five percent of all second level appeals within seventy-five days.*fn6 By May 1, 1979, the Commonwealth defendants had been in compliance with the terms of the Amended Stipulation for eight months, and the Wilkinson plaintiffs, together with the Commonwealth defendants, filed a joint motion to recognize the expiration of the Amended Stipulation.*fn7 This motion was granted, and the action insofar as it sought relief against the Commonwealth defendants was dismissed by the district court on July 6, 1979. As a result, only the federal defendants were left in each action.
On the same day, the district court granted pending summary judgment motions filed by the federal defendants in both cases; cross-motions by the Hower and Wilkinson plaintiffs for summary judgment were denied, and the two actions were dismissed. In granting the federal defendants' motions, the district court upheld the validity of the Secretary's existing regulations governing first and second level administrative appeals. This appeal was taken by the Wilkinson plaintiffs from the district court's ruling insofar as it upheld the validity of the Secretary's regulation concerning second level appeals. The Hower plaintiffs, whose claims related to first level appeals, have not appealed from the district court's order. We are thus called upon to review only the Secretary's regulation governing second level appeals.
The Secretary argues that this case is moot because the Amended Stipulation entered into between the Wilkinson class and the Commonwealth defendants has had the consequence of eliminating delays in the processing of second level appeals taken to the Board of Review. Although the Amended Stipulation expired according to its terms, and the case against the Commonwealth defendants was dismissed on July 6, 1979, the Board of Review has since that time voluntarily complied with the time specifications for processing second level appeals set forth in the Amended Stipulation. Despite this commendable behavior by the Board of Review, this appeal from the order terminating the litigation between the Wilkinson class and the Secretary is not moot.*fn8
Mootness doctrine is predicated upon the proper function of the judiciary in deciding cases brought before it. In California v. San Pablo & T. R. R., 149 U.S. 308, 314, 13 S. Ct. 876, 878, 37 L. Ed. 747 (1893), the Supreme Court explained:
The duty of this court, as of every judicial tribunal, is limited to determining rights of persons or of property which are actually controverted in the particular case before it. When, in determining such rights, it becomes necessary to give an opinion upon a question of law, that opinion may have weight as a precedent for future decisions. But the court is not empowered to decide moot questions or abstract propositions, or to declare, for the government of ...