Claude Rivers, on behalf of himself and all others similarly situated v. EDDIE CAVAZOS, Commissioner, Texas Employment Commission

*Local Rule 47.5 provides: "The publication of opinions
that have no precedential value and merely decide particular
cases on the basis of well-settled principles of law imposes
needless expense on the public and burdens on the legal
profession." Pursuant to that Rule, the court has determined
that this opinion should not be published.
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 94-50563
_____________________
CLAUDE RIVERS, on behalf of
himself and all others
similarly situated,
Plaintiffs-Appellees,
v.
EDDIE CAVAZOS, Commissioner,
Texas Employment Commission,
ET AL.,
Defendants,
EDDIE CAVAZOS, Commissioner,
Texas Employment Commission,
ET AL.,
Defendants-Appellants.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
(A 93 CA 163)
_________________________________________________________________
September 8, 1995
Before REAVLEY, KING and WIENER, Circuit Judges.
PER CURIAM:*

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1At oral argument, counsel for the Commissioners indicated
that the procedures in question may all be recorded in the TEC's
Policy and Precedents Manual; however, the Manual was not
introduced at trial and is not contained in the record on appeal.
2TEX. LAB. CODE ANN. §§ 201.001-217.006 (West 1995).
2
Plaintiff-Appellee Claude Rivers ("Rivers") brought this §
1983 action against Eddie Cavazos, James J. Kaster, and Jackie W.
St. Clair in their official capacities as Commissioners of the
Texas Employment Commission ("TEC"), alleging federal statutory
and constitutional violations arising from the processing of
Rivers's unemployment benefits claims. Concluding that the TEC's
procedures violated the "fair hearing" requirement of 42 U.S.C. §
503(a)(3) and the Due Process and Equal Protection Clauses of the
Fourteenth Amendment to the United States Constitution, the
magistrate judge granted Rivers declaratory and injunctive
relief. The Commissioners timely appealed. We reverse and
render.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. TEC Procedures
Before proceeding to the specific facts of Rivers's claim,
we will first describe the TEC's general procedures for
processing unemployment benefits applications. These procedures
are apparently not embodied in any one document,1 but have
developed over time as a policy based on the mandates of the
Texas Unemployment Compensation Act2 and the TEC's own

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3TEX ADMIN. CODE tit. 40, §§ 301.1-.33 (1994).
4Specifically, the benefits are based on the claimant's
employment in the "base period" preceding the benefit year. The
base period is the first four consecutive completed calendar
quarters within the last five completed calendar quarters
immediately preceding the first day of the benefit year.
3
regulations,3 as well as the TEC's practice in implementing these
statutes and rules.
When an unemployed individual ("the claimant") first files a
claim for benefits (the "initial claim"), the filing establishes
a new "benefit year." A benefit year is a fifty-two week period
that runs from the date that the initial claim is filed. During
this period, the claimant is eligible to receive benefits based
on his employment prior to the benefit year.4 The amount of
benefits that the claimant may receive in the benefit year
depends on how long he worked and how much he earned in this
employment. When the claimant receives benefits, they are
charged to the account of his former employer, who in turn must
pay a tax based on the amount of benefits so charged.
The claimant may receive these benefits at any time during
the benefit year as long as he is unemployed; that is, if the
claimant finds employment again within the benefit year, he will
not receive benefits while he is working for this second
employer. The fifty-two week benefit year, however, continues to
run even though the claimant is not receiving benefits. Stated
differently, a claimant's employment does not "toll" the benefit
year.

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4
If the claimant leaves this second employer before the
benefit year ends, he is eligible to resume receiving the
benefits based on his first employment for the time remaining in
the fifty-two week period; however, the resumption of benefits is
not automatic. The claimant must file another claim (the
"additional claim") and requalify in order to receive these
benefits for the rest of the benefit year. Whether the claimant
requalifies for the resumption of benefits depends on the
circumstances under which he left the second employer. For
example, if the claimant left this second employment voluntarily
without good cause or was fired for misconduct, he will not
qualify. The important point here is that, although the claimant
is attempting to qualify for the remaining benefits that are
based on his first employment, it is his separation from his
second employment that actually determines whether he will
qualify.
Upon receiving the additional claim, the TEC investigates
the claimant's work separation from his second employer and
issues a determination stating the reason for the work separation
and whether the claimant qualifies for benefits for the rest of
the benefit year. If the determination is adverse to the
claimant, he may appeal. Whereas the TEC makes the determination
based mostly on interviews with the relevant actors, it renders a
decision on the appeal only after a "full blown" evidentiary
hearing (the "additional claim hearing"), in which the parties
may testify, examine witnesses, and present evidence. Although

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5This assumes, of course, that the claimant did not also
work for the second employer in the base period prior to the
benefit year.
5
the second employer is given notice of this hearing and is
invited to participate, it does not have an interest at stake
because the purpose of the hearing is only to determine the
claimant's continued eligibility for benefits based on his first
employment.5 The second employer will not be charged for any
benefits for the current benefit year regardless of the outcome
of the hearing. Indeed, because the second employer's interest
in the additional claim hearing is nonexistent, the TEC does not
grant it the right to appeal the decision.
If the claimant remains unemployed at the end of the benefit
year, he may file a new initial claim to establish a second
benefit year based on his work for the second employer (the
"second initial claim"). In order to qualify for this second
benefit year, the claimant must have either worked for the second
employer for at least six weeks or earned six times his weekly
benefit amount. Also, if the claimant left the second employer
voluntarily without good cause or was discharged for misconduct,
he will not qualify. Thus, the TEC must revisit the
circumstances of the claimant's work separation from the second
employer; however, the TEC does not rely on the determination it
previously issued or the decision it rendered in the additional
claim hearing concerning the work separation. Rather, the TEC
issues a new, independent determination stating the reasons for
the work separation and, if the claimant appeals, "readjudicates"

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6
the facts of the work separation in another "full blown"
evidentiary hearing (the "second initial claim hearing"). In
other words, the TEC does not give preclusive effect to the
additional claim determination or decision in ruling on the
second initial claim. Consequently, the TEC may make
inconsistent findings regarding the reasons for the work
separation. For example, with respect to the additional claim,
the TEC may find that the claimant was discharged from the second
employer for misconduct, disqualifying him for the rest of the
first benefit year; yet later, with respect to the second initial
claim, the TEC may find that the claimant was not discharged for
misconduct, entitling him to a second benefit year.
In contrast to the additional claim hearing, the second
employer does have an interest at stake in this second initial
claim hearing. If the TEC determines that the claimant qualifies
for a second benefit year, at least some of the benefits that the
claimant receives during that year will be charged to the second
employer. Accordingly, the second employer has the right to
appeal the TEC's decision in the second initial claim hearing.
With this sketch of the TEC's general procedures in place, we now
turn to a discussion of the specific facts surrounding Rivers's
benefit claims.
B. Rivers's Claim
On November 11, 1990, Rivers filed an initial claim for
unemployment benefits based on his previous employment with Leif

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7
Johnson Ford ("Johnson"). This filing established a benefit year
running from November 1990 to November 1991. Rivers received
benefits during this benefit year until he began working as a
salesperson for Gillman Pontiac ("Gillman") on June 11, 1991.
Rivers worked for Gillman until July 20, 1991, when he left after
having a dispute with a sales manager over a commission.
Thereafter, Rivers filed an additional claim so that he could
resume receiving the benefits based on his employment with
Johnson. The TEC did not make an immediate determination
regarding Rivers's work separation from Gillman, but paid him
$800 in benefits at the end of the benefit year pending this
determination. This first benefit year ended in November 1991.
On January 26, 1992, the TEC issued its determination with
respect to the additional claim. The TEC determined that Rivers
had been discharged from Gillman for misconduct and was therefore
not entitled to any benefits after the discharge for the rest of
the benefit year. Because Rivers had already received $800 in
benefits and the benefit year had ended, the only consequence of
this determination was that Rivers had to repay the $800. Rivers
appealed the determination. On August 4, 1992, the TEC held a
hearing on Rivers's appeal. The appeal tribunal reversed the
determination, holding that Rivers was not discharged for
misconduct but had merely asserted his belief that he had been
wrongfully denied a commission. Because of this ruling, Rivers
did not have to repay the $800 in benefits he had received.

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6Rivers also joined Gillman as a necessary party, but sought
no relief against it.
8
Rivers was still unemployed when his first benefit year
ended in November 1991. On January 5, 1992, he filed a second
initial claim to establish a second benefit year based on his
work at Gillman. One month later, the TEC issued its
determination with respect to this second initial claim. The TEC
determined that Rivers had left Gillman voluntarily without good
cause and was therefore not entitled to a second benefit year.
Rivers did not immediately appeal this determination because he
thought his appeal of the additional claim determination was
sufficient. After Rivers prevailed in the additional claim
hearing on August 4, however, he learned that the appeal
tribunal's decision only affected his rights with respect to the
first benefit year. The TEC allowed Rivers to file a late appeal
of the second initial claim determination. On October 6, 1992,
the TEC held a hearing on this appeal. The appeal tribunal
affirmed the determination, thereby disqualifying Rivers from a
second benefit year.
C. Procedural History
Following the appeal tribunal's denial of benefits, Rivers
instituted this § 1983 action against the Commissioners, alleging
that the readjudication of his work separation from Gillman
violated his federal statutory and constitutional rights.6
Specifically, Rivers sought a declaration that the TEC's

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742 U.S.C. § 503(a)(3) provides that federal grants to
states for unemployment compensation administration are
conditioned on the state providing, inter alia, "[o]pportunity
for a fair hearing before an impartial tribunal, for all
individuals whose claims for unemployment compensation are
denied."
8With respect to the equal protection violation, the
Magistrate Judge specifically held that "claimants who cross
benefit years are subjected to readjudication of their claims
while other claimants who do not pass from one benefit year to
another are not." The Magistrate Judge also concluded that the
Commissioners had not articulated a rational basis for the
readjudication policy.
9
procedures violated 42 U.S.C. § 503(a)(3)7 and the Due Process
and Equal Protection Clauses of the Fourteenth Amendment to the
United States Constitution. Rivers also requested a permanent
injunction against the Commissioners directing them to abandon
their practice of readjudication. Finally, Rivers sought an
order nullifying the TEC's second decision regarding his work
separation from Gillman and giving preclusive effect to the first
decision, which held that he was not discharged from Gillman for
misconduct.
The parties consented to a trial before a magistrate judge
pursuant to 28 U.S.C. § 636(c) and Rule 73 of the Federal Rules
of Civil Procedure. The magistrate judge held that the policy of
readjudication does violate the "fair hearing" requirement of 42
U.S.C. § 503(a)(3), the Due Process Clause, and the Equal
Protection Clause.8 The magistrate judge also ordered the
Commissioners to redesign the TEC's procedures so that decisions
regarding a claimant's work separation are given preclusive
effect in later adjudications. With respect to Rivers, the

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9The Commissioners had also appealed the Magistrate Judge's
order that the TEC not charge Gillman's account for benefits paid
to Rivers. At oral argument, however, the TEC stated that it had
resolved its dispute with Gillman. Accordingly, we consider that
part of the Commissioners' appeal abandoned.
10
magistrate judge ordered the Commissioners to pay him all the
benefits he did not receive due to the TEC's failure to give
preclusive effect to the first decision on his work separation
from Gillman; however, the magistrate judge also ordered the
Commissioners not to charge Gillman for these benefits. The
Commissioners timely appealed.
II. DISCUSSION
The Commissioners challenge the magistrate judge's holding
that the TEC's policy of readjudication violates the "fair
hearing" requirement of 42 U.S.C. § 503(a)(3), the Due Process
Clause, and the Equal Protection Clause.9 Specifically, the
Commissioners argue that the failure to give preclusive effect to
the first adjudication of Rivers's work separation is not so
fundamentally unfair or arbitrary as to infringe on Rivers's
rights to a fair hearing and due process. The Commissioners also
contend that the TEC's procedures are not subject to an equal
protection claim because they do not create classifications of
benefit applicants who are similarly situated but subject to
different treatment. Finally, the Commissioners point out that,
even if the TEC does classify similarly situated claimants, the
system is supported by a rational basis.

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11
Rivers counters that principles of due process require the
TEC to give preclusive effect to the first adjudication of his
work separation. Rivers also maintains that the TEC unfairly
differentiates between claimants whose claims span two benefit
years and those whose claims do not by applying readjudication
only to the former. Finally, Rivers asserts that the system of
readjudication has no rational basis.
A. Standard of Review
We review a judgment rendered by a magistrate court pursuant
to 28 U.S.C. § 636(c) as we would a judgment rendered by a
district court. Thus, we review conclusions of law de novo and
findings of fact under the clearly erroneous standard. Laker v.
Vallette (In re Toyota of Jefferson, Inc.), 14 F.3d 1088, 1090
(5th Cir. 1994).
B. Statutory "Fair Hearing" Requirement
The Commissioners concede that the "fair hearing"
requirement of 42 U.S.C. § 503(a)(3) is co-extensive with the
mandates of procedural due process under the Fourteenth
Amendment. Because the validity of the TEC's system as a matter
of due process is also before this court, we need not analyze
separately the statutory requirement. Accord Ross v. Horn, 598
F.2d 1312, 1318 n.4 (3d Cir. 1979), cert. denied, 448 U.S. 906
(1980).

-- 11 of 23 --

12
C. Due Process
The magistrate judge concluded that the TEC's procedures
violated the Due Process Clause of the Fourteenth Amendment to
the Constitution; however, the Final Judgment does not indicate
whether this violation was a procedural or substantive one.
Rivers's brief relies on procedural and substantive due process
cases as authority for upholding the magistrate judge's decision.
Because of this ambiguity in the record and the briefs, we will
address the issue as a matter of both procedural and substantive
due process.
1. Procedural Due Process
Our analysis of a procedural due process challenge involves
a two-step inquiry: "First, we determine whether the state has
deprived a person of a liberty or property interest; if there has
been such a deprivation, we must determine whether the procedures
relative to that deprivation were constitutionally sufficient."
Welch v. Thompson, 20 F.3d 636, 639 (5th Cir. 1994).
Rivers asserts that he has a property interest in the
unemployment benefits that he would have received in the second
benefit year had the TEC not readjudicated the issue of his work
separation from Gillman. Whether an individual has a
constitutionally-protected property interest is a matter of state
law. Williams v. Texas Tech Univ. Health Sciences Ctr., 6 F.3d
290, 293 (5th Cir. 1993), cert. denied sub nom. Williams v.
Saltzstein, 114 S. Ct. 1301 (1994). Texas courts have recognized

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13
that unemployment benefit claimants do have a property interest
that implicates the protections of procedural due process. See,
e.g., Haas v. Texas Employment Comm'n, 683 S.W.2d 462, 465 (Tex.
App.--Dallas 1984, no writ). Therefore, we conclude that Rivers
was deprived of a property interest.
We evaluate the constitutionality of the procedures relative
to this deprivation using the balancing test enunciated by the
Supreme Court in Mathews v. Eldridge, 424 U.S. 319 (1976). This
test requires us to weigh three factors in determining what
process is due: (1) the private interest affected by the
government action; (2) the risk of an erroneous deprivation of a
protected interest under the current procedures and the value of
additional or substitute procedural safeguards; and (3) the
government interest, including the fiscal and administrative
burdens of implementing additional or substitute procedures. Id.
at 335.
It is undeniable that the private interest in unemployment
compensation is important, and indeed, both the Commissioners and
Rivers agree with this assessment. The parties dispute, however,
the risk of erroneous deprivation created by the readjudication
of a claimant's work separation. In this regard, Rivers argues
that readjudication creates the risk of inconsistent decisions,
one of which must be wrong; if the wrong decision results in a
denial of benefits, it is an erroneous deprivation. While this
may be true, it is not a risk created by inadequate procedural
safeguards. The appeal tribunal adjudicates both the additional

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10Indeed, because of the extensive procedures employed by
the TEC in readjudicating the issue of a claimant's work
separation, the parties' attempt to characterize their dispute as
a procedural due process issue seems rather forced.
14
claim and the second initial claim in "full blown" evidentiary
hearings, in which the claimant has the right to testify, proffer
witnesses, cross-examine the employer's witnesses, and present
evidence.10 Rivers's contention that applying issue preclusion
will reduce the risk of erroneous deprivation is similarly
unpersuasive. It seems that erroneous deprivations are just as
likely to result from the TEC giving preclusive effect to
incorrect decisions as from the TEC readjudicating correct
decisions and reaching different conclusions. Given these
considerations, we find that the risk of erroneous deprivation
created by the TEC's current procedures is slight, and the value
of applying preclusion principles to TEC hearings is minimal.
The final factor we examine is the government's interest,
including administrative and fiscal concerns. The TEC maintains
that it does not give preclusive effect to the decision in the
additional claim hearing because the second employer has no
interest at stake in that hearing. Although the claimant's work
separation from the second employer is at issue, it is only to
determine the claimant's continued eligibility for benefits that
are charged to the first employer. Also, while the TEC does
notify the second employer of this hearing, the notice states
that the employer is a "non-party in interest." Finally, the
second employer has no right to appeal the tribunal's decision.

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11The Commissioners point out that they have historically
regarded the additional claim hearing as a "continuation" matter
between the claimant and the TEC, rather than a conflict between
the claimant and his former employer.
15
Therefore, the second employer has no incentive to offer a
rigorous defense on the issue of the claimant's work separation.
Indeed, as in Rivers's case, the employer often fails to make an
appearance.11 Consequently, if the claimant later files a second
initial claim based on his work with the second employer, the TEC
will readjudicate the issue of the work separation because the
second employer then has an interest and an incentive to defend.
Rivers contends that the second employer does have an
interest in the additional claim hearing because it can
anticipate that the claimant will remain unemployed and will
later file a second benefit claim based on his work with the
second employer; however, the TEC's policies of denying the
employer appeal rights and readjudicating the work separation
eviscerate this interest. Rivers proposes that the TEC can
encourage the second employer to offer a rigorous defense in the
additional claim hearing by giving the decision in that hearing
preclusive effect and allowing the employer to appeal. Rivers
argues that fully litigating the work separation issue in this
hearing would allow the TEC to avoid the expense of
readjudicating the same issue in a later proceeding. Therefore,
Rivers concludes that applying issue preclusion to the first
decision on a claimant's work separation is not a burden at all,

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12In the case sub judice, the additional claim hearing did
not occur until several months after Rivers had filed his second
initial claim, so that Gillman was aware of its potential
liability at the time of this first hearing. Nothing in the
record or briefs, however, addresses why the additional claim
hearing was so delayed. In fact, the parties' briefs seem to
assume that the additional claim hearing will usually occur
before a second initial claim is filed. Without further guidance
on the issue, we treat the parties' assumption as fact.
13Also, if the claimant files his second initial claim so
late that the second employer is no longer in his base period,
the second employer will have engaged in unnecessary litigation.
16
but in fact better serves the government's fiscal and
administrative interest.
Rivers's argument, however, ignores the potential fiscal and
administrative costs of applying issue preclusion. At the time
of the additional claim hearing, the second employer will
generally not know whether the claimant will remain unemployed
after the current benefit year and later choose to file a second
initial claim based on his work with the second employer.12
Nevertheless, if the tribunal's finding on the work separation
issue will have preclusive effect in a second initial claim
hearing, the second employer will avail itself of the right to
fully litigate the issue. The second employer's participation
will likely cause these hearings to be costly compared to the
TEC's current additional claim hearings, in which employers often
do not make appearances. Furthermore, whenever the claimant does
not file a second initial claim, the second employer will have
litigated the work separation issue for nothing.13 Conceivably,
the TEC could have concluded that the costs of readjudicating the
work separations of those claimants who do file second initial

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17
claims are less than the costs of adjudicating work separations
with the unnecessary full participation of second employers who
turn out not to be liable for benefits. Therefore, the
government's fiscal and administrative interest in applying issue
preclusion is, at best, indeterminate.
Balancing these factors, we conclude that the TEC's policy
of readjudicating work separations fully comports with procedural
due process. Accordingly, we also hold that the policy satisfies
the "fair hearing" requirement of 42 U.S.C. § 503(a)(3).
2. Substantive Due Process
As with procedural due process, we begin our analysis of a
substantive due process question by determining whether the state
has deprived an individual of a liberty or property interest; if
we find such a deprivation, and a fundamental right is not at
issue, we then determine whether the government action that gave
rise to the deprivation is supported by a rational basis.
Brennan v. Stewart, 834 F.2d 1248, 1257-58 (5th Cir. 1988).
While Rivers's substantive due process argument is not
clearly articulated, he apparently asserts that the TEC's
readjudication of his work separation from Gillman deprives him
of a liberty interest. Specifically, Rivers contends that it is
fundamentally unfair for the TEC to force benefits claimants to
undergo the burdens of readjudication, that such a policy amounts
to "government harassment," and that due process requires the TEC
to give preclusive effect to the first decision. Therefore, to

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18
fit into the substantive due process framework, Rivers's argument
can best be characterized as a complaint that the TEC's
readjudication policy and failure to apply issue preclusion
deprive him of his liberty interest to be free from government
harassment.
The substantive due process case that Rivers primarily
relies upon as support for this argument is Continental Can Co.
v. Marshall, 603 F.2d 590 (7th Cir. 1979). In that case, the
federal government had issued multiple citations against
Continental Can Co., all relating to the noise level in some of
its plants. These cases were consolidated in an administrative
hearing. In a decision that was upheld on appeal, the
administrative law judge vacated the citations based on the
invalidity of the relevant regulations. Thereafter, the
government continued to pursue the issue with respect to other
Continental plants. Continental sought and was granted an order
enjoining the government from prosecuting the pending and future
citations.
In upholding the injunction on appeal, the Seventh Circuit
held that "it appears rather fundamental that the government
cannot, without violating due process, needlessly require a party
to undergo the burdens of litigation." Id. at 597. The court
found the following language from a district court opinion to be
applicable to the case at bar:
[The government's actions are] precisely the
sort of harassment which fundamental fairness
and the due process clause prohibit. The
Government is not a ringmaster for whom

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19
individuals and corporations must jump
through a hoop at their own expense each time
it commands.
Id. (quoting United States v. American Honda Motor Co., 273 F.
Supp. 810, 820 (N.D. Ill. 1967)). Although the court did not
expressly state that Continental had a liberty interest in being
free from multiple prosecutions, references to the "burdens" and
"harassment" of relitigation manifestly implicate the concept of
liberty.
Notwithstanding the strong language of Continental Can, we
are unpersuaded that, on the facts of this case, Rivers has been
deprived of any liberty interest. First, we note that the
Seventh Circuit has since questioned the continued vitality of
Continental Can. In R.R. Donnelley & Sons Co. v. F.T.C., 931
F.2d 430 (7th Cir. 1991), that court stated:
The law of preclusion (res judicata and
collateral estoppel) does not create a "right
not to be tried" in anything like the sense
that the double jeopardy clause does. . . .
Preclusion in civil cases is not so powerful.
An inadequate opportunity (sometimes even an
inadequate incentive) to present one's case
the first time may permit another shot in
civil litigation. Legal errors by the judge
may be overturned and the case re-done.
Preclusion in a civil case creates a "right
not to be tried" only in the sense that it
creates a right to win . . . . At all
events, Continental Can preceded Socal and
the recent cases putting a damper on
assertions of "rights not to be tried".
Whether there is any life to Continental Can
after Socal remains to be seen. Perhaps a
pattern of vexatious prosecution supporting
an inference that the process is the
punishment calls for different treatment--
although Hollywood Motor Car suggests not.

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20
Id. at 433. In addition, at least one court has rejected the
applicability of Continental Can to substantive due process
claims in § 1983 cases. See Agi-Bluff Manor, Inc. v. Reagen, 713
F. Supp. 1535, 1545 (W.D. Mo. 1989).
Furthermore, Rivers can hardly maintain that this is a case
in which "the process is the punishment." While we agree that
the readjudication process may be confusing and inconvenient, it
does not rise to the level of a "harassment" that infringes on a
claimant's liberty. The purpose of readjudication is not to
discourage benefit applicants, but rather to insure that all
parties with a concrete interest at stake have a full and fair
opportunity to be heard. Because we find that the readjudication
of Rivers's work separation did not deprive him of a liberty
interest, we hold that the TEC's procedures do not violate
substantive due process.
Even if we determined that the TEC's refusal to apply issue
preclusion deprived Rivers of a liberty interest, it is apparent
that the TEC's procedures withstand rationality review. The TEC
does not give preclusive effect to work separation determinations
made at additional claim hearings because the second employer
does not have an interest in litigating the separation at that
point. Although the application of issue preclusion would create
an incentive for the second employer to participate in the first
hearing, that participation would be unnecessary where the
claimant does not later file a second initial claim. As we noted
in our procedural due process analysis, the TEC could have

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21
rationally determined that the costs of readjudicating the work
separations of claimants who file second initial claims are less
than the costs of adjudicating work separations with the needless
full participation of second employers who turn out not to be
liable for benefits. In sum, we hold that the TEC's policy of
readjudication is supported by a rational basis.
D. Equal Protection
The first step in our analysis of an equal protection claim
is to determine whether the challenged government action affords
different treatment to similarly situated individuals. "If the
action does not appear to classify or distinguish between two or
more relevant persons or groups, then the action--even if
irrational--does not deny them equal protection of the laws."
Brennan, 834 F.2d at 1257. If we do find such treatment, we
apply the standard of review appropriate to the type of
classification involved. Where the government action does not
implicate a fundamental right or discriminate against a suspect
or quasi-suspect class, as is the case here, we employ the
rational basis test. Id.
The magistrate judge held that the TEC's readjudication
policy violated the Equal Protection Clause because "claimants
who cross benefit years are subjected to readjudication of their
claims while other claimants who do not pass from one benefit
year to another are not." This holding, however, mislabels
several elements of the TEC's benefits claims process. First,

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22
claimants do not "cross" benefit years; rather, if a claimant
with an established benefit year is hired by another employer
during that fifty-two week period, he may earn enough or work
long enough to establish a second benefit year once his first
benefit year ends. On the other hand, if a claimant does not
find work during his established benefit year, it is more precise
to say that he is unable to establish a second benefit year than
to say that he does not "pass from one benefit year to another."
Also, claimants who find work within an established benefit
year, but leave that employment before the benefit year ends, are
not subjected to having their claims readjudicated. In fact,
they have two separate and distinct claims. The first claim, the
additional claim, is brought to resume receiving benefits for the
rest of the first benefit year. The other claim, the second
initial claim, is brought to establish a second benefit year.
The issue of the claimant's work separation from the second
employer is relevant to both of these distinct claims, and that
is why the separation is adjudicated twice. Claimants who do not
work during the first benefit year have no second employer, and
therefore no separation to adjudicate at all. Therefore, it
cannot be said that these two "classes" of claimants are
similarly situated; accordingly, their disparate treatment does
not give rise to an equal protection claim.
Even if we assume that the TEC's procedures do create two
classes of similarly situated claimants and subject them to
disparate treatment, we have already held in our substantive due

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process analysis, supra, that the procedures are supported by a
rational basis. Because the rational basis review under equal
protection is essentially the same as that under substantive due
process, Brennan, 834 F.2d at 1258, we need not engage in a
separate rationality review here. In sum, we hold that the TEC's
policy of readjudication does not violate the Equal Protection
Clause.
III. CONCLUSION
For the foregoing reasons, we REVERSE the judgment of the
district court and RENDER judgment for the Commissioners of the
TEC.

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