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In Farish v Dep't of Talent &Economic Dev, 336 Mich.App. 433, 438 n 2; 971 N.W.2d 1 (2021), this Court stated that although the plaintiffs' "claim" for equitable relief was properly dismissed because it was not a cause of action, the plaintiffs nonetheless were not "foreclosed from an equitable remedy if entitled to such relief under a different cause of action."
Summary of this case from Int'l Union, Sec., Police & Fire Prof'l of Am. v. MaritasOpinion
No. 350866
03-18-2021
Dock FARISH, Kebeh Gibson, Millie Nichols, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellants, v. DEPARTMENT OF TALENT AND ECONOMIC DEVELOPMENT, Defendant-Appellee, and Talent Investment Agency, Unemployment Insurance Agency, Director Department of Talent and Economic Development, Director Talent Investment Agency, and Acting Director Unemployment Insurance Agency, Defendants-Appellees.
Excolo Law, PLLC (by Daniel W. Weininger and Keith L. Altman, Southfield) for plaintiffs. Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, and Kimberly K. Pendrick, Assistant Attorney General, for defendants. Workers’ Rights Clinic of the University of Michigan Law School (by Andrea Van Hoven) for the Center for Civil Justice, Amicus Curiae.
Excolo Law, PLLC (by Daniel W. Weininger and Keith L. Altman, Southfield) for plaintiffs.
Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, and Kimberly K. Pendrick, Assistant Attorney General, for defendants.
Workers’ Rights Clinic of the University of Michigan Law School (by Andrea Van Hoven) for the Center for Civil Justice, Amicus Curiae.
Before: Riordan, P.J., and Shapiro and Ronayne Krause, JJ.
Shapiro, J. The question before us in this case is whether the Michigan Unemployment Insurance Agency (UIA) may deduct sums from a recipient's present benefits in order to collect penalties and interest assessed because of a prior overpayment. We conclude that it may not. However, we further conclude that plaintiffs’ conversion and other damage claims fail and that they may only obtain declaratory and injunctive relief. We remand for entry of orders providing such relief.
I. BACKGROUND
The Michigan Employment Security Act (MESA), MCL 421.1 et seq. , provides that if an individual is determined to have obtained benefits to which they are not entitled, the agency may recover a sum equal to the overpayment plus interest in one of three ways: "deduction from benefits or wages payable to the individual, payment by the individual in cash, or deduction from a tax refund payable to the individual ...." MCL 421.62(a). A deduction from benefits "is limited to not more than 50% of each payment due the claimant," MCL 421.62(a), but that cap does not apply when the restitution sought by the agency results from the claimant's "intentional false statement, misrepresentation, or concealment of material information," MCL 421.62(b). MESA authorizes the assessment of penalties for such conduct. See MCL 421.54(b).
At the time they brought suit, plaintiffs’ current unemployment benefits were being deducted in whole or in part to recoup prior overpayments, penalties, and interest. Plaintiffs claimed that the deductions violated state law as set forth in MCL 421.30 and MCL 421.62, as well as federal law governing state unemployment systems that receive federal funds. Defendants moved for summary disposition, arguing that the deductions from plaintiffs’ benefits were authorized by the aforementioned state statutes and not precluded by federal law. The Court of Claims dismissed plaintiffs’ suit in its entirety and plaintiffs appealed. Farish v. Dep't of Talent & Economic Dev. , unpublished per curiam opinion of the Court of Appeals, issued December 11, 2018 (Docket No. 341350, 2018 WL 6517575) ( Farish I ). In that first appeal, we affirmed the trial court's conclusion that state law was not violated and also affirmed dismissal of the procedural due-process claim, a standalone count for equitable relief, and all claims against the individual defendants. Id. at pp. 2-7.
MCL 421.30 provides:
All rights to benefits shall be absolutely inalienable by any assignment, sale, garnishment, execution or otherwise, and, in case of bankruptcy, the benefits shall not pass to or through any trustees or other persons acting on behalf of creditors: Provided, That this section shall not prohibit the use of any remedy provided by law insofar as the collection of obligations incurred for necessaries furnished to the recipient of such benefits or his dependents during the time when such individual was unemployed is concerned.
In Farish I , we explained that equitable relief was a remedy, not a cause of action, so summary disposition of plaintiffs’ equitable-relief claim was proper. Farish I , unpub. op. at 7. This does not mean, however, that plaintiffs are foreclosed from an equitable remedy if entitled to such relief under a different cause of action.
However, we reversed the dismissal of plaintiffs’ claim that deducting penalties and interest violated federal law, specifically 42 USC 503 of the Social Security Act, and therefore constituted conversion. The Court of Claims had determined that the deduction of penalties and interest from plaintiffs’ unemployment benefits did not violate the federal statute. However, we remanded for the court to consider certain administrative guidance promulgated by the United States Department of Labor indicating that such deductions were impermissible under federal law so states that deduct past interest and penalties from future benefits (as opposed to only the actual overpayments) may not be certified for federal assistance in funding their unemployment programs. See Farish I , unpub. op. at 5-6. On remand, the court again concluded that the statute was unambiguous and that the Department of Labor's interpretation of the statute was therefore irrelevant and entitled to no deference. The court also ruled that governmental immunity barred plaintiffs’ conversion claims. Plaintiffs again appealed in this Court.
We review de novo grants of summary disposition. Willett v. Waterford Charter Twp. , 271 Mich. App. 38, 45, 718 N.W.2d 386 (2006). The Court of Claims granted summary disposition of plaintiffs’ 42 USC 503 claim under MCR 2.116(C)(8) (failure to state a claim). Under Subrule (C)(8), we accept all well-pleaded factual allegations as true to determine the legal sufficiency of the complaint. See Maiden v. Rozwood , 461 Mich. 109, 119, 597 N.W.2d 817 (1999). Questions of statutory interpretation are also reviewed de novo. Estes v. Titus , 481 Mich. 573, 578-579, 751 N.W.2d 493 (2008). The goal when interpreting federal statutes is to give effect to Congress's intent. Johnson v. Johnson , 329 Mich. App. 110, 119, 940 N.W.2d 807 (2019). Statutes are reviewed "as a whole, reading individual words and phrases in the context of the entire legislative scheme." Ronnisch Constr. Group, Inc. v. Lofts on the Nine, LLC , 499 Mich. 544, 552, 886 N.W.2d 113 (2016). "Statutory language should be construed reasonably, keeping in mind the purpose of the act." People v. Zitka , 325 Mich.App. 38, 49, 922 N.W.2d 696 (2018) (quotation marks and citation omitted). When reviewing a motion under MCR 2.116(C)(7) (governmental immunity), the parties may introduce evidence to support their claims or defenses, and "[t]he contents of the complaint are accepted as true unless contradicted by documentation submitted by the movant." Maiden , 461 Mich. at 119, 597 N.W.2d 817.
The Center for Civil Justice filed an amicus brief in support of plaintiffs’ brief regarding the interpretation of 42 USC 503.
II. ANALYSIS
A. INTERPRETATION OF 42 USC 503
The federal Social Security Act governs various social welfare programs, including state unemployment compensation, 42 USC 501 through 42 USC 506. For all programs, the federal government provides funding for the states on the condition that the states meet and follow certain requirements. The requirements to receive federal funding for unemployment insurance are set forth in 42 USC 503(a). First, the Secretary of Labor may not certify payment unless the state's law provides administrative methods "reasonably calculated to insure full payment of unemployment compensation when due[.]" 42 USC 503(a)(1). In addition, all money withdrawn from a state unemployment fund must, with certain stated exceptions, be expended "in the payment of unemployment compensation." 42 USC 503(a)(5). The exception relevant to this appeal provides "[t]hat amounts may be deducted from unemployment benefits and used to repay overpayments as provided in subsection (g)[.]" 42 USC 503(a)(5). In turn, Subsection (g) provides in pertinent part:
A State shall deduct from unemployment benefits otherwise payable to an individual an amount equal to any overpayment made to such individual under an unemployment benefit program of the United States or of any other State, and not previously recovered. The amount so deducted shall be paid to the jurisdiction under whose program such overpayment was made. Any such deduction shall be made only in accordance with the same procedures relating to notice and opportunity for a hearing as apply to the recovery of overpayments of regular unemployment compensation paid by such State. [ 42 USC 503(g)(1) (emphasis added).]
Defendants concede that the ordinary meaning of "overpayment" does not include penalties and interest, i.e., the statute does not require or expressly authorize deductions for those amounts. Defendants argue, however, that deductions for penalties and interest are nevertheless permissible because they are not explicitly prohibited by 42 USC 503(g). Plaintiffs, on the other hand, maintain that the silence of 42 USC 503(g) on deductions for penalties and interest renders the statute ambiguous and that we should therefore defer to the Department of Labor's stated position on this matter. As discussed in Farish I , in an Unemployment Insurance Program Letter sent to all state employment security agencies in 1989 (UIPL No. 45-89), the Department of Labor advised that permissible deductions from payment of unemployment compensation did not include penalties or interest:
Although issued in 1989, UIPL No. 45-89 remains active. See United States Department of Labor, Active Unemployment Compensation Program Letters and Active Unemployment Insurance Program Letters as of July 28, 2016 < https://wdr.doleta.gov/directives/attach/TEN/TEN_07-16_Attachment_E_Acc.pdf> (accessed March 9, 2021) [https://perma.cc/Z2GY-XWV7].
5. Specific Situations in which Deductions May or Must be Made from Unemployment Compensation. A State law may (or must) include provision for deducting and withholding any sum from compensation payable to an individual only if specifically permitted (or required) by Federal law.[ ] These exceptions are limited to the following circumstances:
a. If the claimant is legally liable to repay an overpayment of compensation made from the State's unemployment fund, that amount owed may be deducted from compensation currently payable from such fund under State law. This is permissible because the amount previously overpaid is tantamount to a prepayment of compensation currently due the claimant.
* * *
When 42 USC 503(g) was enacted in 1986, states were permitted, but not required, to make deductions to recoup overpayments. PL 99-272, § 12401(a)(2); 100 Stat. 297. It became mandatory in 2012 when Congress substituted "shall" for "may" in the original provision. PL 112-96, § 2103(a); 126 Stat. 161.
Deductions to recover overpayments are limited to the offset of the overpayment itself. Offset may not be used to recover any additional interest or penalties due under State law as these additional amounts do not constitute a prepayment of compensation. Further, the offsetting of past due contributions, penalty, interest or costs incurred while the claimant was an employer is not permitted. See the Secretary's decision in the Minnesota conformity proceedings, dated December 16, 1988, and transmitted to the States by UIPL 25-89. [Emphasis added.]
Plaintiffs maintain that UIPL No. 45-89 is entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), the seminal decision from the United States Supreme Court concerning judicial deference to a federal agency's interpretation of a statute. Chevron presents a two-step inquiry. The first step is to determine "whether ‘Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.’ " Dep't of Labor & Economic Growth, Unemployment Ins. Agency v. Dykstra , 283 Mich. App. 212, 223, 771 N.W.2d 423 (2009), quoting Chevron , 467 U.S. at 842-843, 104 S.Ct. 2778. If, however, " ‘the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.’ " Dykstra , 283 Mich. App. at 224, 771 N.W.2d 423, quoting Chevron , 467 U.S. at 843, 104 S.Ct. 2778.
Aside from whether the statute is ambiguous, defendants argue that UIPLs are not entitled to Chevron deference. Plaintiffs disagree, but alternatively argue that even if Chevron does not apply, we should defer to UIPL No. 45-89 under Skidmore v. Swift & Co. , 323 U.S. 134, 65 S. Ct. 161, 89 L. Ed. 124 (1944). Per Skidmore , an agency interpretation that does not "carry the force of law" is nonetheless "eligible to claim respect according to its persuasiveness." United States v. Mead Corp. , 533 U.S. 218, 221, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001), citing Skidmore , 323 U.S. 134, 65 S.Ct. 161. See also Air Brake Sys., Inc. v. Mineta , 357 F.3d 632, 643 (C.A. 6, 2004), quoting Skidmore , 323 U.S. at 140, 65 S.Ct. 161 ("[F]ederal courts give respectful consideration to authoritative interpretations that lack the force of law, but that nonetheless have the ‘power to persuade.’ "); accord In re Complaint of Rovas Against SBC Mich. , 482 Mich. 90, 103, 754 N.W.2d 259 (2008) (explaining that, while not binding, state agency interpretations are entitled to "respectful consideration" and should only be overruled for "cogent reasons").
To begin, we agree with the parties that 42 USC 503(g) is silent on the issue at hand. 42 USC 503(g) mandates that states recoup overpayments through deductions, but it does not expressly preclude a state from making deductions for other amounts. Viewed by itself, 42 USC 503(g) could be read to mean, as the Court of Claims determined, that although states are required to recover overpayments through deductions, they have discretion whether to also recoup penalties and interest in that manner. However, viewing 42 USC 503 as a whole, as opposed to 42 USC 503(g) alone, we conclude that the statute unambiguously precludes states from using unemployment funds to satisfy penalties and interest assessed against benefit recipients. Although 42 USC 503 is silent as to deductions for penalties and interest, it remains the case that in the absence of an applicable exception or express authorization, deductions for penalties and interest violate the general directive in 42 USC 503(a)(5) that unemployment funds must be used to pay benefits. See Grand Rapids Motor Coach Co. v. Pub. Serv. Comm. , 323 Mich. 624, 634, 36 N.W.2d 299 (1949) ("[E]xemptions in a statute are carefully scrutinized and not extended beyond their plain meaning."); Huggett v. Dep't of Natural Resources , 232 Mich. App. 188, 194, 590 N.W.2d 747 (1998) ("Statutory exceptions operate to restrict the general applicability of legislative language and are strictly construed.").
In addition to the exceptions stated in 42 USC 503(a)(5), other subsections in 42 USC 503 allow or require deductions from benefits but none is relevant here. See 42 USC 503(d)(2)(B) (allowing for deductions to recover uncollected overissuance of supplemental nutrition assistant program benefits); 42 USC 503(e)(2)(A)(iii) (requiring deductions to recover unpaid child support).
Indeed, this is the precise reasoning behind the Secretary of Labor's decision that is cited in the relevant paragraph of UIPL No. 45-89. In 1987, Minnesota enacted a statutory provision allowing the deduction of interest and penalties from unemployment benefits made to individual claimants for the purpose of recouping the value of those claimants’ unpaid obligations to the state's unemployment fund that the claimants had failed to pay when they were employers. The United States Department of Labor challenged this provision as violating the Social Security Act's requirement that unemployment benefits be paid in full when due. Minnesota received a hearing before an Administrative Law Judge (ALJ) and maintained that the contested deductions were authorized by 42 USC 503(g). The ALJ determined that the Minnesota statute impermissibly constituted a levy on unemployment compensation that exceeded the narrow statutory exceptions in 42 USC 503(a)(5). The Secretary of Labor adopted the ALJ's recommendation:
[U]nder section 303(a)(5) of [the Social Security Act (SSA)],[ ] all money withdrawn from the unemployment fund must be used in payment of unemployment compensation.... Section 303(a)(1) of the SSA requires that a state unemployment compensation law provide for such methods of administration as will ensure full payment of unemployment compensation when due. Certain exceptions to the requirement that funds be used exclusively in the payment of unemployment compensation are statutorily provided for but none of these are applicable here.
[The Minnesota law at issue] permits the deduction and withholding of up to 50 percent of an individual's unemployment compensation payment for unpaid contributions, interest , penalties and costs for which the individual has been determined to be liable. Thus, an unemployed claimant would not receive in hand the full amount of his or her cash benefits if the claimant owed contributions to the unemployment fund from a prior period when the claimant had been an employer. The question, therefore, arises whether the reduction in the claimant's cash benefits for the purpose of recouping contributions owed conforms to the Federal statutory prescriptions as to use of unemployment fund monies.
The ALJ's recommendation, that I find Minnesota's recoupment provision in nonconformity with Federal law, is based on the ALJ's analysis of the applicable ... SSA provisions. Specifically, the ALJ concluded that the statutory language is clear and unambiguous , and that the legislative history and historical application of the ... SSA provisions support the limiting of the use of unemployment fund monies to cash benefits for unemployed claimants or to certain other specifically stated expenditures. The ALJ then found that Minnesota's recoupment provision involves the constructive withdrawal of funds for a purpose other than permitted by law and resulted in the unemployed claimant failing to receive full benefits when due.
Upon review of the entire record in this case, I agree with the analysis and conclusions of the administrative
42 USC 503 is § 303 of the Social Security Act.
law judge. ... [Minnesota Conformity, decision of the United States Department of Labor, entered December 16, 1988 (Case No. 88-UIA-9) (emphasis added).]
We agree with the Secretary of Labor's conclusion that 42 USC 503 unambiguously precludes the deduction of penalties and interest from current benefits. Alternatively, even if the statute was ambiguous, we would find that the Secretary's reasoning is persuasive and is at least entitled to Skidmore deference. We recognize that UIPL No. 45-89 cites the Minnesota proceedings in support of the statement that deductions cannot be made to recover unpaid contributions, penalties, and interest assessed against former employers currently receiving unemployment benefits. However, the reasoning set forth in the Secretary's decision applies with equal force to the general principle announced in UIPL No. 45-89 that deductions must be limited to recovery of the overpayment itself, and an offset may not be made to recover penalties and interest. It makes no difference that the Minnesota law allowed for recoupment of penalties and interest related to unpaid contributions as an employer rather than past benefits obtained because of an intentionally false statement or concealment of material information. The point is that any deduction to recover penalties and interest is impermissible because it is not authorized by 42 USC 503 and therefore violates the statute's starting point that all amounts withdrawn from the unemployment compensation fund must be used for payment of benefits. Finally, our conclusion is bolstered by the fact that 42 USC 503(a)(11) requires states to assess a penalty against an individual when a payment from the unemployment fund is found to have been made because of fraud, but there is no corresponding provision allowing deductions for such penalties. Given the express authorizations in 42 USC 503 allowing for deductions, we presume that Congress was acting intentionally when it declined to allow or mandate deductions to recover penalties. See Russello v. United States , 464 U.S. 16, 23, 104 S. Ct. 296, 78 L. Ed. 2d 17 (1983) ("[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.") (quotation marks and citation omitted; alteration in original). See also People v. Miller , 498 Mich. 13, 24-25, 869 N.W.2d 204 (2015) ("[I]f the Legislature had intended to allow [the proffered interpretation inferring authorization for multiple punishments], it clearly knew how to do so" given "specific authorization" for multiple punishments elsewhere in the statute.).
The dissent relies on 42 USC 503(m), which provides:
In the case of a covered unemployment compensation debt (as defined under section 6402(f)(4) of the Internal Revenue Code of 1986 ) that remains uncollected as of the date that is 1 year after the debt was finally determined to be due and collected, the State to which such debt is owed shall take action to recover such debt under section 6402(f) of the Internal Revenue Code of 1986.
In turn, 26 USC 6402(f) requires the Secretary of Treasury to deduct a "covered unemployment compensation debt" from a taxpayer's tax refund and pay that amount to the state, 26 USC 6402(f)(1)(A), and it defines covered unemployment compensation debt to include "any penalties and interest assessed" on "past-due debt for erroneous payment of unemployment compensation due to fraud," 26 USC 6402(f)(4)(A) and (C). Thus, if the state does not collect penalties and interest relating to past benefits erroneously paid because of fraud within a year, it must seek recovery under 26 USC 6402(f), i.e., through interception of the recipient's federal tax refund. From these statutory provisions allowing offset from federal tax refunds, the dissent infers authorization for deduction of penalties and interest from current unemployment benefits. How the dissent reaches this conclusion is mystifying. Put simply, authorization to offset penalties and interest from tax refunds does not equate to authorization to deduct the same amounts from current benefits owed to unemployment compensation recipients. The dissent suggests that allowing recoupment through one method but not the other is unreasonable. Congress apparently disagreed. We also note that we ordered the parties to provide supplemental briefs on 26 USC 6402(f)(4)(C), Farish v. Dep't of Talent & Economic Dev. , unpublished order of the Court of Appeals, entered July 8, 2020 (Docket No. 350866), and they filed a joint supplemental brief agreeing that it is not relevant to the interpretation of 42 USC 503. While we are not bound by the parties’ stipulation of law, for the reasons stated, we agree that 26 USC 6402(f) is not relevant to the issue before us.
The dissent concludes that the lack of an express authorization for deduction of penalties is irrelevant. We disagree. Given that Congress authorized states to assess penalties, it could have easily provided that states could deduct penalties from current benefits, as it did in 42 USC 503 for numerous other amounts. That there is no express authorization for deduction of penalties is telling.
To summarize, we conclude that 42 USC 503 precludes the UIA's practice of deducting penalties and interest from unemployment benefits. Where the federal government contributes to a state's unemployment fund, the fund may only be used to pay unemployment compensation unless an exception applies or express authorization for the deduction exists. And no authorization for deducting penalties or interest is contained in the statute. Our reasoning is consistent with UIPL No. 45-89 and the Secretary's decision in the Minnesota conformity proceedings. We conclude that the statute is unambiguous and, to the degree that conclusion may be questioned, that UIPL No. 45-89 is entitled to Skidmore deference. Accordingly, we need not address whether UIPLs are entitled to Chevron deference.
The dissent acknowledges that 42 USC 503 generally requires that the money withdrawn from an unemployment fund be used in the payment of unemployment compensation and that the statute contains multiple provisions expressly allowing or mandating deductions from benefits. Nonetheless, the dissent concludes that a deduction for penalties and interest does not require express authorization "because such a deduction is inherent within the unemployment statutory scheme itself." In other words, the dissent reads language into an unambiguous statute, contrary to the rules of statutory interpretation. See Mich. Ass'n of Home Builders v. City of Troy , 504 Mich. 204, 212, 934 N.W.2d 713 (2019). The dissent also notes that recovered penalties are deposited into the unemployment fund, and so allowing deductions for penalties does not divert funds from the payment of unemployment compensation. This argument overlooks, however, that 42 USC 503 is concerned not only with using funds for proper purposes but also ensuring that recipients receive "full payment of unemployment compensation when due," 42 USC 503(a)(1), which counsels against implying authorization for deductions. Finally, the dissent observes that no federal or state appellate court has relied on UIPL No. 45-89 for the proposition that states may not make deductions for penalties and interest. We presume this is because other states have followed the Department of Labor's unequivocal directive that "[o]ffset may not be used to recover any additional interest or penalties due under State law," UIPL No. 45-89, so the issue has not arisen until now. In any event, we are aware of no authority—administrative or otherwise—consistent with the dissent's view that such deductions are permitted.
B. CAUSE OF ACTION TO ENFORCE 42 USC 503
We agree with defendants, however, that plaintiffs do not have a private cause of action under 42 USC 503 for money damages or remittance of the improper deductions, but conclude that plaintiffs may seek declaratory and injunctive relief.
As an initial matter, we disagree with plaintiffs that we are precluded from considering this question under the law-of-the-case doctrine. "The law of the case doctrine holds that a ruling by an appellate court on a particular issue binds the appellate court and all lower tribunals with respect to that issue." New Props., Inc. v. George D. Newpower, Jr., Inc. , 282 Mich. App. 120, 132, 762 N.W.2d 178 (2009) (quotation marks and citation omitted). "The law of the case doctrine applies only to questions actually decided in the prior decision and to those questions necessary to the court's prior determination." Kalamazoo v. Dep't of Corrections (After Remand) , 229 Mich. App. 132, 135, 580 N.W.2d 475 (1998).
In its first opinion granting defendants summary disposition, the Court of Claims determined that plaintiffs had an implied cause of action to enforce 42 USC 503, relying on federal caselaw to that effect. As an alternative ground for affirmance in the first appeal, defendants maintained that plaintiffs did not have a cause of action under 42 USC 503. See Middlebrooks v. Wayne Co. , 446 Mich. 151, 166 n. 41, 521 N.W.2d 774 (1994) (stating that a party may present a preserved "alternative ground for affirmance"). We did not address the cause-of-action issue and instead remanded for consideration of the Department of Labor's administrative guidance interpreting 42 USC 503. Contrary to plaintiffs’ argument, that result did not impliedly determine that they had a cause of action, and resolution of that issue was not necessary to our prior determination.
Turning to the merits, plaintiffs identify federal authority holding that there is an implied private cause of action under 42 USC 503. See Gann v. Richardson , 43 F. Supp. 3d 896, 901-904 (S.D. Ind., 2014) ; Shaw v. Valdez , 819 F.2d 965, 966 (C.A. 10, 1987) ; Kelly v. Lopeman , 680 F. Supp. 1101, 1105-1106 (S.D. Ohio, 1987) ; Brewer v. Cantrell , 622 F. Supp. 1320, 1322-1323 (W.D. Va., 1985), aff'd without a published opinion 796 F.2d 472 (C.A. 4, 1986). Although the exact basis for allowing private litigants to enforce 42 USC 503 is unclear, the United States Supreme Court "has consistently assumed that it is a proper remedy." Jenkins v. Bowling , 691 F.2d 1225, 1228 (C.A. 7, 1982), citing California Dep't of Human Resources Dev. v. Java , 402 U.S. 121, 91 S. Ct. 1347, 28 L. Ed. 2d 666 (1971). In Java , the United States Supreme Court entertained a private class action lawsuit challenging a state's refusal to pay unemployment benefits while an administrative appeal was pending. Java , 402 U.S. at 122, 91 S.Ct. 1347. The Court concluded that the state law "must be enjoined because it is inconsistent with § 303(a)(1) of the Social Security Act." Id. at 135, 91 S. Ct. 1347. See also Ohio Bureau of Employment Servs. v. Hodory , 431 U.S. 471, 97 S. Ct. 1898, 52 L. Ed. 2d 513 (1977) (reversing on the merits the lower court's decisions that furloughed employees were entitled to declaratory and injunctive relief and that the state law at issue conflicted with the Social Security Act).
Defendants attempt to distinguish these cases by arguing that they imply a cause of action under 42 USC 503(a), not 42 USC 503(g). First, this distinction is insignificant because 42 USC 503(g) operates within the general framework of the administration of a state unemployment fund governed by the rules set forth in 42 USC 503(a). Second, as discussed, although the parties focus on 42 USC 503(g), we conclude that deductions for penalties and interest violates 42 USC 503(a).
Given the federal caselaw holding that a private cause of action exists under 42 USC 503, we agree with the United States Court of Appeals for the Seventh Circuit that this issue is "too well settled to be questioned by us." Jenkins , 691 F.2d at 1228. That said, we agree with defendants that these cases have only allowed the plaintiffs to seek declaratory and injunctive relief. And while plaintiffs ask that we follow this caselaw, they do not explain why it should be extended to allow for a cause of action for money damages. Nor do plaintiffs argue that they have an enforceable "right" under 42 USC 503 such that they may proceed under 42 USC 1983. See Blessing v. Freestone , 520 U.S. 329, 340-341, 117 S. Ct. 1353, 137 L. Ed. 2d 569 (1997). For these reasons, we see no basis to infer a cause of action under 42 USC 503 for money damages or a remittance of improperly withheld funds. Accordingly, plaintiffs do not have a money-damages remedy for the violation of 42 USC 503, but they can seek declaratory and injunctive relief as to whether defendants may continue to reduce benefits to collect interest and penalties. Indeed, plaintiffs could seek that relief even if they did not have an implied cause of action under 42 USC 503. In Lash v. Traverse City , 479 Mich. 180, 196-197, 735 N.W.2d 628 (2007), the Supreme Court held that the plaintiff-employee did not have an implied cause of action for damages against the employer for violating a statute prohibiting governmental entities from imposing residency requirements. However, the Court explained that the lack of a cause of action for damages did not preclude the plaintiff from seeking declaratory and injunctive relief:
Plaintiffs’ 42 USC 1983 claim pertained only to their allegations that defendants’ procedures for recouping overpaid benefits did not provide adequate notice or an opportunity for a hearing.
[P]laintiff's claim that a private cause of action for monetary damages is the only mechanism by which the statute can be enforced is incorrect. Plaintiff could enforce the statute by seeking injunctive relief pursuant to MCR 3.310, or declaratory relief pursuant to MCR 2.605(A)(1).... [A]n "actual controversy" exists for the purposes of a declaratory judgment where a plaintiff pleads and proves facts demonstrating an adverse interest necessitating a judgment to preserve the plaintiff's legal rights. In this case, plaintiff's claim is that defendant's residency requirement, made a condition of plaintiff's employment, was in violation of MCL 15.602(2). Such a claim would constitute an "actual controversy" for the purposes of an action for a declaratory judgment. [ Id. at 196-197, 735 N.W.2d 628 (citations omitted).]
"In a case of actual controversy within its jurisdiction, a Michigan court of record may declare the rights and other legal relations of an interested party seeking a declaratory judgment, whether or not other relief is or could be sought or granted." MCR 2.605(A)(1). The "actual controversy" requirement is easily satisfied in this case because deductions from plaintiffs’ benefits were being made in violation of federal law. Further, it is well established that declaratory actions may be brought to determine issues of statutory construction. See Bd. of Ed. of Detroit v. Superintendent of Pub. Instruction , 319 Mich. 436, 455, 29 N.W.2d 902 (1947) (explaining that cases involving "the validity and interpretation" of statutes were within the purview of the former declaratory judgment statute). See also 26 CJS, Declaratory Judgments, § 53, p. 95 ("Questions as to the validity or construction of statutes may be determined in declaratory judgment proceedings, provided there is an actual or justiciable controversy.").
That plaintiffs unsuccessfully pursued a cause of action for damages does not defeat their claim for declaratory relief. The same is true as to plaintiffs’ request for an injunction to prevent further unlawful deductions from unemployment benefits. Injunctive relief may be granted in declaratory actions as necessary. See Barry Co. Probate Court v. Mich. Dep't of Social Servs. , 114 Mich. App. 312, 319, 319 N.W.2d 571 (1982) ("After entry of judgment for declaratory relief, further relief, such as an injunction, may be granted, if necessary or proper, against any adverse party whose rights were determined by the declaratory judgment."). See also Stein v. Continental Cas. Co. , 110 Mich. App. 410, 426, 313 N.W.2d 299 (1981).
In sum, per federal caselaw, plaintiffs have a cause of action for declaratory and injunctive relief under 42 USC 503. They could also seek that relief in an action for a declaratory judgment under MCR 2.605(A)(1). We remand to the Court of Claims for entry of a declaratory judgment that deductions from unemployment benefits to satisfy penalties and interest violates 42 USC 503 and for an injunction enjoining such deductions in the future.
C. CONVERSION
We next address whether plaintiffs can maintain a claim of conversion on the basis of deductions made in violation of federal law. Plaintiffs argue that the Court of Claims erred by determining that their statutory and common-law conversion claims are barred by the governmental tort liability act (GTLA), MCL 691.1401 et seq. We disagree.
As noted, in Farish I , we affirmed the dismissal of plaintiffs’ conversion claims against the individual defendants who were acting in their official capacity. Therefore, we need only address immunity with respect to plaintiffs’ claims against the agency-defendants.
The GTLA broadly shields government agencies from tort liability:
Except as otherwise provided in this act, a governmental agency is immune from tort liability if the governmental agency is engaged in the exercise or discharge of a governmental function. Except as otherwise provided in this act, this act does not modify or restrict the immunity of the state from tort liability as it existed before July 1, 1965, which immunity is affirmed. [ MCL 691.1407(1).]
Both common-law and statutory conversion are considered torts. See Aroma Wines & Equip., Inc. v. Columbian Distribution Servs., Inc. , 497 Mich. 337, 354, 361, 871 N.W.2d 136 (2015). Plaintiffs nonetheless offer several reasons why their suit is not barred by governmental immunity.
First, they argue that defendants are not immune from tort liability because the deduction of penalties and interest in violation of federal law exceeded the scope of defendants’ governmental functions. This issue is not properly preserved because it was raised for the first time in plaintiffs’ reply brief on appeal. See Henderson v. Dep't of Treasury , 307 Mich. App. 1, 7-8, 858 N.W.2d 733 (2014) ; Blazer Foods, Inc. v. Restaurant Props., Inc. , 259 Mich. App. 241, 252, 673 N.W.2d 805 (2003). In any event, plaintiffs’ argument lacks merit. The GTLA defines a "governmental function" as "an activity that is expressly or impliedly mandated or authorized by constitution, statute, local charter or ordinance, or other law." MCL 691.1401(b). In this case, defendants deducted penalties and interest while exercising the governmental function of administering unemployment insurance benefits. Although we conclude that the agency-defendants violated federal law by deducting penalties and interest from subsequent unemployment benefits, there is no present dispute—given the dismissal of plaintiffs’ state-law claims—that their actions were authorized by MESA. Accordingly, the deductions were not ultra vires activity.
Plaintiffs next argue that because they seek restitution rather than damages, their suit does not sound in tort and so is not barred by immunity. In support, they rely on Genesee Co. Drain Comm'r v. Genesee Co. , 504 Mich. 410, 934 N.W.2d 805 (2019). In that case, the county drain commissioner sought a proportionate share of group health insurance premiums that were overpaid and refunded to the county and deposited into its general fund. Id. at 415, 934 N.W.2d 805. We held that the plaintiff's breach-of-contract claim could proceed, but that his tort claims, including conversion, were barred by the GTLA. Id. at 415-416, 934 N.W.2d 805 On remand, the plaintiff amended his complaint to include a claim for unjust enrichment, which the county argued was also barred by the GTLA. Id. at 416, 934 N.W.2d 805. The Supreme Court disagreed and held that a claim of unjust enrichment does not subject the defendant to tort liability. The Court reasoned that, unlike tort and contract actions in which the party seeks compensatory damages, the remedy for unjust enrichment was restitution. Id. at 419, 934 N.W.2d 805. Significantly, the plaintiff did not merely allege the mechanism used by the county to obtain the monies was improper, but that the county had no right to the sums at all.
Thus, plaintiffs’ reliance on Genesee Co. is misplaced. Plaintiffs do not allege unjust enrichment, i.e., they do not claim that the state is not entitled to collect penalties and interest. They argue only that the mechanism used by the state to recoup those sums violates federal law, a proposition with which we agree. But absent a claim that the state has no right to assess penalties and interest, we do not see how our holding that deductions from future unemployment benefits are not permitted by federal law renders the state "unjustly enriched." Receipt of sums to which the state is entitled is not unjust enrichment, and 42 USC 503 does not bar a state from imposing or collecting those sums except by the means at issue. Our conclusion that a particular means of collection may not be used does not change the fact that the state has an underlying and undisputed right to the amounts in question.
Plaintiffs next argue that the GTLA does not provide immunity from suits for intentional torts. In support, they cite several Court of Appeals cases decided prior to 1984. However, after these cases were decided, the Supreme Court issued its decision in Smith v. Dep't of Pub. Health , 428 Mich. 540, 544, 410 N.W.2d 749 (1987), in which it unambiguously stated that "[t]here is no ‘intentional tort’ exception to governmental immunity." See also Genesee Co. Drain Comm'r v. Genesee Co. , 309 Mich. App. 317, 328, 869 N.W.2d 635 (2015) ; Harrison v. Dir. of Dep't of Corrections , 194 Mich. App. 446, 450, 487 N.W.2d 799 (1992).
Plaintiffs rely on Elliott v. Dep't of Social Servs. , 124 Mich. App. 124, 130, 333 N.W.2d 603 (1983), Randall v. Delta Charter Twp. , 121 Mich. App. 26, 34, 328 N.W.2d 562 (1982), and Lawrence v. Dep't of Corrections , 81 Mich. App. 234, 240, 265 N.W.2d 104 (1978).
Lastly, plaintiffs argue that defendants are specifically not immune from conversion claims, asserting that governmental defendants were subject to such claims before July 1, 1965, and that the scope of the state's common-law immunity was continued in accordance with the second sentence of MCL 691.1407(1). However, the pre-1965 cases relied on by plaintiffs all involved municipalities and counties, which are not included in the GTLA's definition of "state." See MCL 691.1401(a), (e), and (g). Further, we have reviewed the cases cited by plaintiffs for the proposition that conversion claims were permitted against other governmental entities prior to July 1, 1965, and find that the cited cases do not support their argument. Accordingly, plaintiffs fail to establish that conversion claims are excepted from the GTLA. III. CONCLUSION
The sentence reads, "Except as otherwise provided in this act, this act does not modify or restrict the immunity of the state from tort liability as it existed before July 1, 1965, which immunity is affirmed." MCL 691.1407(1).
Loranger v. City of Flint , 185 Mich. 454, 152 N.W. 251 (1915), and Stock v. City of Hillsdale , 155 Mich. 375, 119 N.W. 435 (1909), considered whether a city may use river water for public use when doing so allegedly burdens downriver users. These cases involved claims for damages, and there was no assertion that the plaintiffs held title to the water. Other cited cases involved claims for assumpsit, which were essentially breach-of-contract claims involving municipal governments allegedly failing to pay their contractors for certain materials. See Ward v. Alpine Twp. , 204 Mich. 619, 171 N.W. 446 (1919) ; Detroit v. Mich. Paving Co. , 38 Mich. 358 (1878). Plaintiffs also cite Detroit v. Mich. Paving Co. , 36 Mich. 335 (1877), which, although it makes reference to conversion, was essentially a contract case (discussing whether the city could use sand left in the street by a plaintiff contractor after termination of the contract). Detroit Muni. Employees Ass'n v. Detroit , 344 Mich. 670, 672, 74 N.W.2d 888 (1956), involved an unusual situation in which employees sought to recover wages that had been withheld during the Great Depression pursuant to a city ordinance. The only reference to conversion in that case was the observation that had such a claim been brought, the period of limitations would have barred it. See id. at 678, 74 N.W.2d 888. And McCurdy v. Shiawassee Co. , 154 Mich. 550, 118 N.W. 625 (1908), concluded that a city could not be required to repay a loan when the borrowing was not authorized by the voters as was required. The only mention of conversion in that case was its inclusion in a list of several causes of action brought by plaintiff, all of which were rejected on the ground that plaintiff did not have an enforceable right to repayment. Id. at 562, 118 N.W. 625. In sum, plaintiffs have not cited any pre-1965 cases that support their view regarding the viability of a conversion claim against a governmental entity.
We reverse the Court of Claims as to the interpretation of 42 USC 503. The statute unambiguously precludes states from deducting penalties and interest from unemployment compensation. To the extent that conclusion may be questioned, the Department of Labor's interpretation of the statute in UIPL No. 45-89 is entitled to deference. We conclude, therefore, that the state may not reduce future unemployment benefits as a mechanism to collect interest and penalties due because of an overpayment. We further conclude that federal law provides for a private cause of action to enforce the statute, but only as to declaratory and injunctive relief. Finally, we affirm the Court of Claims’ dismissal of plaintiffs’ conversion claims because they are barred by governmental immunity. Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. Ronayne Krause, J., concurred with Shapiro, J.
Riordan, J. (concurring in part and dissenting in part).
I would affirm the trial court's ruling that plaintiffs failed to state a claim under 42 USC 503(g).
The United States Department of Labor's interpretation of 42 USC 503(g)(1), as stated in Unemployment Insurance Program Letter (UIPL) No. 45-89, conflicts with the plain language of the statute, and therefore, it is not entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837, 843, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), or Skidmore v. Swift & Co. , 323 U.S. 134, 139-140, 65 S. Ct. 161, 89 L. Ed. 124 (1944) (explaining when an administrative policy is entitled to deference; a court applying Skidmore deference determines the best available construction of the statute by considering the agency's own analysis as persuasive and giving that analysis whatever weight it reasonably deserves).
"Under Chevron , the federal courts will defer to an administrative agency's interpretation of a statute that it is charged with administering—even if that interpretation differs from what the courts believe to be the best interpretation—so long as the particular statute is ambiguous on the point at issue and the agency's construction is reasonable." Mich. Farm Bureau v. Dep't of Environmental Quality , 292 Mich. App. 106, 130 n. 10, 807 N.W.2d 866 (2011).
When interpreting a federal statute, our goal is to give effect to the intent of Congress. Walters v. Nadell , 481 Mich. 377, 381, 751 N.W.2d 431 (2008). "[T]he most reliable evidence of that intent is the plain language of the statute." Hegadorn v. Dep't of Human Servs. Dir. , 503 Mich. 231, 245, 931 N.W.2d 571 (2019) (quotation marks and citation omitted). Statutory language should be construed reasonably, keeping in mind the purpose of the act. McCahan v. Brennan , 492 Mich. 730, 739, 822 N.W.2d 747 (2012). When interpreting words and phrases used in a statute, those words and phrases must be assigned meanings that are in harmony with the whole of the statute, construed in the light of history and common sense. Sweatt v. Dep't of Corrections , 468 Mich. 172, 179, 661 N.W.2d 201 (2003). Thus, we do not construe the meaning of statutory terms in a vacuum; rather, we interpret the words in their context and with a view to their place in the overall statutory scheme. Manuel v. Gill , 481 Mich. 637, 650, 753 N.W.2d 48 (2008).
The unemployment insurance system is a joint federal-state scheme whereby the federal government subsidizes state unemployment insurance programs. California Dep't of Human Resources Dev. v. Java , 402 U.S. 121, 125, 91 S. Ct. 1347, 28 L. Ed. 2d 666 (1971). In order to receive funding, a state unemployment fund must only be used to pay unemployment benefits and certain other items such as cash benefits and refunds for amounts erroneously paid into the fund by employers. 42 USC 503(a)(5). Moreover, states are expressly permitted to deduct certain amounts from unemployment benefits, including payments for health insurance, taxes, and "overpayments as provided in subsection (g)." 42 USC 503(a)(5). Subsection (g) provides that "[a] State shall deduct from unemployment benefits otherwise payable to an individual an amount equal to any overpayment made to such individual under an unemployment benefit program of the United States or of any other State, and not previously recovered." 42 USC 503(g)(1). As the trial court correctly concluded, this provision contains no limitation barring states from deducting penalties and interest. Therefore, I would decline to read into the statute a limitation that Congress has not included. See Haynes v. Neshewat , 477 Mich. 29, 38, 729 N.W.2d 488 (2007) (holding that courts should "not read into [a] statute a limitation that is not there").
Moreover, 42 USC 503(m) indicates that states must act to recover any uncollected "covered unemployment compensation debt" as defined by 26 USC 6402(f)(4), which includes:
(A) a past-due debt for erroneous payment of unemployment compensation due to fraud or the person's failure to report earnings which has become final under the law of a State certified by the Secretary of Labor pursuant to section 3304 and which remains uncollected;
(B) contributions due to the unemployment fund of a State for which the State has determined the person to be liable and which remain uncollected; and
(C) any penalties and interest assessed on such debt.
Subsection (C) permits penalties and interest to be assessed on "such debt" as described in Subsection (A) (benefits obtained through fraud or misrepresentation) and Subsection (B) (otherwise liable). Accordingly, Congress expressed its intent for states to seek recovery of any penalties and interest associated with outstanding debts incurred by fraud or otherwise. Rather than rely on the general directive in 42 USC 503(a)(5) that unemployment funds be used only to pay benefits, as the majority does, I would find that the more reasonable view is that the specific provisions of 42 USC 503(m) and 26 USC 6402(f)(4) indicate that the statutory scheme as a whole allows the states to deduct penalties and interest prior to the disbursement of unemployment payments, even in cases in which fraud is not alleged. See Manuel , 481 Mich. at 650, 753 N.W.2d 48 (indicating that the courts interpret the words of a statute in their context and with a view to their place in the overall statutory scheme); see also Donkers v. Kovach , 277 Mich. App. 366, 370-371, 745 N.W.2d 154 (2007) (stating that when two statutes relate to the same subject matter and share a common purpose, they are in pari materia and must be read together as one law; when two statutes are in pari materia but conflict on a particular issue, the more specific statute controls over the more general). This is because 26 USC 6402(f)(4) of the tax code permits recovery of unemployment benefits erroneously paid in cases of fraud or for which a person has been deemed liable irrespective of fraud, and any penalties and interest associated with that debt, by offsetting any tax credit or refund owed to the filer. Further, 42 USC 503(m) of the Social Security Act requires that states utilize that tax-refund-interception method of collection for debts that are outstanding one year after they are assessed, and the Federal Unemployment Tax Act permits those monies to be deposited into the state's funds in the same manner that would have occurred if the individual had made the payment themselves—including penalties and interest. 26 USC 3304(a)(4)(G).
However, the parties have failed to raise this argument, and they agree in their joint supplemental briefs that 42 USC 503(m), and the reference therein to 26 USC 6402(f)(4)(C), does not apply here. But, the parties may not dictate by agreement the proper interpretation and application of the law. Mack v. Detroit , 467 Mich. 186, 209, 649 N.W.2d 47 (2002) (the appellate court must "set forth the law as clearly as it can, irrespective whether the parties assist the Court in fulfilling its constitutional function. The jurisprudence of Michigan cannot be, and is not, dependent upon whether individual parties accurately identify and elucidate controlling legal questions.").
In addition to collecting overpayments via tax-refund garnishment, states are permitted to deduct "overpayments" from unemployment benefits. "Overpayment" is not defined in the statute, but it is more reasonable to conclude that Congress intended for states to have two methods of collecting erroneously paid benefits and associated penalties and interest. The alternative requires us to conclude that in cases in which a recipient commits fraud to obtain unemployment benefits, for example, Congress intended for states to deduct the amount of erroneously paid benefits from unemployment benefit checks, but also to require states to wait one year and then collect the associated penalties and interest separately by intercepting tax refunds. In other words, a state's ability to collect penalties and interest from a recipient who commits fraud to obtain unemployment benefits largely would be dependent upon whether that individual files a tax return, and if so, the size of the tax refund. The majority concludes otherwise. Instead, it holds that deducting penalties and interest violates the general provision in 42 USC 503(a)(5) that unemployment funds must be used to pay benefits and that the enumerated exceptions to this general rule should be strictly construed. I struggle to follow such reasoning. Reducing unemployment benefits by the amount of penalties and interest is not, in any respect, inconsistent with the general rule of 42 USC 503(a)(5) that "[e]xpenditure of all money withdrawn from an unemployment fund of [a] State" must be "in the payment of unemployment compensation." Such language means that money in an unemployment fund may only be used for payment of unemployment benefits and may not, for instance, be used to pay for road repairs. The majority does not explain why the state's conduct in reducing unemployment benefits paid to plaintiffs by the amount of penalties and interest—which logically results in money being retained in the unemployment fund—constitutes "money withdrawn from an unemployment fund of [a] State." 42 USC 503(a)(5).
We must construe statutes reasonably and in a manner that avoids absurd results. Yang v. Everest Nat'l Ins. Co. , 329 Mich. App. 461, 471, 942 N.W.2d 653 (2019). The majority suggests that there is a legitimate basis for such a peculiar scheme because unemployment compensation benefits provide immediate assistance. However, the majority apparently fails to understand that the value of money depreciates over time. Therefore, when a recipient of unemployment benefits receives excess benefits, they deprive the state of the present use of that money. Additionally, in cases of fraud, Congress specifically requires an immediate assessment of penalties when the recipient is determined to have committed fraud. See 42 USC 503(a)(11). Therefore, as with the issue before us, any delay in collecting such penalties is unwarranted.
Regardless, we should not overlook "the general rule that exemptions in a statute are carefully scrutinized and not extended beyond their plain meaning." Grand Rapids Motor Coach Co. v. Pub. Serv. Comm. , 323 Mich. 624, 634, 36 N.W.2d 299 (1949). However, this general rule does not apply in this case, in which the relevant provision states that in order to receive federal funding, the state's unemployment compensation law must provide for
[e]xpenditure of all money withdrawn from an unemployment fund of such State, in the payment of unemployment compensation, ... Provided further , That amounts may be deducted from unemployment benefits and used to repay overpayments as provided in subsection (g)[.] [ 42 USC 503(a)(5).]
Our Supreme Court has interpreted the phrase "provided further" to be clarifying language, rather than indicative of an exception to a general directive. See Magnuson v. Kent Co. Bd. of Canvassers , 370 Mich. 649, 658, 122 N.W.2d 808 (1963). Moreover, while the general rule requires courts to strictly construe exemptions so that they are not extended beyond their ordinary meaning, it does not require us to constrain the ordinary meaning in a manner that is contrary to Congress's intent. Ally Fin. Inc. v. State Treasurer , 502 Mich. 484, 491-492, 918 N.W.2d 662 (2018) (the requirement that an exemption be strictly construed does not permit a strained construction that is contrary to legislative intent). Rather, we are "duty-bound to apply the laws as written." DeWitt Twp. Supervisor v. State Tax Comm. , 397 Mich. 576, 585, 244 N.W.2d 920 (1976). Thus, even if this general rule applied in this case, the majority has not applied it correctly.
In addition, the majority concludes that penalties and interest may not be deducted because the statutory scheme requires states to assess penalties and interest in cases of fraud, 42 USC 503(a)(11), but does not specifically allow for a deduction in that regard. However, it does not follow that states are prohibited from deducting penalties and interest merely because there is no specific statutory allowance for the deduction. 42 USC 503 requires deductions in two instances and allows deductions in four additional instances. All four of the allowed deductions relate to instances in which money is withdrawn from the unemployment fund for purposes other than the payment of unemployment compensation, contrary to the general rule of 42 USC 503(a)(5). For example, an allowed deduction for the withholding of federal income tax obviously does not result in the unemployment fund retaining a windfall in that amount. Instead, the amount is remitted to the federal government. See 42 USC 503(a)(5). Yet, remitting money from the unemployment fund to the federal government for the purpose of satisfying a tax obligation is incompatible with the general rule of 42 USC 503(a)(5). Hence, a specific statutory allowance for the deduction for payments from the unemployment fund was necessary.
States are required to deduct for "child support obligations," 42 USC 503(e), and for "overpayment" of employment benefits, 42 USC 503(g).
States are allowed to deduct "to pay for health insurance, or the withholding of Federal, State, or local individual income tax," 42 USC 503(a)(5) ; "for the payment of short-time compensation under a short-time compensation program," id. ; "for the payment of allowances under a self-employment assistance program," id. ; or for "an uncollected overissuance ... of supplemental nutrition assistance program benefits," 42 USC 503(d).
But a deduction for penalties and interest is unlike all other expressly allowed deductions in that such a deduction does not result in withdrawal of money from the unemployment fund for a generally impermissible purpose under 42 USC 503(a)(5). See, e.g., 42 USC 503(a)(11) (providing that penalties must be immediately deposited into the unemployment fund). In my view, Congress was not required to expressly allow a deduction for penalties and interest because such a deduction is inherent within the unemployment statutory scheme itself. That is, the more reasonable interpretation of the statutory scheme is that Congress left this matter to the discretion of the states—an interpretation which we have determined to be reasonable. Farish v. Dep't of Talent & Economic Dev. , unpublished per curiam opinion of the Court of Appeals, issued December 11, 2018 (Docket No. 341350, 2018 WL 6517575). Instead, the majority reads into the statute a restriction that is absent from the plain language and violates the principle that we may not "judicially legislate by adding into a statute provisions that ... [Congress] did not include." Pike v. Northern Mich. Univ. , 327 Mich. App. 683, 697-698, 935 N.W.2d 86 (2019) (quotation marks and citations omitted).
We remanded this case to the trial court for the sole task of considering whether the UIPL was entitled to any amount of deference. To that point, the UIPL does not describe any ambiguity in the statute and fails to provide any persuasive authority for its interpretation. Therefore, it is not persuasive under Skidmore , 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124. See Dep't of Labor & Economic Growth, Unemployment Ins. Agency v. Dykstra , 283 Mich. App. 212, 225, 229-230, 231 & n. 8, 771 N.W.2d 423 (2009) (applying the Chevron framework to reject a guidance letter that contradicted the statute at issue and concluding that the guidance letter did not warrant a lesser level of deference under Skidmore ). Moreover, the UIPL conflicts with the plain language of the statute and imposes a restriction on states that Congress did not include. TRJ & E Props., LLC v. City of Lansing , 323 Mich. App. 664, 675, 919 N.W.2d 795 (2018) (agency interpretations of statutes are not entitled to deference when they conflict with the language of a statute). Until today, it does not appear that any federal court or state appellate court has embraced the UIPL in the manner the majority advocates since it was issued in 1989. And the majority does so here in a peculiar manner—simultaneously concluding that 42 USC 503 is unambiguous and also that the UIPL is entitled to Skidmore deference which, by the terms of its holding, only applies to ambiguous statutes. See John Hancock Mut. Life Ins. Co. v. Harris Trust & Savings Bank , 510 U.S. 86, 109, 114 S. Ct. 517, 126 L. Ed. 2d 524 (1993).
The United States Court of Appeals for the Fifth Circuit cited the UIPL in a case involving the Employee Retirement Income Security Act of 1974 for the proposition that state law must prohibit waiver of claims to unemployment compensation if participating in the federal-state unemployment compensation system. See Mitchell Energy & Dev. Corp. v. Fain , 311 F.3d 685, 688 (C.A. 5, 2002). I have not identified any other case that has even cited the UIPL.
In sum, the trial court's deference analysis was proper, and I see no reason for reversal.
II. CONCLUSION
The trial court properly concluded that plaintiffs failed to state a claim under 42 USC 503. Accordingly, I would affirm the trial court's ruling.