No. 24-2187 ___________________________

Karla Smith, on behalf of themselves and others similarly situated; Holly Bladel

Plaintiffs - Appellants

v.

Kimberly Reynolds, in her official capacity as Governor of State of Iowa; Beth Townsend, in her official capacity as the Director of Iowa Workforce Development; State of Iowa

Defendants - Appellees ____________

Appeal from United States District Court for the Southern District of Iowa - Central ____________

Submitted: March 19, 2025 Filed: June 2, 2025 ____________ Before GRUENDER, BENTON, and SHEPHERD, Circuit Judges. ____________ GRUENDER, Circuit Judge.

Karla Smith and Holly Bladel sued Iowa state officials and the State of Iowa (“Iowa”) after Iowa opted out of federal programs made available during the Covid- 19 pandemic. Defendants moved to dismiss on several grounds, including plaintiffs’ failure to state a claim and Eleventh Amendment immunity. The district court1 granted the motion, which we affirm.

I. Background

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in response to the Covid-19 pandemic. Pub. L. No. 116-136, 134 Stat. 281 (2020) (codified as amended at 15 U.S.C. §§ 9001-9141). The CARES Act created temporary programs funded by the federal government and administered by the states to supplement state unemployment benefits.

Three CARES Act programs are relevant here. The first provided federal funds to those who were otherwise ineligible for traditional unemployment payments. Id. § 9021 (“Pandemic Unemployment Assistance” or “PUA”). The second added extra weeks of benefits to those who had already exhausted their state benefits. Id. § 9025. (“Pandemic Emergency Unemployment Compensation” or “PEUC”). The third added extra federal dollars to the amount states were already paying their unemployed citizens. Id. § 9023. (“Federal Pandemic Unemployment Compensation” or “FPUC”). The United States Treasury funded the CARES Act programs. See id. §§ 9021(g)(1)(B), 9023(d)(3), 9025(d)(1)(B). The funds were deposited into each state’s existing unemployment-benefits fund—called the Unemployment Trust Fund—and later distributed by the states. Id. §§ 9021(g), 9025(d).

State participation in these three programs was optional. States could choose to participate by entering into an agreement with the U.S. Department of Labor (“DOL”) and could withdraw from any of the programs upon thirty days’ notice. See id. §§ 9021(f), 9023(a), 9025(a)(1). All three programs expired on September 6, 2021. Id. §§ 9021(c)(1)(A)(ii), 9023(b)(3)(A)(ii), 9025(g)(2).

1 The Honorable Stephanie M. Rose, Chief Judge, United States District Court for the Southern District of Iowa. -2- In March 2020, Iowa entered into an agreement with the DOL to distribute benefits under the PUA, PEUC, and FPUC programs. Smith and Bladel each sought and received benefits through these programs. Then, in May 2021, Iowa Governor Kimberly Reynolds announced that Iowa would end its participation in the CARES programs, effective June 12, 2021.

Plaintiffs sued Iowa, Governor Reynolds (“the Governor”), and Director of Iowa Workforce Beth Townsend (“the Director”), alleging they violated the United States Constitution, the Iowa Constitution, and Iowa state law by disenrolling from the CARES Act programs. The gravamen of their complaint was that defendants had no authority to end participation in the CARES programs and that doing so deprived them o