The U.S. Supreme Court on Friday ruled a group of Alabama unemployment applicants can pursue allegations that delays in the state's benefits review process violated their federal civil rights, holding a state law that requires litigants to exhaust administrative remedies before filing suit doesn't bar their procedural claims.
In a 5-4
opinion, the justices held that the Alabama Supreme Court misapplied state law when it ruled in June 2023 that the exhaustion requirement prohibited Alabama courts from hearing claims that "extreme delays" and inaction in the state's processing of unemployment benefit requests amid COVID-19 violated the applicants' due process rights and the Social Security Act.
Friday's narrow ruling asserts that states can't effectively immunize state officials from claims brought under U.S. Code Section 1983 through exhaustion requirements. But the justices declined to address the broader question raised in the case about whether court precedent bars states from creating exhaustion requirements for all federal civil rights claims.
"The Alabama Supreme Court ruled that the claimants could not sue under [Section] 1983 to challenge delays in the administrative process until the claimants completed that process," Justice Brett Kavanaugh wrote for the majority. "But that ruling created a catch-22: Because the claimants cannot sue until they complete the administrative process, they can never sue under [Section] 1983 to obtain an order expediting the administrative process."
"This court's precedents do not permit states to immunize state officials from [Section] 1983 suits in that way," he said.
Justice Clarence Thomas, joined by Justices Samuel Alito, Neil Gorsuch and Amy Coney Barrett, dissented, arguing Alabama's law was simply a "neutral rule of judicial administration" aimed at controlling state courts' workloads.
The majority wrongly based its ruling on the law's incidental effects, instead of its purpose, Justice Thomas wrote.
"As a matter of first principles, states have unfettered discretion over whether to provide a forum for [Section] 1983 claims in their courts," he said. "And, Alabama's exhaustion rule does not transgress the limitations that our precedents have recognized."
Friday's ruling stems from a state court challenge brought by Nancy Williams and 21 other Alabamians, who either experienced "extreme delays" in the processing of their unemployment benefits claims or never received hearings when they appealed benefits decisions. The Alabama Supreme Court tossed their lawsuit after finding it lacked jurisdiction to hear the case due to the exhaustion requirement.
Williams and her fellow unemployment applicants argued to the Supreme Court that two high court decisions from the 1980s established
a categorical bar on state exhaustion requirements. In 1982, the court held in
Patsy v. Board of Regents 
that the exhaustion of state administrative remedies couldn't be a prerequisite to bringing civil rights claims in federal court. And six years later, in
Felder v. Casey , the justices applied the same rule to strike down a Wisconsin exhaustion statute for state court cases.
Former Alabama Secretary of Labor Fitzgerald Washington — who was replaced by Greg Reed — countered that
no such bar exists, adding that Felder requires courts to review state statutes on a case-by-case basis to determine if they are unlawful exhaustion requirements, which are often designed to hinder a litigant's ability to vindicate their federal rights. He argued Alabama's law didn't hinder anything, but determined the role of state courts in such cases.
Justice Kavanaugh refuted Washington's argument, noting the effect of state rules, and not their label, determines whether they are jurisdictional or not.
"As the court has explained, states possess 'no authority to override' Congress's 'decision to subject state' officials 'to liability for violations of federal rights,'" he wrote. "That principle bars any state rule immunizing state officials from a 'particular species' of federal claims, even if the immunity rule is 'cloaked in jurisdictional garb.'"
Justice Thomas wrote for his dissenting colleagues that the only constraint the Constitution places on states is preemption, which he claimed isn't an issue in this case.
"Taken together, this case should begin and end with Alabama's plenary authority to decide which federal matters its state courts will have subject-matter jurisdiction to hear," Justice Thomas wrote. "Alabama exercised that authority to create an exhaustion requirement, and we should respect its decision."
Along with disagreeing with the majority's reasoning, Justice Thomas also accused the court of reviewing and accepting an argument that had never been raised before.
Williams and the unemployment applicants had argued alternatively that, if there is no categorical bar, Alabama's law improperly prohibits them from challenging current procedural issues until the procedure is complete and the alleged harms no longer exist.
Instead of accepting that argument, the court should've remanded the case to give the Alabama Supreme Court a first pass at it, Justice Thomas said. Justice Kavanaugh wrote in the majority opinion that he disagrees the argument was improperly raised.
Jenner & Block LLP partner Adam G. Unikowsky, an attorney for the unemployment applicants, told Law360 in a statement Friday that he is "gratified" by the Supreme Court's ruling that Alabama can't bar his clients' claims.
Counsel for Reed didn't immediately respond to requests for comment.
Williams and the other claimants are represented by Adam G. Unikowsky, Arjun R. Ramamurti and Emanuel Powell III of Jenner & Block LLP, Michael Forton, Lawrence Gardella and Farah Majid of
Legal Services Alabama and David A. Strauss and Sarah M. Konsky of the University of Chicago Law School's Jenner & Block Supreme Court and Appellate Clinic.
Reed is represented by Edmund G. LaCour Jr., Robert M. Overing, Dylan Mauldin and Brenton M. Smith of the
Alabama Attorney General's Office.
The case is Williams et al. v. Reed, case number 23-191, in the
Supreme Court of the United States.
--Editing by Daniel King.
Update: This story has been updated with more information from the court's opinion and comments from Williams' counsel.
For a reprint of this article, please contact reprints@law360.com.