In part 1, I explained that there is a two-step analysis for determining whether the state can be held liable for the crash of the unemployment-benefits system. The first step is answering whether the government owes any duty to the plaintiff. The answer to that is no. But let’s assume the answer is yes and move to the second step: Whether sovereign immunity bars the action. The answer is yes.
Since the last post, the parties have fleshed out these issues in court filings. The plaintiffs have filed an emergency motion for a preliminary injunction. One of the things a party asking for such relief must establish is that he has a substantial likelihood of winning on the merits. Here, the plaintiffs argued the DEO owed them a duty. In a response, the DEO argued there’s no substantial likelihood of success because there is no duty, which again is correct. The DEO also argued that the plaintiffs’ claims are barred by sovereign immunity. The DEO makes the same arguments in its motion to dismiss the claims against it.
The DEO’s specific argument is that its actions are “discretionary,” as opposed to “operational,” a distinction I’ll discuss below. As the DEO cogently explains in the response to the emergency motion:
DEO’s administration of Florida’s RA program involves the exercise of discretion at nearly every step in the process of providing RA benefits. Following a claimant’s application for benefits, DEO engages in fact-finding, adjudication, and even provides for internal and external appeals. DEO’s determination about whether a claimant is eligible for benefits is not a ministerial or operational function. Nor are DEO’s decisions regarding the systems and processes used to facilitate a claimant’s request for benefits. DEO has to exercise discretion as to how best to allocate its resources for the RA program. At present, DEO is doing everything within its discretionary authority to maximize efficiency, maintain and improve systems, and to process and pay benefits to eligible claimants as quickly as possible during this unprecedented time.
So the DEO claims two areas of discretion: 1) the DEO’s system and processes and 2) the actual determination of benefits.
The plaintiffs filed a lengthy reply that summarizes a few cases but doesn’t present a persuasive argument on why their claims don’t involve an “operational” function:
Based upon these cases, clearly the actions of DEO are operational in nature. DEO’s obligation is to determine whether an employee is eligible for benefits and if so pay them what they are owed. These types of claims administration functions are regularly conducted by private companies all the time in the operations of their businesses. This function could have easily been delegated by the State of Florida to a third party that would have been better equipped to handle the claims as was done by other states during this Pandemic. Surely, though when the State engages in claims processing functions, as here, no sovereign immunity would attach.
On Tuesday, the trial court held a hearing on the emergency motion for preliminary injunction (and another hearing is set for today). The judge heard a lot of testimony. But according to reporter Gary Fineout, “Circuit Judge John Cooper has already made it clear that he doubts that he can do anything about the unemployment compensation problem—cites separation of powers.” This is something the parties addressed in supplemental memoranda filed before the hearing.
Discretionary versus operational functions
In American Home Assurance Co. v. National Railroad Passenger Corp. (2005), the Florida Supreme Court identified “three policy considerations” underlying the doctrine of sovereign immunity: “First is the preservation of the constitutional principle of separation of powers. Second is the protection of the public treasury. Third is the maintenance of the orderly administration of government.”
So it should not be surprising that, when the legislature effected a limited waiver of sovereign immunity to the same extent a private person would be liable, that’s not exactly what happened.
Instead, the supreme court explained in Wallace v. Dean (2009) that separation of powers “requires that certain quasi-legislative policy-making, planning or judgmental governmental functions cannot be the subject of traditional tort liability.” The court itself recognized the holding was “[d]espite the absence of an express discretionary-function exception within the statute itself.”
The court, therefore, distinguishes between discretionary and operational acts, the latter of which the government can be liable for. In Wallace, the court wrote:
Planning level functions are generally interpreted to be those requiring basic policy decisions, while operational level functions are those that implement policy. This distinction requires us to find and isolate those areas of quasi-legislative policy-making which are sufficiently sensitive to justify a blanket rule that courts will not entertain a tort action alleging that careless conduct contributed to the governmental decision. Functionally, the discretionary-versus-operational-function test is intended to determine where, in the area of governmental processes, orthodox tort liability stops and the act of governing begins.
(Cleaned up, but emphases in original.)
The four questions
To decide if a challenged act is discretionary or operational, a court must ask four questions. If the answer to each of these questions is clearly and unequivocally yes, the challenged act is discretionary. Per Wallace, the questions are:
“[D]oes the challenged act, omission, or decision necessarily involve a basic governmental policy, program, or objective?”
“[I]s the questioned act, omission, or decision essential to the realization or accomplishment of that policy, program, or objective as opposed to one which would not change the course or direction of the policy, program, or objective?”
“[D]oes the act, omission, or decision require the exercise of basic policy evaluation, judgment, and expertise on the part of the governmental agency involved?”
“[D]oes the governmental agency involved possess the requisite constitutional, statutory, or lawful authority and duty to do or make the challenged act, omission, or decision?”
The design and implementation of CONNECT necessarily involve a basic governmental program, the provision of unemployment benefits. I think the answers to the second and third questions are self-evidently yes. As for the fourth question, the legislature mandated the DEO to design and implement CONNECT. There shouldn’t be a dispute that the acts the plaintiffs challenge are discretionary or planning-level.
Case law on similar situations confirms that. For example, in Perez v. Department of Transportation (1983), the petitioners sued the state over, as relevant here, the state’s design of a bridge and its failure to upgrade and improve the bridge. The supreme court held “that the act of designing the bridge and the failure to upgrade and improve the bridge arise at the judgmental, planning-level of government and are immune from suit.” I don’t see a principled difference between the claims in Perez and those here.
Perez also resolves another issue raised by the plaintiffs’ complaint. They say the state “fail[ed] to maintain [an] adequate unemployment compensation system” (emphasis added). Could this be distinct from design and implementation? In Perez, the supreme court noted that the petitioners “used the term ‘maintenance’ in their complaint.” However, the Perez petitioners used that word “in the context of the department’s having failed to upgrade the steel-grated portion of the bridge by installing metal studs [which is discretionary] rather than having failed to maintain the bridge as originally constructed [which is not discretionary].” That’s what I read the plaintiffs’ complaint to be alleging—the failure to upgrade and improve a designed-to-fail system.
What about the actual eligibility determinations, also something the plaintiffs have raised? At first blush, this might appear operational. Yet what it looks like to me is that the plaintiffs are asking the trial court to review the DEO’s determinations on individual applications. As the DEO notes, there is an internal and external appeals process. That is provided by statute, subsections 443.151(3)(e) and (4): a redetermination by the DEO “if it finds an error or if new evidence or information pertinent to the determination is discovered,” appeals to impartial appeals referees, review by the Reemployment Assistance Appeals Commission, and external appeals to the District Courts of Appeal. The legislature’s decision to provide for this review process was a policy decision—a discretionary or planning-level decision. The plaintiffs are asking the trial court to interfere with that decision.
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After going through the two-step analysis, it’s clear that the state owes the plaintiffs no duty of care and, even if it did, their claims are barred by sovereign immunity. The court is currently hearing the plaintiff’s emergency motion for a preliminary injunction. The plaintiffs have no substantial likelihood of succeeding on their claims, and the court appears at the moment likely to deny the motion. And when the DEO’s motion to dismiss comes up, the court should grant it.