## Facts

- Illinois provided up to 26 weeks of regular unemployment benefits; after exhaustion, claimants could seek Extended Benefits (EB) and Federal Supplemental Compensation (FSC).
- The Illinois Department of Employment Security (IDES) informed exhausted claimants that they must be “actively” seeking work and should relax wage and commuting demands, and it required biweekly questionnaires about wage and travel willingness.
- IDES applied undisclosed, objective thresholds to those questionnaires, including automatic denial if a claimant would not accept minimum-wage work or would not commute at least a two-hour round trip.
- When IDES found a claimant ineligible, it sent notices directing the claimant to appear before an adjudicator, but the notices often did not identify the specific deficiency (e.g., wage/commute values deemed unacceptable under IDES rules).
- If the adjudicator upheld ineligibility, benefits were denied for the affected two-week period.
- Claimants filed a § 1983 class action against state officials and federal labor officials, alleging statutory violations governing EB/FSC and Fourteenth Amendment due-process violations based on inadequate notice.
- After plaintiffs presented their evidence in a bench trial, the district court granted defendants’ Rule 41(b) motion for involuntary dismissal.

## Issues

1. Whether IDES’s administration of EB and FSC violated applicable federal statutes and regulations.
2. Whether unemployment benefits constitute a protected property interest requiring procedural due process in eligibility and denial determinations.
3. Whether due process requires claimants to receive notice of the specific eligibility standards IDES uses to evaluate job-search requirements.
4. Whether due process requires denial and hearing notices to state the specific reasons for ineligibility to permit meaningful preparation and participation at a hearing.

## Decision

- The Seventh Circuit affirmed judgment for defendants on the statutory claims.
- The court reversed the dismissal on the due-process claims concerning IDES notice practices.
- The court held that IDES’s failure to disclose determinative eligibility rules and its vague denial/hearing notices did not satisfy procedural due process.
- The case was remanded for further proceedings consistent with the court’s due-process analysis.

## Legal Principles

- Once statutory eligibility is established, unemployment benefits are a protected property interest under the Due Process Clause.
- Procedural due process requires notice that is reasonably calculated to inform affected persons of the action and to allow a meaningful opportunity to object.
- A hearing is not meaningful if the claimant is not told in advance the precise issues and reasons for the proposed denial or termination.
- When an agency uses specific, outcome-determinative eligibility criteria, due process requires that those criteria be disclosed with sufficient specificity for claimants to conform their conduct and to contest adverse decisions.
- The administrative burden of providing clearer, more specific notices may be outweighed by the claimant’s interest in subsistence benefits and the risk of erroneous deprivation created by vague or incomplete notice.

## Conclusion

The Seventh Circuit upheld Illinois’s administration of EB and FSC against statutory challenges but ruled that procedural due process was violated where IDES relied on undisclosed eligibility thresholds and provided denial and hearing notices that often failed to specify the precise grounds for ineligibility, requiring further proceedings on the constitutional claims.


Cosby v. Ward, 843 F.2d 967 (7th Cir. 1988)