SHEA v. VIALPANDO
Legal provision: Aid to Families with Dependent Children (AFDC--provisions of the Social Security Act)
Argument of Douglas D. Doane
Chief Justice Warren E. Burger: We’ll hear arguments next in 72-1513, Shea against Vialpando.
Mr. Douglas D. Doane: Mr. Chief Justice and may it please the Court.
Colorado is here today to ask the Court to assist Colorado to remove the Federal Courts from the administration of the Welfare Programs.
The facts of this case are that the respondent, Mrs. Vialpando was working and receiving Aid to Families with Dependent Children and she was provided certain work expenses under the Social Security Act which required that the state agency in determining need for Aid to Families with Dependent Children must take into consideration, expenses reasonably attributable to the earning of income.
The statutory language is not specific as to how this is to be done.
In Colorado, prior to July of 1970, it had a policy which provided for consideration of employment expenses by the itemization of each and every expense which the -- which the welfare recipient have and under this system, Mrs. Vialpando was able to reduce her income by a certain amount of employment expenses and under the previous system she was able to deduct approximately $181.00 of her income and her income was about $281.00 per month.
So this made her eligible and made her needy under Colorado’s program.
After July of 1970, however, Colorado changed its policy and provided for taking into the consideration employment expenses, expenses reasonably attributable to the earning of income by allowing deduction of mandatory deductions from income.
Also, a $30.00 flat allowance which was statistically based and the way Colorado arrived at this $30.00 figure was to take for a period of months during 1969 and 1970, all of the actual employment expenses of all the recipients for Aid to Families with Dependent Children and strike an average and in our brief in the appendix, it’s indicated these figures range from about $32.00 to $36.00.
Colorado therefore and its policy said, “We will strike an average allowance for employment expenses at $30.00.”
Justice Potter Stewart: I am having trouble understanding that as matter of arithmetic as they ranged from $32.00 to $36.00, why is the average is $30.00?
Mr. Douglas D. Doane: Well, the state of Colorado felt that it was taking into consideration expenses attributable to the earning of income by basing it upon what the employment expenses were and not using the actual figure.
In both of the lower Court decisions, they do not pass upon whether the $30.00 is an actual sufficient amount or whether it is statistically correct.
What they say in the lower courts is that the state may not use --
Justice Potter Stewart: I know that -- I know that then that’s the basic question of course in this case.
I was just wondering why an average of -- a low of $32.00 and I have $36.00 turns out to be $30.00 in Colorado because where went to school it doesn’t?
Mr. Douglas D. Doane: It seemed to be a sufficient taking into consideration of expenses reasonably attributable.
In other words, they based it upon that.
The statute does not in our opinion say that you have to allow what the actual average was.
It’s I think similar to a case the Court had previously in Rosado versus Wyman were the Court found that you could use statistically based averages as long as they were fairly priced and that some people would have an advantage by the use of that average, other peoples would -- other people would be disadvantaged.
Justice Potter Stewart: Well, I don’t see how anybody could come out ahead on this apparently?
It ranges from $32.00 to $36.00, how does anybody gain when he gets $30.00?
Mr. Douglas D. Doane: The person who gains is the person who does not have $30.00 of employment expenses.
This was not actual payment of expenses up to a ceiling of $30.00 regardless of whoever was and what are their expenses were, they got to full $30.00.
Justice Potter Stewart: You mean some people have no expenses?
Mr. Douglas D. Doane: Some people --
Justice Potter Stewart: As I understand it those who do have expenses, their expenses range from $32.00 to $36.00, is that --?
Mr. Douglas D. Doane: No, this was the average figure Your Honor.
For a -- in our brief or in the appendix rather at page 40, it's set out how the average was determined.
For example, for the month of March 1969, the average per case was $32.44.
Now, the very nature of an average would mean that some persons would have expenses less than the average, others would have expenses higher than the average.
Justice Potter Stewart: What page are you on?
Mr. Douglas D. Doane: Page 41.
Justice Byron R. White: And your $32.00 to $36.00 range was at different times?
Mr. Douglas D. Doane: Yes, Your Honors.
Justice Byron R. White: That was the range of average – a range of averages?
Mr. Douglas D. Doane: A range of averages, correct.
Justice Potter Stewart: I see.
Mr. Douglas D. Doane: In other months it would run $36.00.
The last one, April of 1970 ran $36.00, but the state does not claim that the $30.00 is all that a work expense allowance should be.
The State of Colorado is here today stating that the statute does not prohibit the use of an average and the lower court seem to feel that the statute --
Justice Potter Stewart: That did prevent the use of it.
Has there have been any change since this case was -- begun, is there been any increase in the --
Mr. Douglas D. Doane: No Your Honor, the average --
Justice Potter Stewart: -- that's been allowed?
Mr. Douglas D. Doane: Has not been adjusted.
Justice Potter Stewart: So they remain same --
Mr. Douglas D. Doane: -- but I would assume that it would have to be adjusted upward with the cost of living, but the --
Justice Potter Stewart: Well, I’ve already interrupted you, I presume you have a copy of the Solicitor General’s letter, February 25th addressed to the clerk in the Court?
Mr. Douglas D. Doane: Yes Your Honor, I do.
The Federal Statute in this case provides that the states in determining need must take into consideration expenses reasonably attributable to the earning of income.
Reasonably attributable would seem to require that someone has to decide how you determine what expenses are reasonably attributable.
The federal regulations in this case are both in the federal register and in the form of Handbook material and circulars.
This type of regulation both of which we feel are binding upon the state, mainly restate what the statute provides.
There is some statement in the federal regulations that certain items maybe standardized, but prior to the time Colorado implemented this standard flat expense allowance, the federal regulations both -- the federal regu -- federal register regulations and the circulars allowed for the use of a standard expense allowance.
And Mrs. Vialpando alleges that Colorado can only accommodate this requirement of the statute by itemizing all expenses and there’s no other way to do it.
As I mentioned previously in Rosado, the Court did allow the use of standard -- standardizing and averaging as long as the items in the average were fairly priced.
The Court has also held in the welfare areas and recently in the Dablino case that the federal law is to be looked at carefully and if there is not a specific statutory requirement or if there is not a condition of eligibility being added by the state that the states do have discretion in this difficult area in the -- the Courts are -- the lower courts have been cautioned by this Court to not get into the are of -- determine what might be in its opinion the best way to -- to administer the welfare program.
Colorado’s position is that this -- this AFDC statute is merely setting out of the basic state plan requirements.
It doesn’t spell out of every detail, period and comma to have a program which complies with the statute, that there are other requirements in the statute that have to be accommodated also.
One is that the states must in a prompt manner determine eligibility and provide benefits to those who are eligible.
The determination of employment expenses only on an item by item basis would have to be done every month for every welfare recipient not only to determine eligibility, but to determine the amount of assistance and the cost of administering this type of a determination would take a lot of money from the actual benefits going to the welfare recipient and use it up for administrative expenses.
Justice William O. Douglas: Isn’t that [Inaudible]?
Mr. Douglas D. Doane: HEW requires that the states must promptly determine eligibility for assistance and the amount of assistance.
Justice William O. Douglas: Individual by individual?
Mr. Douglas D. Doane: No Your Honor.
Their position as stated in the Solicitor General’s amicus brief is that averaging in standard employment allowances --
Justice William O. Douglas: But I’m talking about this letter that Justice Stewart mentioned.
Mr. Douglas D. Doane: The most recent letter?
Justice William O. Douglas: Yes.
Chief Justice Warren E. Burger: Which we must treat as a supplement to his brief, I’m sure you would agree, would you not?
Justice William O. Douglas: Yes Your Honor, I think the letter --
Unknown Speaker: (Inaudible)
Mr. Douglas D. Doane: Pardon?
Unknown Speaker: It’s a different position.
Justice Potter Stewart: It takes a different position, but it makes that even stronger than its brief.
His brief indicated and back -- that back in 1964, the secretary took the position that you had to allow actual expenses when they exceeded the lump sum and it now tells us that in -- they’ve determined that in 1964 that was not the practice.
That’s the way I’ve read this letter.
Mr. Douglas D. Doane: Yes Your Honor, that’s correct.
The Solicitor was advised by the Department of Health, Education and Welfare that even back --
Justice William O. Douglas: And they don’t -- their reasoning doesn’t affect yours, does it?
Mr. Douglas D. Doane: Well, yes Your Honor it does.
We’re saying that at the time Colorado implemented the standard employment allowance, it was permitted by HEW and that was their interpretation of the statute and this letter even goes further back, way back to 1964.
Justice William O. Douglas: I understand, I’ve read the letter.
Mr. Douglas D. Doane: Yes, Your Honor.
Justice William J. Brennan: But Mr. Doane, I expect -- notwithstanding that may have been HEW position, but it’s still isn’t there of -- that maybe their interpretation, but the language of the statute is as well as any expenses reasonably attributable to the earning of any such income.
So, there’s still isn't there the question of conflict between the standard allowance and the – and the statute even though HEW apparently from this letter now has approved the standard allowance as satisfying that requirement.
Isn’t that so?
Mr. Douglas D. Doane: Yes, Your Honor, the question before the Court is, does the statute allow both HEW and the State to standardize --
Justice William J. Brennan: That's right.
Mr. Douglas D. Doane: Which is when this language in the statute --
Justice William J. Brennan: Whether any expenses is satisfied by a standard allowance?
Mr. Douglas D. Doane: Exactly, Your Honor.
Justice William J. Brennan: Plus, I gather this petitioner or respondent rather, her actual expenses were a $126.11, weren’t they?
And I gather that had been under the former practice in Colorado, she’d been allowed that, had she not?
Mr. Douglas D. Doane: Yes, she had Your Honor.
Justice William J. Brennan: Yes.
Justice Byron R. White: But I take it, your point is that any expenses means any expenses, but the question is whether the statute's requirement that you take them into consideration require that you pay them all?
Mr. Douglas D. Doane: Yes, Your Honor.
That’s exactly correct so --
Justice Byron R. White: I mean, and it does mean just what it says.
Mr. Douglas D. Doane: Any means any and any would mean all and the language we think is most important is the first part, it says the state in determining need and in determining the need, the state has always had large discretion as to how they do this, shall take into consideration and take into consideration does not mean shall deduct all because if the --
Justice Byron R. White: My point was, I suppose you say under that language you could just say, we will take into consideration and allow half the expenses or 10% or 90% instead of that, you say, we’re going to have a standard deduction.
Mr. Douglas D. Doane: Well, I would question that type of an allowance because --
Justice Byron R. White: Why?
Mr. Douglas D. Doane: -- In that case you’re not reviewing full consideration to the actual expenses, you only --
Justice Byron R. White: How do you -- considering them?
Mr. Douglas D. Doane: You -- it could be argued that (Voice Overlap) --
Justice Byron R. White: You could put them and certainly with the -- for people above $30.00, you’re not giving them full consideration in the sense that you just spoke?
Mr. Douglas D. Doane: Well, it depends how the state is required by the statute to take into consideration expenses.
Justice Byron R. White: Yes, alright.
Mr. Douglas D. Doane: And the following section of the statute after the one that we’re concerned with talks about “and the state shall disregard certain income.”
Now, if Congress had intended the state must deduct all employment expenses, they could have very easily, put this provision on deducting employment expenses down in the next section which really says disregard which means deduct to me.
The language is a lot different “take into consideration and deduct” --
Justice Byron R. White: While I’ve got you interrupted, could I ask you a -- there was a constitutional claim in this take case, I take it?
Mr. Douglas D. Doane: No, Your Honor.
It’s a strictly an interpretation of the statute it does --
Justice Byron R. White: Well, I think they’re probably has to be to get into the Federal Court.
Mr. Douglas D. Doane: Yes, Your Honor.
Justice Byron R. White: Did you make any motion to dismiss on jurisdictional grounds?
Mr. Douglas D. Doane: Well, Your Honor, I think pendent jurisdiction would have allowed the --
Justice Byron R. White: Well, only if the constitutional claim is -- was something.
Now, the Judge Rouse (ph) just moved directly to the statutory claim, I guess.
Mr. Douglas D. Doane: Yes, Your Honor.
Justice Byron R. White: There’s never been any litigate -- any consideration of whether there is a federal jurisdiction here?
You wouldn’t suggest there would be a -- or would you that there -- if there’d only been a statutory claim that the -- there'd would’ve been federal jurisdiction?
Mr. Douglas D. Doane: No, Your Honor, I think it would have
Justice William J. Brennan: Did the complaint or let’s say constitutional claim?
Mr. Douglas D. Doane: Yes, it did.
Justice William J. Brennan: Thank you.
Mr. Douglas D. Doane: Page 14th.
Justice Byron R. White: This -- but the -- There was no consideration given to what -- as to whether it was substantial or not.
Justice Harry A. Blackmun: Maybe that question should asked to the other side?
Mr. Douglas D. Doane: Yes, Your Honor.
But I -- if the Court is interested in that area, the – it would appear then at the Federal Statute does provide the State of Colorado, the option as to what method to select in determining and considering what expenses are reasonably attributable and that the lower court’s determinations that there was no such discretion that there only was one way to meet the requirement of the statute gave no effect to the words “reasonably attributable” that the lower court should be reversed.
Chief Justice Warren E. Burger: Mr. Armour.
Argument of Tom W. Armour
Mr. Tom W. Armour: Mr. Chief Justice and may it please the Court.
In this case we’re concerned with a particular section of Social Security Act of 1935, in particular Section 402 (a) (7) and it's the respondent’s position that the question presented in this case is whether consistent with this Section 402 (a) (7), the State of Colorado may refuse to take into consideration expenses of employment which are reasonably attributable to the earning of that employment, but in excess of the flat, $30.00 per month allowance.
The controlling statute, Your Honors, require states which participate in the AFDC program to disregard any expense reasonably attributable to their earning of income.
The Colorado regulation permits the disregard of $30.00 per month in addition to child care expenses and mandatory payroll deductions.
We believe it is also important to state what this case is not about.
The respondent is not arguing that Colorado must allow unreasonable work expenses.
In fact, it is our position that the states have a duty to inquire into the reasonableness of work expenses both as to amount and as to whether or not they're necessary for employment.
There cannot be a tenuous relationship between the particular work expense in the particular job.
The State of Colorado made that inquiry prior to July 1, 1970 and determined that in this ascension be upon those case that she had reasonable work expenses in the amount of $126.11 per month.
That has never been an issue.
But however, after July of 1970, the State of Colorado disregarded the flat, $30.00 per month.
And because the State of Colorado failed to take into consideration $96.11 per month, Mrs. Vialpando finding it difficult to meet in -- make ends meet left the job market.
So therefore, the question before the Court is whether Section 402 (a) (7) permits states to use flat amounts based on statistical averages to determine work expenses when the individual’s work expenses exceed that flat amount and we think that properly this analysis begins first by looking to the text of the statute and trying to determine its plain meaning.
And that statute says, “That a state plan must, except as maybe otherwise provided in Clause 8, provide that the state agency shall in determining need take into consideration any other income and resources of any child or relative as well as any expenses reasonably attributable to the earning of that income.”
First of all, the word “shall” is used.
It mandates the state agency to look at both income and expenses of the recipient.
Chief Justice Warren E. Burger: They looked at it -- they didn’t look at it, didn’t they?
Mr. Tom W. Armour: Yes, Your Honor and it is our position that they did not look fully at those work expenses and they failed to disregard reasonable work expenses in a -- that were reasonably attributable to the earning of income.
It is not our position that they may simply look at or take into consideration an average of work expenses.
They must disregard any expense as long as it’s reasonably attributable to the earning of income.
The statute in fact requires them to determine need -- to determine need in the individual case.
Chief Justice Warren E. Burger: Whether administratively, would there be any point in determining the average and then allowing everyone -- the average or approximately the average, including those who have no expense at all and then allowing supplements for those who went above this hypothetical average?
Mr. Tom W. Armour: Well, Your Honor, Judge Rouse in the trial court asked whether it made any sense to allow $30.00 per month to recipients who in fact had no expenses or less than that.
But as far as administrative efficiency is concerned, we would agree that the use of the flat amount for all recipients based on a fair average, together with the right of individual recipients to demonstrate an entitlement of greater reasonable work expenses would both meet the goals of administrative efficiency and stay within the terms of the statute.
Chief Justice Warren E. Burger: Would it be administratively feasible, given if you know, given the number of people involved to allow $10.00 a month and then such additions as people could demonstrate by vouchers or by whatever process they do it?
Mr. Tom W. Armour: Well, Your Honor, this question of administrative efficiency has never been actually litigated in the courts below.
It is just been alluded to.
We’re not quite sure how much administrative efficiency, if any, would be generated by the use of a flat amount.
I don’t believe the State of Colorado could use the figure $10.00 per month because as Mr. Justice Stewart mentioned, three years ago, in the State of Colorado, average work expenses were close to $37.00 per month.
We would maintain and -- expenses have gone up since that time so we wouldn’t want to accept the use of the $10.00 per month.
But as to the use the flat amount together with the right to demonstrate an entitlement to a greater amount, we would -- we would accept Your Honor.
Chief Justice Warren E. Burger: Well, could not the State of Colorado constitutionally allow no expense except that that was demonstrable by the same kind of evidence that this lady has produced here?
Mr. Tom W. Armour: Your Honor, I think the State of Colorado by its participation in the AFDC program has to follow these -- this statute, (a) (7) and that statute requires both the recipient to demonstrate an entitlement to each and every expense and also the State of Colorado to disregard each and every expense as long as its reasonably attributable with their earning of income, yes.
The words of the statute taken into consideration perhaps in and of themselves are flexible as the Tenth Circuit indicated, but when you look at this particular statute and its entirety, it takes no a particular meaning.
First of all, take into consideration modifies the words “any other income and resources.”
The word “any” is used to introduce income and resources.
The State of Colorado and the Secretary of HEW certainly don’t put forth any averaging argument or outside sources of income.
The State wants to take into consideration every cent of outside income and they properly should.
ADC is to be given to needy children and naturally the state should take into consideration any outside source of income.
You can’t average child support payments.
You certainly can’t average the earnings of all employed recipients in the State of Colorado.
You’ve got to take a look at each individual’s outside income.
Now, this statute goes on and adds a expense section and it's introduced by the words “as well as.”
We think its reasonable to conclude that Congress intended work expenses to be treated in the same manner and that’s why they used this phrase “as well as.”
And this language requires any expenses to be disregarded, not sum, not an average but any.
Section 402, the Social Security Act in sub-section (a) (8), Your Honors, uses the word “other than any” when talking about the state’s option to set aside earned income for the future needs of the child.
In the -- in that part of the statute, Congress has said that states may permit any or excuse me, all or any portion of the earned income to be set aside.
I think this demonstrates that Congress knows how to use specific language and allows states to disregard something less than a 100% and that part of the statute they use the words “any, all or any portion.”
In our Section of the statute, they used the word “any”.
In addition to the plain meaning of the statute which we think supports the respondent’s position, we also think that the legislative history supports us as well.
Prior to 1962 when this part of the statute was added, it was optional for states to disregard work expenses, but the Senate Finance Committee in reporting out the Bill which amended 402 (a) (7) stated that it believed that only reasonable for the states to take these expenses fully into account.
Justice William J. Brennan: [Inaudible] given this same interpretation?
Mr. Tom W. Armour: Your Honor, we believe that our position is supported by decisions --
Justice William J. Brennan: No conflict as I understand?
Mr. Tom W. Armour: No, there’s a decision in the Second Circuit Court of Appeals, the Connecticut State Department versus HEW which we believes supports our position.
The decision in the Tenth Circuit and on December 23, 1973 the Eight Circuit in Anderson versus Graham took the position that any expenses requires states to disregard all actual expenses.
So we believe that there are three circuit opinions in the point, Your Honor.
Justice Potter Stewart: That December 23 decision, it’s in your briefs anyway?
Mr. Tom W. Armour: Your Honor, I believe Anderson versus Graham is set out in appendix E to the respondent’s brief.
Justice Potter Stewart: Thank you.
Mr. Tom W. Armour: Yes.
Mr. Justice Stewart has alluded in petitioner’s argument to a letter submitted yesterday by the Solicitor General.
Respondents would like the opportunity to respond to that letter in writing briefly, if we may.
Chief Justice Warren E. Burger: If you can, of course.
Justice William J. Brennan: May I ask what the response -- tenor of the response maybe?
Mr. Tom W. Armour: Well, Your Honor we have not carefully analyzed the contents of this letter, but we do agree that apparently the Secretary of HEW is now taking a position that they didn’t take on October 4 when they filed their original brief.
The letter goes to Sections 31, 40 of the Handbook and we simply think that they’ve misstated the Secretary’s position.
Justice William H. Rehnquist: Mr. Armour.
Mr. Tom W. Armour: Yes, Your Honor.
Justice William H. Rehnquist: At page 14 of your appendix whether complaint appears, apparently its paragraph 9, you call it ahead of the constitutional claim then you say Section such and such of the Colorado manual of public assistance imposes an arbitrary maximum on employment expense in violation of the Equal Protection Clause of the Fourteenth Amendment.
Your opponent was asked about that point.
Was there any particular line of cases from this court that you were relying on for the proposition that that was a constitutional violation?
Mr. Tom W. Armour: Your Honor, may I first answer the question by saying that petitioners correctly stated that this issue was not argued at any point.
Judge Rouse simply --
Justice William H. Rehnquist: It is jurisdictional though, I would think.
So, if we were troubled by it, we would have to address it here.
Mr. Tom W. Armour: Well, Your Honor, our complaint was filed under Section -- Title 42, Section 1983 and the jurisdictional sections that we relied upon were 28 United States Code, Section 1343.
We believe there is a subs -- or there was at the time and still remains a substantial constitutional question and that the Court had pendent jurisdiction to decide the statutory issue and properly should have gone to the statutory issue first.
But we don’t think that there is a rational class -- justification for steps in two classes of -- well, working welfare recipients those with less than $30.00 per month in expenses and those with more than $30.00 in expenses.
I think we could've established clearly jurisdiction in the trial court and I properly agree that the courts below have also because they’ve been able to decide this case on the basis of the statutory issue, not going to the constitutional --
Justice William H. Rehnquist: Well, don’t they have go to it at least to assure themselves that it’s not frivolous or insubstantial?
Mr. Tom W. Armour: Yes, Your Honor.
Justice Byron R. White: Did you urge it all to Judge Rouse?
Mr. Tom W. Armour: I -- Your Honor, at the time this action was commenced, there was a different counsel arguing the case, but to my best knowledge, the constitutional issue was presented and we did in fact want to argue it.
It was Judge Rouse just simply took the statutory issue, but yes Your Honor, we did fully intend to argue that point.
Justice Harry A. Blackmun: Well, did you press it upon in the briefs or anything at all before?
Mr. Tom W. Armour: Your Honor, the first -- it was done orally.
The first time the briefs that were filed were in support of motions for summary judgment which was considerably after the time of filing the action, almost a year.
So it was not urged in actual brief writing, but it was urged orally before the Court.
Justice Harry A. Blackmun: It’s pretty important to you isn’t it otherwise your case goes out the Court?
Mr. Tom W. Armour: Yes Your Honor, certainly is, but we think there is a substantial constitutional issue and that this Court I believe in Rosado versus Wyman which has been cited for other purposes before by petitioners states that this Court does have jurisdiction to decide statutory issues raised along with claims with constitutional violation.
Justice Potter Stewart: Was the jurisdictional question as such brought to the attention of the District Court or to the Court of Appeal?
Mr. Tom W. Armour: To the District Court Your Honor.
Justice Potter Stewart: Was a motion to dismiss for one of jurisdiction?
Mr. Tom W. Armour: No, not a motion that was either filed or argued.
Justice Potter Stewart: And -- so how was it brought to the attention of the District Court?
Mr. Tom W. Armour: At the time that plaintiff went to U.S. District Court in Denver to see contemporary restrain order enjoining enforcement of the regulation.
That restrain order was not granted with the -- I believe Your Honor the issue of jurisdiction was brought up at that time.
There was a hearing on a motion for a temporary -- for preliminary injunction.
Justice Potter Stewart: And the -- I think your fellow counsel may ask have help for their -- on this question.
Mr. Tom W. Armour: No.
Justice Potter Stewart: No?
Does the record -- does the appendix show that question of jurisdiction was brought to the attention of the District Court?
Mr. Tom W. Armour: The appendix Your Honor --
Justice Potter Stewart: You answered, as I understand it correctly, that if there is probably a substantial constitutional claim, the statutory claim was pendent to it and that there is no -- can be no question of jurisdiction but on the other hand if the constitutional claim is frivolous then there’s a very great question about whether there is jurisdiction under these jurisdictional statutes?
Mr. Tom W. Armour: Well, Your Honor, we certainly I think we have substantial statutory provision, one that can be --
Justice Potter Stewart: Well, I know, but that’s not enough, -- they're arguably?
Mr. Tom W. Armour: Yes, but in addition I mean I think it can be well -- well recognized that it whether -- you have two classifications of working (Inaudible) recipients, one with less than $30.00 per month work expenses and another with more than $30.00 per month work expenses.
I don’t see the reasonable class -- you know, that understand that classification and I think we could sustain, in fact have sustained the burden of presenting a cargo constitutional issue.
Justice Potter Stewart: And was that again, may I, I am not sure, and I don't mean to be repetitious but I’m not sure I understand your answer.
Was this question brought in any way to the -- to the attention of the District Court or Court of Appeals?
Mr. Tom W. Armour: Your Honor, it was brought to the attention of the U.S. District Court judge at the time there was a hearing to determine whether injunctive relief should be granted.
Justice Potter Stewart: Does the injunct -- does the appendix reflect that fact anywhere?
Justice Lewis F. Powell: The District Court had --
Mr. Tom W. Armour: No, Your Honor, I believe it does not.
Justice Lewis F. Powell: -- recorded on page 44 of the appendix, has a sentence saying that the respondent have also raised these constitutional questions which are not under consideration at this time, it's top of page 44.
That’s the opinion you're talking about?
Mr. Tom W. Armour: Yes, Your Honor, that is the first memorandum opinion I believe of the U.S. District Court.
Justice Lewis F. Powell: Were they considered at a later time?
Mr. Tom W. Armour: No, Your Honor, they were not.
Justice William J. Brennan: So, I gather Mr. Armour, there are -- suggest that or implies at least to -- with the -- Judge Rouse thought that there maybe enough for the convening of a three-judge court about that -- in your constitutional claim about that -- he wouldn’t recommend that if -- since the case could be disposed of under statutory claim?
Mr. Tom W. Armour: Yes.
And she -- and Judge Rouse was the Chief Justice of the District (Voice Overlap).
Justice William J. Brennan: So that falls?
Mr. Tom W. Armour: Yes.
Justice William J. Brennan: But he said that but -- he wouldn’t convene a three-judge court since there was -- or wouldn’t worth convening, only if the case can’t be disposed of on the statutory ground?
Mr. Tom W. Armour: I think Your Honor that clearly implies that he felt that was a question (Voice Overlap).
Justice William J. Brennan: (Voice Overlap)
Mr. Tom W. Armour: Yes.
Justice William J. Brennan: Justified and in Goosby last year, I guess we set down the standard of what kind of constitutional claim required the convening of a three judge court, didn’t we?
Mr. Tom W. Armour: Yes, Your Honor.
Justice William J. Brennan: And it wasn’t a non-frivolous or I've forgotten -- that’s rather a broad language.
Mr. Tom W. Armour: Well, Your Honor we think, we certainly have a non-frivolous constitutional claim as well as a statutory argument that that holds up under close analysis.
The use of averaging, we don’t believe is permitted either by the statutory language or the legislative history, apart from the Secretary’s novel argument about the a (Inaudible), the only other argument they had in essence was at this Court in Rosado versus Wyman, sanctioned the use of averaging.
We don’t believe that Rosado stands for a blanket approval of averaging without taking a look at the particular case and we think that this action can be distinguished.
This Court in Rosado had -- that Section 402 (a) (23) had been violated by the State of New York in its conversion from a system of special need grants to a system of flat grants.
However, the Court did say that in determining standard of need, the states could use a fair averaging process, but this Court in Rosado was concerned with Section (a) (23) not (a) (7).
There is nothing in (a) (23) that requires states to meet all needs just to make cost of living adjustments periodically.
In contrast, (a) (7) requires specifically that any expenses be disregarded as petitioner's correctly stated, the states have traditionally had great flexibility in determining standards of need.
This Court in King versus Smith, 397 -- 392 U.S. made that very clear.
But we’re not talking about a hypothetical standard in meeting this particular case, we’re talking about Mrs. Vialpando’s actual work expenses.
And even in the Rosado, I believe that this Court stated that this lauded goal of administrative efficiency may not be furthered in such a way to violate a specific statutory command.
So, this -- for this reason we do not believe that Rosado was in point or sanctions the use of averaging in determining work expenses.
In fact, what we believe that the State of Colorado has done with the Secretary’s approval as cut into the incentive that Congress intended for welfare recipients to go back into the job market and maybe -- may well be that what Congress did in 1962 is wrong.
We don’t think so.
However, the Secretary of HEW is actually convinced that administrative efficiency is a more important policy than encouraging self-support in helping parents of needy children and relatives claiming aid to attain or retain the maximum capability for self-sufficiency, then this argument should properly be addressed to the Congress of United States.
There have been a number of proposals since 1962 before the Congress to combine the work expense disregard, found in (a) (7) with their earned income exemption found in (a) (8).
However today, Congress has rejected those arguments, but that is a proper forum, that the Secretary of HEW to take its argument.
We firmly believe that Congress intended by the enactment of (a) (7) to give recipients of powerful and a meaningful incentive to go back into the job market.
Mrs. Vialpando was tried on a three occasions to return to work.
Parents and needy children need to be able to break their cycle of poverty and one way to do this Your Honors is to disregard all their reasonable work expenses and for those reasons we respectably submit that the judgment of the Tenth Circuit Court of Appeal should be affirmed.
Chief Justice Warren E. Burger: Thank you Mr. Armour.
Argument of Charles B. Lennahan
Mr. Charles B. Lennahan: May it please the Court.
I’d like to comment on several aspects that have either been brought by the Court or by Mr. Armour.
Now, I might start with this situation that existed in July of 1970 when Colorado chose to change its method of taking into consideration work expenses as Mr. Armour has suggested prior to July the method involved in itemized treatment of work expenses for each individual recipient.
The state’s position is that Mrs. Vialpando did not have a vested right to that earlier regulation or to that method and that the state as long as they acted consistently with the Social Security Act and of the requirements of HEW could elect a more efficient or less costly method to take work expenses into consideration.
And I would also like to bring out that we have all at the counsel side of the case dwelled upon the $30.00 aspect of the work expenses allowance, but it should be noted that the work incentive purpose of the Social Security Act was accomplished not only by the $30.00 work expense allowance, but by the provision of the Colorado Rules that permitted the deduction of mandatory payroll deductions such as State taxes and Social Security and also the actual cost of child care was deducted from income in determining need.
So this work incentive in Colorado after July of 1970 consistent of this three-part work expense --
Justice Byron R. White: How do you view the purpose of your standard allowance rather than the actual?
Mr. Charles B. Lennahan: The purpose of the standard allowance is largely to reduce the amount of time that an individual eligibility technician at the county level has to spend dealing with each case and there’s a discounted --
Justice Potter Stewart: Would the other way of doing it going to the actual expenses also delay the starting of welfare?
Mr. Charles B. Lennahan: Unless the staff was increased considerably, we could anticipate that it would delay the process in individual cases.
Justice Byron R. White: And hence the beginning of welfare payments?
Mr. Charles B. Lennahan: Correct.
Chief Justice Warren E. Burger: There's a fact that it may not be important Mr. Lennahan, I notice that there are $63.80 or some such thing allowed for the payments on this lady’s car.
What happens when she’s got the car paid for?
That (Voice Overlap) disallowed?
Mr. Charles B. Lennahan: Under the older rule where we would give itemized consideration, once she was no longer in making car payments they would no longer be actual work expenses and her work expense allowance would be reduced by that (Voice Overlap) --
Chief Justice Warren E. Burger: So in effect her claim now is that capital expenditure is one that’s properly taken into account as an expense --
Mr. Charles B. Lennahan: That is correct.
Chief Justice Warren E. Burger: Purchase of a car is for these purposes a capital item, is it not?
Mr. Charles B. Lennahan: Yes, Your Honor.
This is another aspect that concerned us.
This was an individual decision in an individual case in El Paso County, Colorado.
The same facts could’ve been presented to an (Inaudible) technician in another part of Colorado who would have made a decision on a rather subjective basis equally valid saying that the car was a personal expense, that a job was available closer to the home of the recipient or that she could use probably transportation.
This is another reason why Colorado prefers to use a flat amount so that there were will be a more accurate and a more consistent determination in each case then is possible without some type of numerical guideline on what is a reasonable work expense.
I also like to point out that in connection with the statistical tables that appear in our appendix, this may have been adequately brought up, but I would like to specifically point out that each of the pages, 41A and there after consists of a printout of all of the Aid to Dependent -- Aid to Families or Dependent Children cases in Colorado for the particular month and Mr. Freedman in his analysis on pages 40 to 41 of the appendix, took the items from the left hand column of each of these computer printouts and pulled out the general work expenses, the transportation expenses.
He excluded childcare because that was going to be allowed separately, took out union dues, tools, telephone and computed a 100% average.
The people who had more than $30.00 prior to July of 1970 are included in each of these printouts.
It’s a 100% sample of the high as well as the low work expense allowance cases.
So, this is a primary part of our position that a flat amount does take into consideration not only any type of expense, but also considers the specific amounts that were being spent in Colorado by this class of recipients.
Then I’d like to comment briefly on your question Mr. Chief Justice on the -- whether or not it would be permissible for Colorado to have a $30.00 work expense allowance and then if a particular recipient wanted to present evidence of expenses in excess of $30.00 --
Chief Justice Warren E. Burger: I thought my question was $10.00.
Mr. Charles B. Lennahan: Alright, $10.00 this would -- as another touch to it --
Chief Justice Warren E. Burger: (Voice Overlap) below the average?
Mr. Charles B. Lennahan: What the state’s position is in this case is that once the dollar amount is fixed by a reasonably statistical basis it could if it wanted to pay in excess of that average figure, but it doesn’t have to, that it’s permissible under the Social Security Act to stick with the flat amount.
And I think as Mr. Armour responded, the position of HEW and I think the state’s response would be that if the flat amount is too low, this would present a problem that we would then take up in the District Court.
Justice Potter Stewart: According to the Solicitor General’s letter of yesterday is, at least as I read it, makes the last paragraph on page 2, he says, “Furthermore we inform that no state plan containing a standard working expense allowance has ever granted beneficiaries the alternative of itemizing.”
So, if I understand that language, he is telling us that no state has ever done this --
Mr. Charles B. Lennahan: Correct.
Justice Potter Stewart: -- adopted the suggestion implicit in the Chief Justice’s question.
Mr. Charles B. Lennahan: Right.
Justice Potter Stewart: It’s either an itemization or it’s a standard allowance, none has ever combined as I read this.
No state has ever combined it.
Mr. Charles B. Lennahan: I think that it could, but none have ever done it.
Justice Potter Stewart: Right.
Mr. Charles B. Lennahan: Correct.
On the question of Equal Protection, I must apologize we don’t we have the record with us today, but it is my recollection that there’s a pretrial order early in the trial court record what was agreed by the counsel at that time for Mrs. Vialpando and by the state counsel that the constitutional issue would not be litigated in the case and that again this is my recollection, that is the basis for the footnote in Judge Rouse’s opinion saying that the constitutional question would not be taken up.
Justice Byron R. White: Well, I don’t suppose the parties or the judge can stipulate the jurisdiction?
Mr. Charles B. Lennahan: I forgot the exact text of the pretrial order, but I would presume that the context was that there was a constitutional question sufficient to give pendent jurisdiction and then they proceeded to handle the case on the statutory basis.
Justice Harry A. Blackmun: Well, what’s the significance of that that it wasn’t an agreement that they would not litigate it and whoever losses on the statutory issue was not in a position to raise the constitutional one or --?
Mr. Charles B. Lennahan: No, I think Judge Rouse in his footnote --
Justice Harry A. Blackmun: I know what he said, but I want to know about your stipulation that you or the agreement that you’ve referred.
Mr. Charles B. Lennahan: Well, as I said, I do not recall the exact text.
We should have included it in the appendix, we did not, but I suggest to the Court that there is a pretrial order in there with a provision on the constitutional issue which is the basis for that footnote in Judge Rouse’s initial opinion.
Justice William J. Brennan: And that provision may not be a stipulation, but at least intended a determination by the judge that there was a non-frivolous constitutional question, but let’s go on and decide the statutory one?
Mr. Charles B. Lennahan: This is my recollection of what happened.
If this Court was to raise the constitutional issue, I believe the State of Colorado would be relying on the case of Dandridge v. Williams and pointing out that there was no invidious discrimination in the use of a flat amount.
We have pointed out that the rational basis for the use of a flat amount would include such things as it does encourage employment.
It maintains an equitable balance economically between people who earn low salaries and are not on public assistance programs as compared to people who are on public assistance programs.
And it does serve an aspect -- serve the purpose of helping to allocate public funds to serve a larger number of individuals.
Then I’d like to comment upon the fact that I believe is reflected in our appendix that the Department of Health, Education and Welfare has consistently permitted the use of average amounts or flat amounts for at least some types of work expenses both prior to and after the 1962 statute that’s being litigated here.
I believe our brief might be more helpful to the Court if on page 24 of the brief for petitioners, after that second full paragraph, a reference were inserted to appendix F of the amicus brief of the State of Colorado or the State of California, I’m sorry, the amicus brief for the State of California filed in this case.
Justice William J. Brennan: What paragraph?
Mr. Charles B. Lennahan: I’m suggesting a reference be inserted after the second full paragraph on page --
Justice William J. Brennan: On beginning the new regulations?
Mr. Charles B. Lennahan: Yes, we’re talking about --
Justice William J. Brennan: Hmm.
Mr. Charles B. Lennahan: -- new regulations and then this letter that I am referring to in the California amicus brief in appendix F is a letter from the commissioner, a memorandum from the Commissioner of the Social Rehabilitation Service indicating that the Handbook Sections that had been previously utilized were obsolete because I think that bears upon the consistency of the Department of Health, Education and Welfare’s interpretation of the statute --
Chief Justice Warren E. Burger: What is your page reference to the California brief?
Mr. Charles B. Lennahan: It’s appendix F, it would be on page 29 in their appendix.
Chief Justice Warren E. Burger: Thank you.
Mr. Charles B. Lennahan: Because it -- it is really not completely clear what the legal effect of the Handbook is, we are suggesting to the Court that the -- in -- I think is why the State of Colorado, Mr. Doane was saying, the State of Colorado looked at the Social Security Act back in 1970, looked at the Federal Regulations published in the Federal Register, looked at the letter dated September 29th of 1969 from the Commissioner of the Social Rehabilitation Service and that letter is printed on page 7 of the joint appendix clearly permitting the use of a flat work expense allowance.
Against this -- another thing I think that is involved here is that there is really no apparent legal difference between this September 26, 1969 letter in the joint appendix on page 7 and the circular that was involved in the case of Thorpe versus The Housing Authority of Durham, though the circular in the Durham case was a mandatory requirement, in this case, it provides an option.
But we are suggesting to the Court that the exercise of the discretion of the Department of Health, Education and Welfare is indicated by the -- by this letter and should be given effect by this Court.
Chief Justice Warren E. Burger: Thank you Mr. Lennahan.
Thank you gentlemen.
The case is submitted.