John Custin v. Harold Wirths ( 2021 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 20-1837
__________
JOHN M. CUSTIN,
Appellant
v.
HAROLD J. WIRTHS, STATE OF NEW JERSEY COMMISSIONER OF LABOR;
JOSEPH SIEBER, N.J. BOARD OF REVIEW;
GERALD YARBROUGH, N.J. BOARD OF REVIEW;
JERALD L. MADDOW, N.J. BOARD OF REVIEW;
HILDA S. SOLIS, U.S. SECRETARY OF LABOR;
JANE OATS, SECRETARY OF EMPLOYMENT & TRAINING;
SETH D. HARRIS, ACTING U.S. SECRETARY OF LABOR
__________________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 2-12-cv-00910)
District Judge: Honorable Kevin McNulty
____________________________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
February 12, 2021
Before: AMBRO, PORTER and SCIRICA, Circuit Judges
(Opinion filed: March 4, 2021)
___________
OPINION*
___________
PER CURIAM
Appellant John Custin, proceeding pro se, appeals from the District Court’s orders
dismissing his complaint in part and granting summary judgment on the remaining claims
in an action he brought pursuant to 42 U.S.C. § 1983. For the following reasons, we will
affirm.
In April 2010, Custin was discharged by Walmart Stores, Inc., after two years of
employment. Over the next two years, he filed four separate claims for benefits under the
New Jersey Unemployment Compensation Law, N.J.S.A. § 43:21-1, et seq., each of
which was ultimately denied. In February 2012, Custin filed this action. The operative
third amended complaint sought relief against the Commissioner of the State of New
Jersey Department of Labor and Workforce Development (NJDOL) and three members
of the Department of Labor’s Board of Review (collectively the state defendants), and the
former and acting U.S. Secretary of Labor and the U.S. Secretary of Employment and
Training Administration (collectively the federal defendants). Custin alleged that, in
their administration of the unemployment compensation program, the state defendants
violated the Social Security Act (SSA), as well as his Fourteenth Amendment due process
rights and Eighth Amendment right to be free of excessive fines. Custin also challenged
the constitutionality of 20 C.F.R. § 615.8(c)(2) and N.J.S.A. § 43:21-5(b). Finally, he
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
2
sought to enjoin the federal defendants from continuing to certify or provide federal
funding for New Jersey’s unemployment compensation program.
In January 2014, the District Court dismissed the claims against the federal
defendants. See ECF No. 82 & 83. It subsequently dismissed, under Fed. R. Civ. P.
12(b)(6), all of the claims against the state defendants except the due process claims.1
See ECF No. 130 & 131. In an order entered March 26, 2020, the District Court granted
the state defendants’ motion for summary judgment on the due process claims, and this
appeal ensued. See ECF No. 253 & 254.
We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. We exercise
plenary review over the District Court’s dismissal of the claims for failure to state a claim
for relief, see Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir.
2009), and over its grant of summary judgment, see Groman v. Twp. of Manalapan, 47
F.3d 628, 633 (3d Cir. 1995). Summary judgment is proper where, viewing the evidence
in the light most favorable to the nonmoving party and drawing all inferences in favor of
that party, there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a); Kaucher v. County of Bucks, 455
F.3d 418, 422-23 (3d Cir. 2006).
We first affirm the dismissal of the claims against the federal defendants.
Pursuant to the Social Security Act of 1935, 42 U.S.C. § 501 et seq., unemployment
1
In the same order, the District Court dismissed all claims against the NJDOL; however,
because the agency was not named as a defendant in the third amended complaint, we do
not address Custin’s argument on appeal that the claims against NJDOL were dismissed
in error.
3
compensation is provided through a cooperative federal-state program. See California
Dep’t. of Human Resources Development v. Java, 402 U.S. 121, 125 (1971). Although
the United States partially funds the programs, the states are responsible for establishing
eligibility requirements and making individual eligibility determinations. See 26 U.S.C.
§ 3304(a); 42 U.S.C. § 503. The Secretary of Labor annually certifies state programs
after confirming that they conform to federal requirements. Java, 402 U.S. at 125.
Custin claimed that the federal defendants violated his constitutional rights by continuing
to certify New Jersey’s unemployment compensation program as compliant with federal
law “when it was not.” In particular, Custin claimed that the state failed to comply with
the federal requirements that its program provide “full payment of unemployment
compensation when due,” and the “[o]pportunity for a fair hearing, before an impartial
tribunal,” when benefits are denied. 42 U.S.C. § 503(a)(1), (3).
The District Court properly concluded that Custin lacked standing to pursue this
claim because there was no causal connection between the certification of New Jersey’s
unemployment compensation benefits program and the injury alleged in the complaint,
which, contrary to Custin’s contention on appeal, was the alleged improper denial of his
benefits claims and an ensuing financial fallout. See Lujan v. Defenders of Wildlife, 504
U.S. 555, 560 (1992) (noting the well-recognized elements of Article III standing,
including a “causal connection between the injury and the conduct complained of”). In
his complaint, Custin did not allege any facts suggesting that the state’s unemployment
compensation program was non-compliant with federal law; instead, he alleged only
defects in the process by which the state denied his claims for benefits. Neither the
4
Secretary of Labor nor the Secretary of Employment and Training Administration is a
proper defendant under the facts as alleged. Id. (noting that the alleged injury must be
“fairly . . . trace[able]” to the defendant’s actions) (citation omitted); cf. Java, 402 U.S. at
135 (enjoining enforcement of California unemployment law as inconsistent with federal
“when due” requirement where defendants were California Department of Human
Resources Development and other state defendants).
Turning to the claims against the state defendants, Custin argues that the District
Court used the wrong standard in evaluating his due process claims. We disagree. A
claimant has a property interest in unemployment compensation benefits which is
protected by the Fourteenth Amendment’s Due Process Clause. See Wilkinson v.
Abrams, 627 F.2d 650, 664 (3d Cir. 1980). The District Court cited and properly applied
Supreme Court decisions outlining “the essential requirements of due process,” including
the right to “notice and opportunity to respond,” “the opportunity to be heard at a
meaningful time and in a meaningful manner,” and the right to “an impartial and
disinterested tribunal.” See ECF No. 253 at 13 (citing and quoting Cleveland Bd. of
Educ. v. Loudermill, 470 U.S. 532, 546 (1985), Mathews v. Eldridge, 424 U.S. 319, 332
(1976), and Marshal v. Jericho, 446 U.S. 238, 242 (1980)). The District Court also
looked to analogous administrative cases to guide it in applying these principles to the
unemployment compensation context.2 See, e.g., DeBlasio v. Zoning Bd. of Adjustment
2
Contrary to Custin’s argument on appeal, this case is not analogous to Shaw v. Valdez,
819 F.2d 965, 968 (10th Cir. 1987). Shaw challenged the state’s procedures as
violative of the “fair hearing” requirement of the SSA, 42 U.S.C. § 503(a)(3). Id. at 966.
Although Custin purported to do the same, as discussed supra, the factual allegations in
5
for Twp. of West Amwell, 53 F.3d 592 (3d Cir. 1995). Custin appears to argue that the
District Court should have separately analyzed whether he was denied a “fair hearing”
under 42 U.S.C. § 503(a)(3); but a separate analysis was not necessary as the
requirements of due process and § 503(a)(3) are co-extensive. See Cosby v. Ward, 843
F.2d 967, 982 (7th Cir. 1988) (“Whether the statutory ‘fair hearing’ requirement has been
met is tested by the same standards as constitutional procedural due process.”) (citation
omitted); Ross v. Horn, 598 F.2d 1312, 1318 n.4 (3d Cir. 1979) (assuming the same).3
In his brief, Custin focuses on his due process claims stemming from the denial of
his first claim for unemployment benefits made in April 2010. Initially, the Deputy
Director of the Division of Unemployment and Disability Insurance determined that
Custin was eligible for benefits. Walmart appealed and, during a telephonic hearing
before the Appeals Tribunal on June 28, 2010, argued that Custin was ineligible for
benefits because he was dismissed for misconduct. See N.J.S.A. § 43:21-5(b) (2007)
(disqualifying individuals for unemployment compensation benefits “for the week in
which the individual has been suspended or discharged for misconduct connected with
the work, and for the five weeks which immediately follow that week”). A personnel
manager from Walmart testified that Custin was discharged from employment because he
his complaint support only a claim that he was denied a fair hearing.
3
To the extent that Custin challenges the District Court’s discovery rulings as erroneous
and adversely affecting his due process claims, we find no abuse of discretion. See
Anderson v. Wachovia Mortg. Corp., 621 F.3d 261, 281 (3d Cir. 2010) (“We review a
district court’s discovery orders for abuse of discretion, and will not disturb such an order
absent a showing of actual and substantial prejudice.”).
6
violated the company’s callout policy by failing to notify Walmart of his absences for
five consecutive days that he was scheduled to work in April 2010. Under the policy,
employees were required to call a 1-800 number prior to their shift to advise that they
would be absent; employees then received a verification number as proof of their call and
were directed to their local Walmart store to speak to a manager. Custin testified that he
was aware of the callout policy and that, on each of the days in question, he tried to call
the hotline but he was disconnected because “there [wa]s something wrong with it,” and
he tried to call the local store but no one picked up. The manager testified that there were
no problems reported with the phone system and other employees properly called out on
those days. During her testimony, the manager referred to two documents which were
provided to the hearing examiner in advance of the hearing, an “exit interview” indicating
that Custin was “rehirable,” and an “attendance report” indicating the dates of Custin’s
absences from work.
The hearing examiner determined that Custin was discharged for misconduct
based on his failure to properly notify Walmart of his absences and that, as a result, he
was ineligible for benefits under § 43:21-5(b) for the period from April 18, 2010 to May
29, 2010. See N.J.S.A. § 43:21-5(b) (defining “[m] isconduct” to include “conduct which
is improper, intentional, connected with the individual's work, within the individual's
control, not a good faith error of judgment or discretion,” including the “deliberate
refusal, without good cause, to comply with the employer's lawful and reasonable rules
made known to the employee”). Custin appealed, first to the NJDOL Board of Review,
7
which affirmed the Tribunal, and then to the Appellate Division of the Superior Court of
New Jersey, which affirmed the Board’s decision.
In his complaint, Custin claimed that his due process rights were violated because
he did not receive notice of his right to appeal the Appellate Tribunal’s decision, he was
not provided copies of the “exit interview” and “attendance report” referenced in the
hearing, and the Board of Review upheld the decision without copies of those documents.
Custin also alleged that the hearing examiner was required to find malicious intent to
sustain a misconduct charge.4
We agree with the District Court that Custin received all of the process that he was
due in these initial proceedings. Custin was given notice, both of the hearing before the
Appellate Tribunal, and of Walmart’s claims, and he was afforded an opportunity to rebut
those claims. See FTC v. National Lead Co., 352 U.S. 419, 427 (1957) (noting that “the
requirements of a fair hearing include notice of the claims of the opposing party and an
opportunity to meet them”). As the Superior Court indicated in affirming the denial of
benefits, “Custin was well aware of Walmart’s position that he had been separated from
work for misconduct.” ECF No. 233-13 at 13. The Court noted that when Custin first
4
In its opinion, the District Court outlined numerous other procedural defects stemming
from these proceedings which Custin raised for the first time in his Statement of Material
Facts. See ECF No. at 14-16. These claims were not properly before the District Court.
See Shanahan v. City of Chicago, 82 F.3d 776, 781 (7th Cir. 1996) (“A plaintiff may not
amend his complaint through arguments in his brief in opposition to a motion for
summary judgment.”); Trishan Air, Inc. v. Federal Ins. Co., 635 F.3d 422, 435 (9th Cir.
2011) (noting that “summary judgment is not a procedural second chance to flesh out
inadequate pleadings”) (citation omitted). In any event, for the reasons provided by the
District Court, these alleged procedural defects do not amount to due process violations.
8
applied for unemployment benefits, the notice scheduling an appointment with a claims
examiner indicated “in bold letters” that “the reason for his appointment was that he may
have been separated for misconduct in connection with his work.” Id. at 13-14. It further
noted that, when Walmart appealed, Custin received a copy of the notice of the Appeal
Tribunal hearing, “which explicitly stated that the issues involved were ‘voluntary
leaving’ and ‘discharge for misconduct.’” Id. at 14. Finally, at the start of that hearing,
the examiner indicated that “[t]he issues to be resolved were the issue of discharge for
misconduct and the issue of voluntary leaving.” Id. Custin gave no indication that he
was unprepared to meet those charges.
At the Appeal Tribunal hearing, Custin was also provided an opportunity to
present evidence and testify on his own behalf, and to cross-examine Walmart’s
personnel manager. See ECF No. 233-11. Neither the failure to provide Custin with
copies of the exit interview or attendance record, nor the failure to make those documents
part of the record on appeal, rendered the proceedings fundamentally unfair. Custin
readily admitted in his testimony that he was absent on the days in question. And
Walmart’s personnel manager testified that, according to the exit interview, Walmart was
willing to rehire Custin; that testimony was part of the record on appeal. The mere fact
that Walmart was willing to rehire Custin did not negate the hearing examiner’s finding
that Custin was discharged for misconduct. Furthermore, the hearing examiner was not
required to find malicious intent to disqualify Custin for misconduct. Cf. N.J.S.A.
§ 43:21-5(b) (2015) (providing malicious behavior as an example of “severe
9
misconduct”).5 As the Superior Court observed, the determination that Custin failed to
properly notify Walmart of his absences constituted misconduct at the time under
N.J.A.C. § 12:17-10.3. See ECF No. 233-13. Finally, Custin exercised his right to
appeal to the Board of Review and, from there, to the Superior Court, which addressed
his due process claims. Because Custin was afforded all of the procedural safeguards
required for a fair hearing and received meaningful review through the appellate process,
summary judgment was warranted on these due process claims.
The District Court also properly denied Custin’s due process claims arising from
the denial of his second, third, and fourth claims for unemployment compensation
benefits because he failed to avail himself of all the processes available to him. See
Alvin v. Suzuki, 227 F.3d 107, 116 (3d Cir. 2000) (“In order to state a claim for failure to
provide due process, a plaintiff must have taken advantage of the processes that are
5
Custin sought to challenge N.J.S.A. § 43:21-5(b), arguing that it “enables an employer
to disqualify a claimant for benefits for being a malicious employee while in the same
breath stating in testimony that he is rehirable.” ECF No. 38 at 6. But as the District
Court concluded, Custin failed to allege how the statute violates 42 U.S.C. § 503(a)(1),
the provision of the SSA requiring state unemployment compensation programs to
provide for payment of benefits “when due.” We likewise agree that there is no merit to
Custin’s challenge to the validity of N.J.S.A § 21-24(19), which deems claimants
ineligible for extended unemployment benefits if they failed to accept any offer of, or to
apply for, suitable work, or if they failed to actively seek suitable work. Custin argued
that the statute “disqualifies claimants twice on the same charge on the original claim
even before that original disqualification has been heard on appeal.” We see no basis for
finding this statute violative of the SSA or the due process clause, neither of which
requires the payment of benefits while an appeal from the denial of benefits is pending.
Cf. Java, 402 U.S. at 133 (finding section of state unemployment insurance code
providing for suspension of allowed benefits pending the employer’s appeal violative of
the SSA’s “when due” clause). For the same reasons, Custin’s challenge to 20 C.F.R.
§ 615.8(c)(2), which was based on similar arguments, fails.
10
available to him or her, unless those processes are unavailable or patently inadequate.”).
In particular, for each of these benefits claims he failed to appeal the final decisions of
the Appeals Tribunal to the Board of Review. See N.J.S.A. § 43:21-6 (setting forth the
appeal procedures in unemployment compensation proceedings). Custin did not
explicitly allege that the state processes were unavailable or inadequate. The District
Court, construing the pro se pleadings liberally, identified a dozen allegations of
procedural defects in the appellate process. See ECF No. 253 at 10-11. But as the
District Court explained, most of the alleged defects could have been raised on appeal to
the Board of Review, and none of them would amount to interference with the appellate
process or render it a sham. See Alvin, 227 F.3d at 118 (“When access to procedure is
absolutely blocked or there is evidence that the procedures are a sham, the plaintiff need
not pursue them to state a due process claims.”).
Finally, we agree with the District Court that Custin alleged no basis for relief
under the Eighth Amendment. See Browning-Ferris Indus. v. Kelco Disposal, 492 U.S.
257, 262 (1989) (holding that the Eighth Amendment applies “primarily, and perhaps
exclusively, to criminal prosecutions and punishments” and does not apply to punitive
damages in a civil suit).
For the foregoing reasons, we will affirm the District Court’s judgment.
11