OHIO BUREAU OF EMPLOYMENT
SERVICES et al., Appellants,
v.
Leonard Paul HODORY.
No. 75-1707.
Argued Feb. 28, 1977.
Decided May 31, 1977.
Furloughed employee brought suit for declaratory and injunctive
relief, asserting that an Ohio statute disqualifying a Worker for
unemployment compensation benefits if his unemployment was "due to
a labor dispute other than a lockout at any factory * * * owned or
operated by the employer by which he is or was last employed,"
conflicted with federal law and denied due process and equal
protection. A three-judge panel of the United States District Court
for the Northern District of Ohio, 408 F.Supp. 1016, held the
statute unconstitutional and state- appealed: The Supreme Court,
Mr. Justice Blackmun held. that (1) abstention was not required;
(2) the Ohio, statute was neither in conflict with, nor was it
preempted by the Social Security Act or the Federal Unemployment
Tax Act, and (3) the statute had a rational relation to a
legitimate state interest and was constitutional.
Reversed.
Syllabus *
Appellee, an employee of United States Steel Corporation (USS) at a
plant in Ohio, was furloughed when the plant was shut down because
of a reduction in fuel supply resulting from a nationwide strike of
workers at USS's coal mines. Appellee applied ,to appellant Ohio
Bureau of Employment Services for unemployment benefits but his
claim was disallowed under an Ohio statute that disqualified a
worker from such benefits if his unemployment was "due to a labor
dispute other than a lockout at any factory . . . owned or operated
by the employer by which he is or was last employed." While
appellee's request for reconsideration was pending before the Board
of Review, he filed a class action in Federal District Court
against appellants, the Bureau and its director, for declaratory
and injunctive relief, asserting that the Ohio statute conflicted
with certain provisions of the Social Security Act (SSA) and that,
as applied, it was irrational and had no valid public purpose, in
violation of the Due Process and Equal Protection Clauses of the
fourteenth Amendment. Concluding that abstention was not proper,
the District Court held that the statute, as applied to appellee
and the class members, violated those Clauses. Held:
1. Abstention is not required under either Younger v.
Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669, or
Railroad Comm'n v. Pullman Co., 312 U.S. 496, 61 S.Ct.
643, 85 L.Ed. 971. Pp. 1902-1905.
(a) Where Ohio has concluded to submit the constitutional issue to
this Court for immediate resolution, Younger principles of
equity and comity do not require this Court to refuse Ohio the
immediate adjudication it seeks. Pp. 1903-1904.
(b) Nor is Pullman abstention appropriate, where the
possible benefits of abstention have become too speculative to
justify or require avoidance of the constitutional question. Pp.
1904-1905.
2. The Ohio statute is neither in conflict with, nor is it
preempted by 42 U.S.C. § 503(a) (the provision of the SSA that
precludes the Secretary of Labor from certifying payment of federal
funds to state unemployment compensation programs unless state law
provides for such methods of administration as the Secretary finds
are
"reasonably calculated to insure full payment of unemployment
compensation when due"), or the Federal Unemployment Tax Act
(FUTA). Pp. 1905-1909.
3. The Ohio statute, which has a rational relation to a legitimate
state interest, is constitutional. Pp. 1908-1911.
(a) The statute does not involve any discernible fundamental
interest or affect with particularity any protected class, and the
test of constitutionality, therefore, is whether the statute has a
rational relation to a legitimate state interest. P. 1908.
(b) In considering the constitutionality of the statute, this Court
must view its consequences, not only for the recipient of the
benefits, but also for the contributors to the compensation fund,
and, although the system may provide only "rough justice" and a
rough form of state "neutrality'! in labor disputes, the statute
cannot be said to be irrational, and the need for limitation of the
liability of the compensation fund is a legitimate state interest.
Pp. 1908-1911.
408 F.Supp. 1016, reversed,
Richard A. Szilagyi, Columbus, Ohio, for appellants.
Thomas Patrick Lordeon, Youngstown, Ohio,for appellee.
Mr. Justice BLACKMUN delivered the opinion of the Court.
This case presents a challenge. to Ohio Rev.Code Ann. §
4141.29(1)~:1)(a) (1978). That statute, at the times relevant to
this suit, imposed a disqualification for unemployment benefits
when the claimant's unemployment was "due to a labor dispute other
than a lockout at any factory owned or operated by the employer by
which he is or was last employed." The challenge is based on the
Supremacy Clause and on the Due Process and Equal Protection
Clauses of the Fourteenth Amendment. The case also raises questions
concerning abstention.
In November 1974 plaintiff-appellee, Leonard Paul Hodory, was
employed as a millwright apprentice with 'United States Steel
Corporation (USS) at its works in Youngstown, Ohio. The United Mine
Workers at that time were out on strike at coal mines owned by USS
and by Republic Steel Corporation throughout the country. These
company-owned mines supplied the fuel used in the operation of
manufacturing facilities of USS and Republic. As a result of the
strike, the fuel supply at the Youngstown plant was reduced. The
plant eventually was shut down and appellee was furloughed on
November 12, 1974.
Hodory applied to appellant Ohio Bureau of Employment Services for
unemployment benefits. On January 3, 1975, he was notified by the
Bureau that his claim was disallowed under Ohio Rev.Code Ann. §
4141.29(D)(1)(a) (1973). That statute then provided that a worker
may not receive unemployment benefits if:
"[h]is unemployment was due to a labor dispute other than a lockout
at any factory, establishment, or other premises located in this or
any other state and owned or operated by the employer by which he
is or was last employed; and for so long as his unemployment is due
to such labor dispute."
The written notification to appellee recited: "A labor dispute
started at coal mines owned and operated by U. S. Steel Corporation
and claimant is unemployed because of this labor dispute." App. i.
Other notifications to Hodory for subsequent unemployment weeks
contained similar recitals. Id., at ii and iii. Appellee promptly
filed a request for reconsideration. In accord with the provisions
of Ohio Rev.Code Ann. § 4141.28(G) (1973), his request, along with
a number of others, was referred on March 7 to the Board of
Review.
Meanwhile, on January 27, Hodory filed a complaint in the United
States District Court for the Northern District of Ohio against the
Bureau and its director, 'Albert G. Giles. The complaint was based
on, 42 U.S.C. § 1983 and sought declaratory and injunctive relief
on behalf of appellee and "all others similarly situated" who had
been or in the future would be denied benefits under §
4141.29(D)(1)(a), Record,- Doc. 3, pp. 1 and 3. Hodory asserted,
among other things, that the Ohio statute was in conflict with §§
303(a)(1) and (3) of the Social Security Act of 1935, as amended,
42 U.S.C. §§ 503(a)(1) and (3), and that the statute as applied was
irrational and had no valid public purpose, in violation of the Due
Process and Equal Protection Clauses of the Fourteenth Amendment.3
The gravamen of Hodory's complaint was the assertion that the State
may not deny benefits to those who like him, are unemployed under
circumstances where the unemployment, is "not the fault of the
employee." A three-judge court was requested.
Appellants in their answer asserted, among other things, that
Hodory had failed to exhaust his state administrative
remedies.
A three-judge court was convened. The case was tried on the
pleadings and interrogatories. In its opinion filed March 5, 1976,
408 F.Supp. 1016, that court concluded that abstention was not
required and would not be proper; that the action was properly
maintained as a class action; and that the appellants had failed to
demonstrate a rational and legitimate interest in discriminating
against "individuals who were unemployed through no fault of their
own and neither participated in nor benefited from the labor
dispute involving another union and their employer." Id., at 1022.
The court then held that § 4141.29(D)(l)(a), as applied to Hodory
and the class members, violated the Equal Protection and Due
Process Clauses.
The Bureau and its director took a direct appeal here pursuant to
28 U.S.C. § 1253. In their jurisdictional statement appellants
argued only that (1) the "labor dispute" disqualification provision
is not unconstitutional as applied to appellee and the class; (2)
the disqualification provision is not in conflict with the Social
Security Act; (3) a state system of unemployment compensation may
predicate disqualification upon any reasonable basis, and (4) USS
and Republic, as employers of the class members, were denied
substantive and procedural due process by the failure of the
District Court to order them joined as parties defendant.
Appellants made no claim therein based on abstention. We noted
probable jurisdiction. 429 U.S. 814, 97 S.Ct. 53, 50 L.Ed.2d 73
(1976).
A claim that the District Court should have abstained from deciding
the case has been raised, however, in the brief amicus
curiae filed by the AFL-CIO. A like claim is at least
suggested by Republic Steel. Brief as Amicus Curiae 16-17. We feel
those claims merit consideration.
We follow the proper course for federal courts by considering first
whether abstention is required, then whether there is a statutory
ground of resolution, and finally, only if the challenge persists,
whether the statute violates the Constitution.
II
Abstention
There are, of course, two primary types of federal abstention. The
first, usually referred to as Pullman abstention, involves an
inquiry focused on the possibility that the state courts may
interpret a challenged state statute so as to eliminate or at least
to alter materially, the constitutional question presented.
Railroad Comm'n v. Pullman Co., 312 U.S. 496, 151 S.Ct.
643, 85 L.Ed. 971 (1941). See Bellotti v. Baird, 428 U.S.
132, 96 S.Ct. 2857, 49 L.Ed.2d 844 (1976). The second type is
Younger abstention, in which the court is primarily
concerned, in an equitable setting, with considerations of comity
and federalism, both as they relate to the State's interest in
pursuing an ongoing state proceeding, and as they involve the
ability of the state courts to consider federal constitutional
claims in that context. Younger v. Harris, 401 U.S. 37, 91
S.Ct. 746, 27 L.Ed2d 669 (1971). See Huffman v. Pursue,
Ltd., 420 U.S. 592, 95 S.Ct. 12DO, 43 L.Ed.2d 482 (1975);
Judice v. Vail, 480 U.S. 327, 97 S.Ct. 1211, 51 L.Ed.2d
a76 (1977); Trainor v. Hernandez, 431 U.S. 434, at 448, 97
S.Ct. 1911, at 1920, 52 LEd.2d 486 (concurring opinion).
A. In the present case, appellants, who in effect are the State of
Ohio, argued before the District Court that appellee was
free to pursue his pending administrative appeal and have his
constitutional claim adjudicated in the Court of Common Pleas, and
that principles of comity therefore required abstention. Although
appellants in their written submission to that court cited
Pullman, the argument was clearly to the effect that
Younger abstention should apply.
The District Court held that abstention was unwarranted. It first
asserted that in Gibson v. Berryhill, 411. U.S. 564, 93
S.Ct.1689, 36 L.Ed.2d 489 (1973), this Court "stated specifically
that administrative remedies need not be exhausted where the
federal court plaintiff states a good cause of action under,42
U.S.C. § 1983." 408 F-Supp., at 1019. The court then stated that §
4141.29(D)(1)(a), "on its face, would appear to except the
plaintiff from unemployment benefits for the period he was laid off
due to coal miners' strike," and that "the Employment Bureau has
denied benefits to plaintiff . . . solely on the basis of the
challenged labor dispute disqualification." 408 F.Supp., at 1019.
The court held that exhaustion of administrative remedies would be
futile because the administrative appeal process would not permit a
challenge to the constitutionality of the statute, and the Ohio
courts had held the statute to be constitutional. Id., at 1019, and
n. 1. Although the court observed that Huffman v. Pursue,
Ltd., supra, broadened the Younger doctrine "to
include a prohibition against federal court interference with
certain ongoing civil proceedings in the state Courts." 408
F.Supp., at 1019-1020, the court held that Huffman "was
limited to the enjoining of ongoing state initiated judicial
proceedings," 408 F.Supp., at 1020 (emphasis in original), and did
not apply to a challenge to administrative actions. Finally, the
court held that abstention, along the Pullman line, "would
not be proper in this case" because the challenged statute is not
an ambiguous one "involving unsettled questions of state law which
could be rendered constitutionally inoffensive by a limiting
construction in the state courts." 409 F.Supp., at 1020. The court
concluded that it would be improper to require the appellee "to
undertake three administrative appeals" before he could challenge
the statute in state court "where, moreover, the issue as to the
constitutionality of the labor dispute disqualification has
apparently been settled." Ibid.
In this Court, as has been noted, appellants have not argued that
Younger requires a remand with directions to the District
Court to abstain, and at, oral argument they resisted the
suggestion of such a remand. Tr. of Oral Arg. 9-10. Instead, it is
amicus Republic Steel that has made the suggestion.
Younger v. Harris reflects "a system in which there is
sensitivity to the legitimate interests of both State and National
Governments, and in which the National Government, anxious though
it may be to vindicate and protect federal rights and federal
interests, always endeavors to do so in ways that will not unduly
interfere with the legitimate activities of the States." 401 U.S.,
at 44, 91 S.Ct., at 750. See Huffman v. Pursue, Ltd., 420
U.S., at 604, 95 S.Ct., at 1208; Judice v. Vail 430 US.,
at 834. 97 S-Ct., at 1216-1217; Trainor v. Hernandez, 431
U.S., at 441-443, 445-446, 97 S.Ct., at 1916-1917, 1919-1920, and
id., at 448, 97 S.Ct., at 1920 (concurring opinion).
Younger and these cited cases express equitable principles
of comity and federalism. They are designed to allow the State an
opportunity to "set its own house in order" when the federal issue
is already before a state tribunal.
It may not be argued, however that a federal court is compelled to
abstain in every such situation. If the State voluntarily chooses
to submit to a federal forum, principles of comity do not demand
that the federal court force the case back into the State's own
system. In the present case, Ohio either believes that the District
Court was correct in its analysis of abstention or, faced with the
prospect of lengthy administrative appeals followed by equally
protracted state judicial proceedings, now has concluded to submit
the constitutional issue to this Court for immediate resolution. In
either event, under these circumstances Younger principles of
equity and comity do not require this Court to refuse Ohio the
immediate adjudication it seeks.
B. Amicas AFL-CIO argues that Pullman abstention
is proper here. The basis for the claimed applicability of
Pullman is found in the facts that there were other
steelworkers, at other Ohio facilities, laid off at the same time
as appellee and assertedly for the same reason, and yet they were
awarded unemployment compensation by the Bureau. See Brief for
Appellants 3. Benefits were granted on the ground that the
company-owned coal mines did not supply a sufficient amount of fuel
to the plants there involved to effect a plant shutdown. Amicus
argues that if appellee were to pursue his administrative appeal,
he might be granted benefits on the same ground.
The problems with this approach, however, are several. First,
appellee did not press any such claim before the Bureau or
on administrative appeal, Tr. of Oral-Arg. 9, and there is no
indication that a claimant may be awarded benefits on the basis of
a claim not made to the Bureau or Board of Review. Second, there is
no indication that the plant at which appellee worked is situated
similarly to the plants as to which benefits were granted. The
Bureau apparently applied a test under which the closing of a plant
was held not to be "due to" the labor dispute if the plant received
less than 50% of its coal from the employer's struck mines. Id., at
7-8. There has been no claim or showing that the 50% test is
unreasonable or improper and there has been no claim that
appellee's plant was not dependent on the struck mines for more
than 50% of its coal. What amicus suggests is that the court
abstain on the basis of speculation that the unchallenged facts may
not be as the Bureau obviously saw them, or that the Board might
overturn an unchallenged standard of causation, or that the Board
might even come up with a hitherto unknown and unclaimed reason for
awarding benefits to appellee, such as a theory that because the
coal strike was nationwide it was not "'at the employers' mines."'
See Brief for AFL-CIO as Amicus Curiae 8.
None of these suggestions is based on fact or solid legal
precedent. As has been noted, Pullman abstention is an
equitable doctrine that comes into play when it appears that
abstention may eliminate or materially alter the constitutional
issue presented. There is a point, however, at which the possible
benefits of abstention become too speculative to justify or require
avoidance of the question presented. That point has been reached
and surpassed here. We conclude that Pullman abstention is not
appropriate.
III
Pre-emption
[5] Appellee argues that the Ohio statute is in conflict with, or
preempted by, certain provisions of the Social Security
Act, 42 U.S.C. § 501 et seq., and the Federal Unemployment Tax Act,
26 U.S.C. §§ 3301-3311. This argument was raised in the District
Court but was not resolved there. It would have been preferable, of
course, for that court to have dealt with this statutory issue
first. See Hagans v. Lavine, 415 U.S. 528, 543-545, 94 S.Ct. 1372,
1382-1383, 39 L.Ed.2d 577 (1974). The issue, however, entails no
findings of fact and has been fully briefed here by both parties.
We therefore perceive no need to remand to the District Court, and
we proceed to decide the question.
[6] Appellee points to two statutes as the source of his claimed
federal requirement that he be paid unemployment compensation. The
first is 42 U.S.C. § 503(a)(1), to the effect that the Secretary of
Labor shall make no certification for payment of federal funds to
state unemployment compensation programs unless state law provides
for such methods of administration "as are found by the Secretary
of Labor to be reasonably calculated to insure full payment of
unemployment compensation when due." Appellee's argument
necessarily is that payment is "due" him.
Appellee cites only a single page of the voluminous legislative
history of the Social Security Act in support of his assertion that
the Act forbids disqualification of persons laid off due to a labor
dispute at a related plant. That page contains the sentence: ''To
serve its purposes, unemployment compensation must be paid only to
workers involuntarily unemployed." Report of the Committee on
Economic Security, as reprinted in Hearings on S. 1130 before the
Senate Committee on Finance, 74th Cong., 1st Sess., 1811, 1328
(1935).
The cited Report was one to the President of the United States and
became the cornerstone of the Social Security Act. On its face, the
quoted sentence may be said to give some support to appellee's
claim that "involuntariness" was intended to be the key to
eligibility. A reading of the entire Report and consideration of
the sentence in context, however, show that Congress did not intend
to require that the States give coverage to every person
involuntarily unemployed.
The Report recognized that federal definition of the scope of
coverage would probably prove easier to administer than
individualized state plans, id., at 1323, but it nonetheless
recommended the form of unemployment compensation scheme that
exists today, namely, federal involvement primarily through tax
incentives to encourage state-run programs. The Report's section
entitled "Outline of Federal Act" concludes with the
statement:
"The plan for unemployment compensation that we suggest
contemplates that the States shall have broad freedom to set up the
type of unemployment compensation they wish. We believe that all
matters in which uniformity is not absolutely essential should be
left to the States. The Federal Government, however, should assist
the States in setting up their administrations and in the solution
of the problems they will encounter." Id., at 1326.
See also id., at 1314.
Following this statement, the Report contains a section entitled
"suggestions for State Legislation." It reads:
"Benefits.---- The States should have freedom in determining their
own waiting periods, benefit rates, maximum benefit periods, etc.
We suggest caution lest they insert benefit provisions in excess of
collections in their laws. To arouse hopes of benefits which cannot
be fulfilled is invariably bad social and governmental policy."
Id., at 1327.
This statement reflects two things. First, it reflects the
understanding that unemployment compensation schemes generally do
not grant full benefits immediately and indefinitely, even to those
involuntarily unemployed. The States were expected to create
waiting periods, benefit rates, and maximum-benefit periods, so as
to bring the amount paid out in line with receipts. Second, the
statement reflects concern that the States might grant eligibility
greater than their funds could handle.
By way of advice on particular statutes, the Report's
"Suggestions", contains the following:
"Willingness-to-work test.-- To serve its purposes, unemployment
compensation must be paid only to workers involuntarily unemployed.
The employees compensated must be both able and willing to work and
must be denied benefits if they refuse to accept other suitable
employment. Workers, however, should not be required to accept.
positions with wage, hour, or working conditions below the usual
standard for the occupation or the particular region, or outside of
the State, or where their rights of self-organization and
collective bargaining would be interfered with." Id., at
1328.
This, as has been noted, is the origin of appellee's argument that
all persons involuntarily unemployed were intended to be
compensated. Placed in context, however, it is clear that the
single sentence is only an expression of caution that funds should
not be dispensed too freely, and is not a direction that funds must
be dispensed.
Appellee' s claim of support in the legislative history accordingly
fails. Indeed, that history shows, rather, that Congress did not
intend to restrict the ability of the States to legislate with
respect to persons in appellee's position. See also H.R.Rep.No.615,
74th Cong., 1st Sess., 8-9 (1935); S.Rep.No. 628, 74th Cong., 1st
Sess., 12-13 (1935).
Appellee would find support in the "labor dispute disqualification"
contained in § 5(d) of draft bills issued by the Social Security
Board shortly after passage of the Social Security Act. Social
Security Board, Draft Bills for State Unemployment Compensation of
Pooled Fund and Employer Reserve Account Types (1936). Appellee
argues that this proposed section evinced an intention that
"innocent" persons not be disqualified from unemployment
compensation. The Social Security Board, however, on the cover page
of the draft bills booklet explicitly stated:
"These drafts are merely suggestive . . . . . Therefore, they
cannot proper ly be termed 'model' bills or even recommended bills.
This is in keeping with the policy of the Social Security Board of
recognizing that it is the final responsibility and the right of
each state to deter mine for itself just what type of legisla tion
it desires and how it shall be drafted.
We therefore are most reluctant to read implications of the draft
bills into the Social Security Act. More important, however,
appellee's ar gument fails on its face. The draft bills themselves
denied "innocents" certain compensation. They did so not only in
the various provisions as to minimum time spent at the job, waiting
periods, and maximum benefits, but also in the labor dispute
disqualification itself. The labor dispute provisions are triggered
by a dispute at the same "establishment" and they disqualify any
member of a "grade or class of work ers" any of whose members were
interested in the dispute. As the commentary and case law in
jurisdictions that adopted ver sions of the draft bills immediately
recognized, this division could serve to disqualify even a person
who actively opposed a strike and could extend to persons laid off
because o f a dispute at another plant owned by the same
employer.
The law that appellee challenges is different in form from the
draft bills, but we cannot say that it is qualitatively different.
We do not find in the draft bills any significant support for
appellee's argument that the Social Security Act forbids his
disqualification from benefits.
Appellee also claims support from this Court's decision in
California Human Resources Dept. v. Java, 402 U.S. 121, 91
S.Ct. 1347, 29 L.Ed.2d 666 (1971). In that case the Court held that
the requirement of 42 U.S.C. § 503(a)(l) that payments be made
"when due" forbids suspension of payments during an appeal
subsequent to a full consideration on the merits. Appellee relies
on the Court's statement: "The objective of Congress was to provide
a substitute for wages lost during a period of unemployment not the
fault of the employee." 402 U.S., at 130, 91 S.Ct., at, 1353.
Appellee argues that this statement is a holding that the Act
forbids disqualification of persons in his position. We do not
agree. Nothing in Java purported to define the class of persons
eligible for benefits. The Court's sole concern there was with the
treatment of those who already had been determined under state law
to be eligible.
Finally, appellee argues that statements in the legislative history
of the Employment Security Amendments of 1970, 94 Stat. 695,
indicate a congressional understanding that persons in his position
must not be disqualified. These statements (identical in both House
and Senate Reports) relate to the amendment prohibiting States from
canceling accumulated wage credits on grounds such as an employee's
change of jobs.
The statements are concerned with a situation unrelated to the one
in which appellee finds himself. To the extent that they might be
seen as shedding light on the area, they are far from persuasive
authority in appellee's favor, since they recognize that the States
continue to be free to disqualify a claimant whose unemployment is
due to a labor dispute "in the worker's plant,etc."
As an alternative or addition to his argument based on the Social
Security Act, appellee urges that the Federal Unemployment Tax Act,
26 U.S.C. §§ 3301-3311, as amended, shows "congressional intent to
pre-empt the state, particularly with respect to the scope of
inclusiveness in the unemployment program." Brief for Appellee 13.
We do not.understand appellee to argue that the States are
pre-empted by the Federal Unemployment Tax Act from imposing any
sort of labor dispute disqualification. If total pre-emption is not
claimed, we find nothing in any of appellee's citations that would
show pre-emption in the particular area of concern to him. Indeed,
study of the various provisions cited shows that when Congress
wished to impose or forbid a condition for compensation, it was
able to do so in explicit terms. There are numerous examples, in
addition to the one set forth in n. 16, less related to labor
disputes but showing congressional ability to deal with specific
aspects of state plans.
The fact that Congress has chosen not to legislate on the subject
of labor dispute disqualifications confirms our belief that neither
the Social Security Act nor the Federal Unemployment Tax Act was
intended to restrict the States' freedom to legislate in this
area.
IV
Constitutionality
[7] We come, then, to the question whether the Ohio labor dispute
disqualification provision is constitutional. The statute does not
involve any discernible fundamental interest or affect with
particularity any protected class. Appellee concedes that the test
of constitutionality, therefore, is whether the statute has a
rational relation to a legitimate state interest. Brief for
Appellee 29. See New Orleans v. Dukes, 427 U.S. 297, 96
S.Ct. 2513, 49 L.Ed.2d 511 (1976). Our statement last Term in
Massachusetts Bd. of Retirement v. Murgia, 427 U.S. 307,
96 S.Ct. 2562, 49 L.Ed. 520 (1976), explains the analysis:
"We turn then to examine this state classification under the
rational-basis standard. This inquiry employs a relatively relaxed
standard reflecting the Court's awareness that the drawing of lines
that create distinctions is. peculiarly a legislative task and an
unavoidable one.
"(C) if as a condition of being employed the individual would be
required to join a company union or to resign from or refrain from
joining any bona fide labor organization."
Perfection in making the necessary classifications is neither
possible nor necessary. Dandridge v. Williams, [397 U.S.
471,] 485, 90 S-Ct. [1153], at 1162 (25 L.Ed.2d 491 (1970)]. Such
action by a legislature is presumed to be valid." Id., at 314, 96
S.Ct., at 2567.
[8] Appellee challenges the statute only in its application to
persons in his situation. We find it difficult, however, to discern
the precise nature of the situation that appellee claims may not be
the subject of disqualification. His discussion focuses to a great
extent on his claim that he is "involuntarily unemployed," but he
cannot be arguing that no person involuntarily unemployed may be
disqualified, for he approves the draft bills' labor dispute
provision. Brief for Appellee 53. That provision, as discussed
above, would disqualify an involuntarily unemployed nonunion worker
who opposed a strike but whose grade or class of workers
nevertheless went out on strike.
Appellee's claim of irrationality appears to be based, rather, on
his view of the statute's broad sweep, in that it disqualifies an
individual "regardless of the geographical remoteness of the
location of the dispute, and regardless of any arguable actual, or
imputable, participation or direct interest in the dispute on the
part of the disqualified person." Id., at 34. Appellee thus focuses
on the interests of the recipient of unemployment
compensation.
The unemployment compensation statute, however, touches upon more
than just the recipient. It provides for the creation of a fund
produced by contributions from private employers. The rate of an
employer's contribution to the fund varies according to benefits
paid to that employer's eligible employees. Ohio Rev.Code Ann. §
4141.25 (1973). Any action with regard to disbursements from the
unemployment compensation fund thus will affect both the employer
and the fiscal integrity of the fund. Appellee in effect urges that
the Court, consider only the needs of the employee seeking
compensation. The decision of the weight to be given the various
effects of the statute, however, is a legislative decision, and
appellee's position is contrary to the principle that "the
Fourteenth Amendment gives the federal courts no power to impose
upon the States their views of what constitutes wise economic or
social policy." Dandridge v. Williams, 397 U.S. 471, 486,
90 S.Ct. A411 1153, 1162, 25 L.Ed.2d 491 (1970). In considering the
constitutionality of the statute, therefore, the Court must view
its consequences, not only for the recipient of benefits, but also
for the contributors to the fund and for the fiscal integrity of
the fund.
Looking only at the face of the statute, an acceptable rationale
immediately appears. The disqualification is triggered by "a labor
dispute other than a lockout." In other words, if a union goes on
strike, the employer's contributions are not increased, but if the
employer locks employees out, all his employees thus put out of
work are compensated and the employer's contributions accordingly
are increased. Although one might say that this system provides
only "rough justice," its treatment of the employer is far from
irrational. "If the classification has some 'reasonable basis,' it
does not offend the Constitution simply because the classification
'is not made with mathematical nicety or because in practice it
results in some inquality.' Lindsley v.
Natural Carbonic Gas Co., 220 U.S. 61, 78, 31 S.Ct.
337, 55 L.Ed. 369." Dandridge v. Williams, 397 U.S. at 485, 90
S.Ct. at 1161. The rationality of this treatment is, of course,
independent of any "innocence" of the workers collecting
compensation.
Appellants assert three additional rationales for the
disqualification provision. First, they argue that granting
benefits to workers laid off due to a strike at a parent company's
subsidiary plant in effect would be subsidizing the union members.
Brief for Appellants 12. The District Court correctly rejected this
rationale, as applied to appellee and his class, because payments
to appellee would in no way directly subsidize the striking coal
miners, and the fact the appellee happened to be a member of a
union (other than the striking union) is not a legitimate reason,
standing alone, to deny him benefits. 408 F.Supp., at 1022. The
court continued:
"Moreover, close scrutiny of the reasons for the State's
classification reveals that what the state is actually intending to
prevent is not the 'subsidizing' of unemployed union members per
se, but the subsidizing of union-initiated work stoppages"
(emphasis in original). Ibid.
This statement of the State's purpose reflects its second proffered
justification, namely, that the granting, of benefits would place
the employer at an unfair disadvantage in negotiations with the
unions. The District Court rejected this justification on the
grounds that payments of funds to the steelworkers
"could hardly be deemed to put the coal miners in a position to
refuse to negotiate with the steel companies until the companies
reached a financial crisis, thereby causing the companies to yield
to the unreasonable and economically unsound demands of the coal
miners to prevent bankruptcy."
Although the District Court was reacting to appellants' own
hyperbole in speaking of financial crises and bankruptcy, it must
be
recognized that effects less than pushing the employer to
bankruptcy may be rationally viewed as undesirable. The employer's
costs go up with every laid-off worker who is qualified to collect
unemployment. The only way for the employer to stop these rising
costs is to settle the strike so as to return the employees to
work. Qualification for unemployment compensation thus acts as a
lever increasing the pressures on an employer to settle a strike.
The State has chosen to leave this lever in existence for
situations in which the employer has locked out his employees, but
to eliminate it if the union has made the strike move. Regardless
of our views of the wisdom or lack of wisdom of this form of state
"neutrality" in labor disputes, we cannot say that the approach
taken by Ohio is irrational.
The third rationale offered by the State is its interest in
protecting the fiscal integrity of its compensation fund. This has
been a continuing concern of Congress and the States with regard to
unemployment compensation systems. See Report of the Committee on
Economic Security, cited supra, at 1905; Hearing on H. R. 6900
before the Senate Committee on Finance, 94th
Cong., 1st Sess. (1975). It is clear that protection of the fiscal
integrity of the fund is a legitimate concern of the State. We need
not consider whether it would be "rational" for the State to
protect the fund through a random means, such as elimination from
coverage of all persons with an odd number of letters in their
surnames. Here, the limitation of liability tracks the reasons
found rational above, and the need for such limitation
unquestionably provides the legitimate state interest required by
the equal protection equation.
The District Court's opinion contains a paragraph declaring that,
in addition to violating the Equal Protection Clause, the
disqualification denied appellee due process. 408 F.Supp., at 1022.
There is, however, no claim of denial of procedural due process, of
Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2a 18
(1976), and we are unable to discern the basis for a claim that
appellee has been denied substantive due process.
The judgment of the District Court is reversed.
It is so ordered.
Mr. Justice REHNQUIIST took no part in the consideration or
decision of this case.