Karla Smith v. Kimberly Reynolds
139 F.4th 631
8th Cir.2025Background
- In response to the COVID-19 pandemic, Congress passed the CARES Act in March 2020, creating temporary federal unemployment benefit programs administered by states.
- Iowa opted into the CARES Act programs (PUA, PEUC, FPUC), but later withdrew from them, ending participation effective June 12, 2021.
- Plaintiffs, Smith and Bladel, both received CARES Act benefits prior to Iowa’s withdrawal.
- Plaintiffs sued Iowa, the Governor, and the Workforce Director, alleging that the early termination of CARES benefits violated federal and state law and deprived them of protected property interests.
- The district court dismissed the action, and Smith (on behalf of both plaintiffs) appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Eleventh Amendment Bar (Official Capacity) | Ex parte Young exception applies | No ongoing violation, just past actions | Claim barred by Eleventh Amendment |
| Due Process/Property Interest (Individual) | CARES Act benefits are protected property | State participation was discretionary | No protected property interest; claim dismissed |
| Iowa State Law (Chapter 96) | Termination violated Iowa Code & state law | Sovereign immunity bars state law claims | Claim barred by Eleventh Amendment (Pennhurst) |
| Declaratory Judgment | Declaratory relief needed to define rights | Seeks retrospective, not prospective, relief | Dismissed as addressing past acts, not future conduct |
Key Cases Cited
- Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261 (Eleventh Amendment bars suits against states by private individuals)
- Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89 (federal courts may not instruct state officials how to conform to state law)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for a complaint to survive dismissal)
- Castle Rock v. Gonzales, 545 U.S. 748 (no protected property interest where government benefit is discretionary)
- Verizon Md., Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635 (Ex parte Young exception analysis for Eleventh Amendment immunity)