Earlier this month, the Federal Circuit heard oral argument in Ireland v. United States, a case that attracted an amicus brief. In this case, the Federal Circuit is reviewing a decision by the Western District of Texas to grant a motion to dismiss for failure to state a claim in an unemployment benefits case under the Little Tucker Act. Judges Lourie, Linn, and Stoll heard the argument. This is our argument recap.
Charlotte H. Schwartz argued for the appellant, Creagor Ireland. Schwartz began by claiming that the language of the statute providing the unemployment benefit during the early days of the COVID-19 pandemic was “unique amongst the unemployment compensation programs” and is “mandatory and unconditional.” She contended the statute allowed the Secretary of State to provide assistance “through agreements with states which, in the judgment of the Secretary, have adequate systems for delivering those benefits.” Schwartz asserted that, according to the statute, even if a state did not have adequate systems, individuals from that state may still receive assistance from another state. One judge asked Schwartz to point to the part of the statute that “provides for direct payment by the government to individuals.” Schwartz answered by citing a provision she explained states that the Secretary “shall provide you any covered individual unemployment benefit assistance.” The judge responded that the statute does not mention paying individuals directly, only facilitating this payment through “agreements with the states.” Schwartz reiterated that the Secretary is “charged with providing” payment “to the individuals,” unlike other statutes in which access is conditioned by a state’s “desire to participate.”
Schwartz claimed the lower court incorrectly concluded that “the statute provided no other means or contemplated no other means of delivering benefits.” Schwartz pointed to the statute;s contemplation of cross-state administration. One judge asked how the cross-state administration works and whether the federal government would have to effectuate it. Schwartz answered that the federal government would indeed have to effectuate cross-state administration. Another judge interjected, asking how the government would make a direct payment without violating the statute, considering that part of the statute foreclosed the federal government from payment in any other way than through the states. Schwartz answered that, if “the state does not have an adequate system,” another state would administer the benefits. Alternatively, she argued, no part of the statute prohibited direct federal administration.
Steven A. Myers, representing the government, began by asserting that “plaintiff’s Little Tucker Act claim fails on the merits because Congress was clear . . . that the payment of benefits was conditioned on the existence of a state agreement.” He argued that, because the statute “does not require, or indeed even permit direct federal administration,” the Federal Circuit should affirm the lower court’s judgment. Myers contended that, if Congress had intended to allow direct federal administration, it would have done so explicitly. Instead, Congress “modeled the program on the disaster unemployment assistance program” and its regulations, which expressly provide that “benefits are payable only by states and only when an agreement is in effect.” Additionally, Myers argued, the “Supreme Court has said that we need to read statutes as a whole.” So, he continued, “we don’t take provisions in isolation,” and the sections of this statute must be “read in harmony” with each other.
Myers eventually turned the argument to cross-state administration. He argued that the government had “no threshold obligation” to find a new state to fulfill the administration if “another state decides it doesn’t want to participate.” Myers proposed that, even if there was an obligation the government failed to meet, the proper cause of action would be a claim under the Administrative Procedure Act, not the Little Tucker Act.
In her rebuttal, Schwartz argued the court should not use the Disaster Unemployment Assistance statute as a blueprint for pandemic relief because “Congress departed in a significant way” from that statute “by obligating the Secretary to provide benefits to individuals rather than creating a discretionary program.” She reiterated that the Secretary had an obligation to provide these benefits to “covered individuals” and that Congress and the government’s failure to uphold their promise to the American people is precisely the type of violation the Little Tucker Act is designed to remedy.
We will continue monitoring this case and report on developments.