SCOTUS UPDATE: Colorado Unemployment Lawsuit

Hi Denver,

It's been about four months since my last update on the federal lawsuit challenging Colorado's broken unemployment insurance system

(Abrams v. Colorado Division of Unemployment Insurance, Case No. 1:24-cv-03390-RMR)

That post sparked over 200 comments, and so many of you reached out via DMs sharing your own horror stories of endless holds, ignored appeals, privacy nightmares, and more.

Thank you for that; it's been invaluable in showing this isn't just my fight, but ours. If you missed the original thread, here:
https://www.reddit.com/r/Denver/comments/1jez186/colorado_unemployment_integrity_holds/
and the update 4 months ago;
https://www.reddit.com/r/Denver/comments/1kxzzdc/update_federal_lawsuit_over_colorado_unemployment/

A quick recap: The suit targets unconstitutional delays, "integrity holds," lack of due process, ADA violations for disabled claimants, privacy breaches with third-party vendors like Google and ID.me, and a system that funnels people into dead-end appeals while ignoring real issues like underpayments. We've highlighted how CDLE employs only about 60 phone reps for hundreds of thousands of claimants, wastes millions on vendors, and pretends these problems are isolated despite mountains of complaints.

Here's the Big Update: I've Filed a Second Amended Complaint, On September 21, 2025, I submitted a detailed Second Amended Complaint to the U.S. District Court in Denver. This builds on the original filing and my previous emergency injunctions (which the court dismissed earlier this year, mooting the motions despite ongoing harms). The amendment incorporates new evidence from my experiences, public audits, and your shared stories. It adds stronger claims around retaliation for speaking out, coercion into fee-charging ReliaCards, insecure handling of personal data, and more. Here's a high-level breakdown of the key counts and allegations:

• Procedural Due Process Violations (14th Amendment): CDLE's system issues vague or no notices for real disputes (like wage errors or underpayments), then "funnels" appeals into irrelevant tracks with no "catch-all" option. This leaves claimants without a fair hearing, violating federal law (42 U.S.C. § 503) and causing real harm like my $6,000 underpayment from mishandled out-of-state wages, which contributed to my eviction notice.
• First Amendment Retaliation: After I petitioned for fixes (calls, faxes, appeals), CDLE slapped me with three back-to-back "integrity holds" without reasons or fixes clear punishment for speaking up, blocking benefits and chilling free speech.
• Social Security Act "When Due" Violations: The state must pay benefits promptly, but overloaded calls, ignored faxes, and unsafe in-person visits (which gave me COVID and conjunctivitis) make timely fixes impossible.
• ADA and Rehabilitation Act Violations (for Disabled Claimants): No real way to request accommodations—everything's oral-only through jammed phone lines, no written portals, and zero interactive process. This denied me (and others with disabilities like autism) meaningful access, forcing risky in-person visits.
• Unconstitutional Conditions and Deceptive Practices: Agents coerced me into a U.S. Bank ReliaCard by lying about my bank not validating, omitting fees, and claiming it was the "only way" to proceed despite later depositing to my account anyway. This smells like vendor steering for kickbacks.
• Insecure PII (Personal Identifiable Information) Handling: To clear holds, you're forced to submit SSNs, IDs, bank info, and even facial scans through shady, unsecure channels with no info on sharing, retention, or deletion. This violates privacy laws and creates huge risks of identity theft.
• Placeholder for Potential RICO (Racketeering) Investigation: While not fully pleading it yet (due to sovereign immunity for the state), the ReliaCard coercion and vendor deals suggest an "enterprise" extracting fees from vulnerable claimants. I've asked the court for targeted discovery into contracts, fees, and scripts to uncover any quid-pro-quo bribery (post-Snyder v. United States, 2024). If evidence shows non-state actors profiting corruptly, this could open a civil RICO path.

The full amended complaint is dense (legal stuff!), but I've attached a link to the PDF if you want to dive in: [insert link if available, or note it's public record via PACER]. It seeks declarations that these practices are illegal, injunctions for reforms (like better notices, written ADA portals, secure data handling, and fee-free payment options), and damages for harms like my medical bills and lost stability.

How the Supreme Court's Williams v. Reed (February 2025) Changes Everything

This ruling is a game-changer for cases like ours. In Williams v. Reed, the Supreme Court held that federal courts cannot abstain (defer) or require exhaustion of state remedies when those processes are "illusory" or lead to bureaucratic dead ends, like CDLE's notice-gated appeals that ignore real issues or force endless loops without resolution. It builds on cases like Sprint Communications v. Jacobs (2013) and Patsy v. Bd. of Regents (1982), emphasizing that if state systems don't provide adequate forums for federal claims (e.g., due process or ADA violations), plaintiffs can go straight to federal court without jumping through ineffective hoops.For Colorado's UI mess, this means the feds can't just punt back to the same broken agency that caused the problem.

That means no more "exhaust administrative remedies" excuses when those remedies don't exist or are rigged to fail. This directly supports our suit: my appeals were funneled into irrelevant tracks, no notice was issued for key disputes, and disabled access was a joke. Williams confirms the court must step in to fix systemic failures, especially in federally funded programs like unemployment.

What We've Uncovered So Far Through audits, public records, and your tips, here's some eye-opening stuff:

• PII Mishandling: CDLE funnels sensitive data (SSNs, faces, bank docs) to vendors without clear security, sharing, or deletion rules. Audits like the Colorado State Auditor's March 2025 report and DOL OIG findings (2021) flag major vulnerabilities, 1.1 million fraudulent claims exposed due to weak safeguards. This isn't just sloppy; it's deliberate indifference, risking ID theft for all of us.
• Misallocation of Spending to Third-Party Contracts: CDLE's FY 2024-25 budget is $455 million, with millions funneled to vendors like ID.me and Google for "integrity" tools that flag innocents and delay benefits. Meanwhile, they skimp on staff (still ~60 reps) and modernization, despite pulling out of a 2016 multi-state upgrade project. Public hearings show even state senators calling out this waste, which prioritizes profits over people and contributes to budget deficits.
• Possible RICO Angle on ReliaCard: The coercion into U.S. Bank's fee-laden card (ATM fees, inactivity charges) while lying about alternatives screams kickbacks. Discovery could reveal revenue-sharing deals where the state gets offsets for steering claimants. This isn't isolated—thousands are affected, turning a public benefit into a profit scheme. (Again, not fully claiming RICO yet, but pushing for docs to prove it.)

These aren't hypotheticals; they're backed by public records and audits, my experiences, and your stories. Media and lawmakers: if you're reading, this is ripe for investigation, feel free to contact me.

If you've been hit by CDLE's mess, via due process denials (no fair hearing), failure to notify key issues, inability to contact anyone (dropped calls, ignored faxes), disability barriers (no accommodations, forced in-person risks), integrity holds, PII/privacy scares, ReliaCard coercion, underpayments, or similar, your experience matters. Please DM me or coordinate a way to send me a short, signed 1-page affidavit (possibly notarized for extra weight, free at many banks/libraries) describing how it affected you. Keep it factual: dates, what happened, harms (e.g., eviction, health issues, lost wages) , with your name, address, signed and phone number in case the courts need to contact you and will likely be part of public record. The courts scoff at references to social media, but hard evidence like signed documents from real people will show this is systemic. Together, we can force accountability, reforms, and justice.

– Joshua Abrams
Plaintiff, Pro Se
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