WEINBERGER v. SALFI

Print this transcript Transcript: 

Argument of Harriet S. Shapiro

Chief Justice Warren E. Burger: We'll hear arguments next in 74-214, Secretary of Health, Education and Welfare against Salfi.

Mrs. Shapiro.

Ms Harriet S. Shapiro: Mr. Chief Justice and may it please the Court.

This case is here on direct appeal by the Government from a decision of a three-judge District Court in the Northern District of California.

In this class action, the court struck down the nine-month duration of marriage requirement for entitlement to mothers and stepchild's benefits imposed by Section 416 (c) and 416 (e) of the Social security Act.

That Act provides benefits for surviving minor children of a wage earner and for the mothers of those children and as the court said this morning, the fathers, so that they need not work outside of the home.

But 416 (e) of the act defines the child of a deceased wage earner to exclude short-term stepchildren, that is ones whose natural parent had married the wage earner in less than nine months before his death and of course the mothers of such ineligible children are not entitled to mother's benefits to permit them to stay home to take care of the ineligible children.

Justice Harry A. Blackmun: Mrs. Shapiro do you know that the reason for the nine months, why is it nine rather than 10 or 12?

Ms Harriet S. Shapiro: Well, the indication is that Congress felt that nine months was long enough to deter marriages designed to obtain benefits.

There is also apparently some idea that wherein some short period there isn't the kind of dependency developed which is -- needs to be recognized by Social Security payments when the expectation is disappointed.

Justice Harry A. Blackmun: Is it related to the period of gestation?

Ms Harriet S. Shapiro: Not so far as I know.

Justice Harry A. Blackmun: I know.

Ms Harriet S. Shapiro: The court below found that the nine-month eligibility requirement was unconstitutional because it thought that it established a conclusive presumption that shorter marriages are undertaken to secure benefits.

It concluded that claimants like Mrs. Salfi and her daughter Doreen Kalnins are constitutionally entitled to disprove that presumption.

The District Court was wrong.

The duration of marriage requirement is a substantive limitation on eligibility.

It reflects a legislative policy decision that marriage alone is not a sufficient qualification for benefits and there -- so that the stepfather's obligation to support his stepchild generally matures overtime.

Still less is it -- as it --

Chief Justice Warren E. Burger: Does that depend to some extent on a state by state analysis?

Ms Harriet S. Shapiro: No.

Chief Justice Warren E. Burger: Are there some states in which the stepfather has no obligation at all?

Ms Harriet S. Shapiro: The Social Security Act requires --

Justice Potter Stewart: State law although --

Ms Harriet S. Shapiro: Yes, but the social security doesn't make the eligibility turn on the state law requirements.

The --

Justice Harry A. Blackmun: Mrs. Shapiro, if what you just said is so, why is there the exception in the statute for death by accident?

Ms Harriet S. Shapiro: Well, this reflects one of the important factors in the Social Security Act that the -- each specific provision reflects the interrelation and the resultant effect of many different policies that the general policy may -- having this exception because of other policies which are impinge.

The accident section was added in 1967.

It was a part of -- there were two exceptions put in at that time.

One was for the survivors of servicemen who die on an active duty and that clearly obviously was designed to recognize the particular special responsibility, federal responsibility for people who are killed in the federal service.

And Congress may have thought that people who die in accidents earned some sense similar, they too are likely to be young and the Act has always had a particular concern for people, the survivors of wage earners who die before they have a chance to build up financial security for their families when living, families, young families.

Justice Harry A. Blackmun: Is that in your view then a distinction between a death by accident and one by surprising heart attack is a policy decision?

Ms Harriet S. Shapiro: Yes.

Justice Harry A. Blackmun: Even though the wage earner might be 33?

Ms Harriet S. Shapiro: That's -- well, the other basic -- the Congress in these duration of marriage requirements was looking at the problems of the question of motivations for entering into valid marriages.

They didn't want to pay benefits to those who married simply to get benefits, who were -- thought of marriage is a condition of eligibility for a government subsidy.

But the provision is not a -- kind of a rough evidentiary tool to identify those marriages which were entered into out of a desire to obtain benefits.

Instead, it is designed to serve as a deterrent or more precisely to make sure that the act doesn't become an incentive to marriage.

Congress thought that few people would marry for benefits which they couldn't get for many months after marriage and that's why wives of retired workers are not entitled to benefits unless they have been married for a year.

It's also why widows and their children in appellee's class are not entitled to benefits on the basis of a marriage which ended in death in less than nine months.

If the duration of marriage requirements were simply evidentiary presumptions the waiting period for wives would make no sense because all wives are entitled after a year.

And that's -- so that that provision has no evidentiary purpose in identifying marriage as motivated by a desire for benefits.

The fact that there is this waiting period for wives as well as for widows demonstrates the deterrent purpose of all the duration of marriage requirements.

There are substantive conditions of eligibility and they're designed primarily to avoid any incentive, the Act might otherwise provide for marriage.

The fact that as Mr. Justice Blackmun mentioned, there is a group of survivors that Congress has excused from these duration of marriage requirements doesn't indicate any general exception to the provisions of the act requiring duration of marriage.

Justice Byron R. White: (Inaudible) is the United States satisfied there was jurisdiction in the District Court rule?

Ms Harriet S. Shapiro: We are not satisfied that there was jurisdiction for -- to the extent that it imposed a -- identified a class and required retroactive payments to all members of the class.

Justice Byron R. White: What about the jurisdictional amount?

Ms Harriet S. Shapiro: Well --

Justice Byron R. White: The United States made a motion, I gather to dismiss?

Ms Harriet S. Shapiro: Yes.

Justice Byron R. White: Based on the --

Ms Harriet S. Shapiro: Well, the -- its --

Justice Byron R. White: Well, does the -- is it possible that the plaintiff, each plaintiff could recover more than $10,000.00?

Ms Harriet S. Shapiro: It's possible.

They're right on the line.

The child is -- was currently 14.

She would ordinarily be entitled to the benefits until she is 18 or if she goes to college until she is 22 and if she is entitled for five years, or about five years, she'll make it.

Its --

Justice Byron R. White: What's (Inaudible)?

Ms Harriet S. Shapiro: The payment of benefits to the survivors of accident victims without -- immediately doesn't undercut the deterrent purpose of the statute.

Since -- when death is by accident, it's by definition unanticipated and so, payment of benefits in accident cases can be no incentive to people who might be contemplate marriage to obtain benefits.

Of course death from natural causes can also be unanticipated.

Justice Harry A. Blackmun: I suppose you can have a problem as to whether it is by accident?

Ms Harriet S. Shapiro: Well --

Justice Harry A. Blackmun: What does the department do?

Ms Harriet S. Shapiro: Ordinarily I think that the fact that it was by accident would appear on the death certificate, that in the vast majority of these cases, the fact of an accidental death is pretty much self-evident.

Justice William H. Rehnquist: Is suicide excluded?

That's what you usually get into the play in an insurance case, whether it was an accident or whether it was suicide?

Ms Harriet S. Shapiro: I am not sure whether suicide is excluded.

Justice Harry A. Blackmun: Or whether after an automobile collision, the victim has a heart attack and dies, is that by accident?

Justice William H. Rehnquist: Well, the death definition of accident in the Act says it has to be solely by external causes.

The Act --

Justice Harry A. Blackmun: Always the same definition and always the same litigation?

Justice William H. Rehnquist: But unexpected death from natural causes is far more difficult to identify.

A claim could be made in any case where death occurred within nine months of marriage.

The Secretary would then have to make a judgment as to life expectancy at the time of marriage.

And that judgment is by its nature speculative and the possibility of error is evident to any who might be tempted to marry for benefits.

There are other rational reasons for Congress to have decided to waive the duration of marriage condition for survivors of accident victims.

Justice Harry A. Blackmun: Mrs. Shapiro let me interrupt you once again.

There was a time in the federal state tax law when a gift made within three years of death was deemed to be made in contemplation to death.

Isn't this statute rather reminiscent to that and that's -- that was held invalid as I recall?

Ms Harriet S. Shapiro: Well --

Justice Harry A. Blackmun: (Voice Overlap) changed?

Ms Harriet S. Shapiro: The function of this provision in this Act is to deter the entering into marriages in order to obtain benefits and I believe it's the deterrent purpose of the statute that distinguishes it.

The Congress has usually moved step by step in revising the Social Security Act and extending the benefits to particular classes and particular problems are identified.

One of the things Congress considers in deciding whether to extend the benefit is the effect on the fund created by Social Secure -- the social security fund which is created from the taxes and of which the benefits are paid.

Social Security System is supposed to be basically an insurance program.

So the actuarial soundness of the fund is a matter of great concern to Congress.

And if it -- a decision of the fund can afford the obligation to pay benefits to survivors of accident victims, doesn't mean that it can also afford payment to survivors of other short-term marriages or than it -- that it could afford to eliminate the duration of marriage requirement altogether.

The sufficiency of the fund is basic to the effectiveness of the insurance system.

And so in this area it is particularly important to permit Congress to move step by step in expanding the obligation chargeable against the fund.

So long as there is a rational basis for distinguishing the categories that Congress defines, this Court should not interfere particularly when as here there is no classification involved which requires any kind of higher than normal judicial scrutiny.

On the retroactivity question, we rely primarily on the discussion in our brief.

I would like to address briefly the appellee's statement that our sovereign immunity argument is only a claim that they fail to exhaust administrative remedies.

We discuss in our brief the reason why we believe that 42 U.S.C. 405 (g) is the only possible jurisdictional basis for this suit and that Section has two important limitations on the waiver of sovereign immunity.

First, is the requirement that the administrative remedies must be exhausted.

But second --

Justice William J. Brennan: I gather, there is no stipulation here as there was in Wiesenfeld this morning?

Ms Harriet S. Shapiro: That's right.

Justice William J. Brennan: And that -- it would be futile to exhaust remedies?

Ms Harriet S. Shapiro: No.

There is no stipulation in this case.

But --

Justice William J. Brennan: But that would make a difference, isn't it?

Ms Harriet S. Shapiro: Well, it would make a difference as to the --

Justice William J. Brennan: Well, you didn't argue -- you didn't argue sovereign immunity in Wiesenfeld?

Ms Harriet S. Shapiro: No, we did not.

Justice William J. Brennan: I wondered why, because of the stipulation?

Ms Harriet S. Shapiro: Apparently because Wiesenfeld wasn't a class action.

What we're concerned about in this --

Justice William J. Brennan: Wiesenfeld was a -- there was a provision of the order we affirmed this morning, requiring back payment of those benefits?

Ms Harriet S. Shapiro: Well -- that's the problem that we're addressing here.

Justice William J. Brennan: Well, I'm just wondering why you didn't raise it, you didn't --

Ms Harriet S. Shapiro: No.

We didn't raise that.

Justice William J. Brennan: And I wondered if the stipulation of that, it would've been futile in the case at the issue then to exhaust it.

Was that the reason that you (Voice Overlap) --

Ms Harriet S. Shapiro: No.

The -- pardon?

Unknown Speaker: Maybe you didn't think about it.

Ms Harriet S. Shapiro: The problem that we see --

Justice William J. Brennan: (Inaudible) Maybe I'm wrong but I think that provision as to retroactive of benefits apply to more than just Wiesenfeld, (Inaudible)?

Ms Harriet S. Shapiro: I didn't notice the provision for retroactive payments and --

Justice William J. Brennan: Oh!

Well, -- yes.

Oh!

Yes, it's there, it's in the order, we affirmed this morning?

Justice Thurgood Marshall: You want us to reverse ourselves the same day, do you?[Laughter]

Ms Harriet S. Shapiro: I just don't want you to order retroactive payments here[Attempt to Laughter].

The other provision in Section 405 (g) is that the claim must be filed within 60 days of the final administrative decision.

So even if the exhaustion requirement can be ignored in cases raising constitutional claims, the time limit must still be respected.

It's because once a claim has been denied and 60 days have passed, that denial is final and the finality is important to the actuarial assumptions on which the Social Security System is based.

It protects the fund out of which benefits are paid from any possibilities that large contingent liabilities will be built up.

Individual appellees here filed promptly, but the class recognized by the District Court includes all those previously denied benefits because of the nine-month rule.

It does includes claimants whose denials became final more than 60 days before this suit and as to those claimants, there has been no waiver of sovereign immunity and payment of the benefits to them imposes just the kind of liability on the fund that 405 (g) is designed to avoid.

It's about $35 million in this case which is serious enough, but a decision that class actions can be used to avoid the finality provisions of 405 (g) is even more serious because that would mean that any denial of benefits based on the statutory requirement later declared invalid could be reopened at any time in a class action and the contingent liability of the fund is then enormous and totally unpredictable and that's the kind of actuarial nightmare that 405 (g) is designed to prevent.

I would like to reserve the rest of my time.

Chief Justice Warren E. Burger: Mr. Kates.

Argument of Don B. Kates Jr.

Mr. Don B. Kates Jr.: Mr. Chief Justice and may it please the Court.

I'm Don Kates, counsel for appellee in this matter.

Before I go into my prepared argument I'd like to respond to a question which Mr. Justice Rehnquist asked.

I'm informed by my co-counsel that there is a specific regulation relating to suicide.

If it is found as a matter of fact that the suicide was so mentally ill that he didn't know the consequences of his act, it is accidental, otherwise a suicide is considered a -- is considered to come under the ninth-month conclusive presumption.

Justice William H. Rehnquist: (Inaudible)

Mr. Don B. Kates Jr.: I would also like to respond just briefly to the allegations here that a justification maybe offered for the ninth-month rule in terms either of deterrents or of proving dependency of the stepchild and the widow upon the husband.

As to deterrents, I mean, this is covered in our brief, but as to deterrents, there is no deterrent factor of this rule at all because there is no penalty in this rule.

If a man terminally ill is induced to enter into one of these sham marriages and manages to hang on for nine months after the marriage, then the widow and any children she has are entitled to benefits.

If he doesn't manage to hang on, nobody has lost anything.

There's no deterrents at all.

Mr. Justice Blackmun I believe referred to the case of Heiner versus Donnan in which we had a two or three-year conclusive presumption of a donor's intent to give a gift in expectation of death, there was equal deterrents in that case.

If deterrents consist merely in the fact that if they catch you out, you don't succeed.

Deterrents in our view, if I may give the example of a bank robbery situation, the United States has not merely passed a law saying that if the FBI catches up with the bank robber, he has to give back the money.

The bank robber also goes to jail, that's deterrence, that's the cost which occurs in excess of any benefit that you may have gotten through the fraudulent or other illegal conduct.

Chief Justice Warren E. Burger: Has there been much doubt in the past whether they could get the money back?

Mr. Don B. Kates Jr.: I beg your pardon Your Honor?

Chief Justice Warren E. Burger: Has there been much doubt in the past that they could get the money back in your hypothetical or your illustration?

Mr. Don B. Kates Jr.: There certainly has been some doubt, although I understand that the law applies equally Your Honor whether they get the money back or not.

Perhaps the bank robber gets a little off at his sentence for that, but he certainly doesn't go scot-free as would occur in our case.

Justice William H. Rehnquist: In your case of the terminal illness person and you say that nobody loses anything, but if the purpose of the thing is to deter that kind of marriages for the benefit, I would presume that the putative spouse who is going to marriage -- marry the terminally ill person would be a little less likely to do it if she knew that he had to last nine months?

Mr. Don B. Kates Jr.: She might be a little less likely to do it Your Honor, but if the marriage is a sham which is what this rule is directed at, I don't see why she really would.

She doesn't have to live with him.

She doesn't have to do anything at all except marry him and if he lives nine-months, she is automatically a widow.

Justice William H. Rehnquist: Well, but some consequences certainly attach to marriage other than getting Social Security benefits?

Mr. Don B. Kates Jr.: Yes, Your Honor, but I don't see that any of the deleterious consequences would apply such as they may be speaking as a bachelor.

I [Laughter] that I don't see how any of those deleterious consequences would apply to a sham marriage of this kind.

The facts in this case Your Honors typify what's happened in thousands of cases because of this nine-month rule.

The deceased wage earner, Londo Salfi was an active and healthy man of 52 years at the time of the marriage with a life expectancy of 21 years.

Routine medical examinations demanded by his employer, including one within a year of the marriage showed that he had no heart problem or any disease or debilitation whatever as far as his physicians could determine.

Indeed the possibility of a heart ailment was so far off from his mind that like all too many other people, he dismissed the first heart attack which begun about a month after the marriage as acute indigestion and the physician was only called after the symptoms persisted.

After his death, Mrs. Salfi applied for survivorship benefits for herself and the child by a former marriage, only to meet an absolute bar of the nine-month rule.

She offered medical and other evidence to show that the marriage was genuine and not contracted in contemplation of death, but none of this could be or was considered by the Social Security Administration because of the statutory conclusive presumption that where a marriage has entered into -- in contemplate -- is entered into and the man dies of natural causes, non-accidental causes within nine months, the marriage is conclusively presumed to have been a sham entered into in contemplation of death.

Mr. Salfi's unexpected death in this manner is by no means an isolated extraordinary or unusual kind of event.

On the contrary, every year, thousands of people are struck down by heart attacks or other ailments in the prime of life.

What is unusual, however, is a conclusive presumption that where this occurs within nine months of marriage, the marriage was a sham entered into an expectation of death.

We wish very strongly to emphasize that the Social Security Administration had submitted absolutely no evidence whatever that such fraudulent applications or that such fraudulent marriages to result in fraudulent applications are now or ever has been any kind of a problem for them.

Justice Byron R. White: Well, how about a -- suppose Congress made a judgment that it was a -- and that was a chance that they should take some precautions against it?

Mr. Don B. Kates Jr.: Yes, Your Honor.

We can agree that that is what Congress did.

However, the lack of any evidence as to the prevalence of the matter goes to the gravity of the evil, goes directly to that issue and undercuts any attempt to justify the ninth-month rule.

Justice Byron R. White: Well let's assume there was evidence that a -- of a substantial incidence of fraudulent claims, would that make a difference to you?

Mr. Don B. Kates Jr.: It would not make a difference to our conclusive presumption argument Your Honor but it would make a difference --

Justice Byron R. White: Well, (Voice Overlap) arguing it?

Mr. Don B. Kates Jr.: Pardon?

Justice Byron R. White: Why are you arguing that?

Mr. Don B. Kates Jr.: We also rest this case on an equal protection argument Your Honor and we feel that a classification is per se unreasonable where it is so over broad -- well, to give an example, a classification would --

Justice Byron R. White: Are you -- you're suggesting Congress in a law may not classify -- may not treat a group was a class unless every single member of the group shares the same characteristics?

Mr. Don B. Kates Jr.: Absolutely not Your Honor, but we think that a classification is fatally over broad if it tosses out 99 innocent people to catch one malefactor.

Justice Byron R. White: Well, what if it were the other way around?

Mr. Don B. Kates Jr.: If it were the other way around we think that it might well be acceptable.

Justice Byron R. White: Well, what, on both equal protection and (Voice Overlap) --

Mr. Don B. Kates Jr.: No Your Honor.

Only upon equal protection grounds would it be acceptable.

Justice Byron R. White: Well, what about the conclusive presumption in that case?

Mr. Don B. Kates Jr.: A conclusively presumption Your Honor is unconstitutional unless (Voice Overlap) --

Justice Byron R. White: Then you are saying Congress cannot classify in this way unless every single member of the class shares the trade?

Mr. Don B. Kates Jr.: For the purposes of the conclusive presumption doctrine, Your Honor, a conclusive presumption must be universally true.

Justice Potter Stewart: Why on Stanley against Illinois on this -- that argument?

Mr. Don B. Kates Jr.: I certainly do Your Honor as well as upon Vlandis and upon LaFleur.

Justice Byron R. White: Stanley against Illinois and those cases had some, not Vlandis but Stanley against Illinois specifically said that there was a kind of a special relationship that it -- that required some kind of special scrutiny?

Mr. Don B. Kates Jr.: Well, Your Honor I --

Justice Byron R. White: And what is it here?

Mr. Don B. Kates Jr.: I do not --

Justice Byron R. White: The marriage.[Attempt to Laughter]

Mr. Don B. Kates Jr.: Well, Your Honor there is as your colleague --

Justice Byron R. White: And what -- I'd like to know what -- I'd like to know what your answer is to Justice Stewart's question besides, Mr. Justice Stewart's answer?[Laughter]

Mr. Don B. Kates Jr.: I always attempt to rely upon Mr. Justice Stewart whenever I can Your Honor.[Attempt to Laughter]

Justice Byron R. White: Well, and on any other justice whenever you can?[Laughter]

Mr. Don B. Kates Jr.: Absolutely Your Honor.

Justice Byron R. White: So what is your answer?

Mr. Don B. Kates Jr.: We do not believe that other than marriage, there is a special relationship.

However, that would not distinguish this case from Vlandis or United States Department of Agriculture versus Murry or Heiner versus Donnan or Schlesinger versus Wisconsin, all of them concludes presumption cases without any special relationship.

Justice Harry A. Blackmun: I take it in your answer to Justice White, you're really reaching for unattainable perfection, aren't you?

Mr. Don B. Kates Jr.: No Your Honor.

All that we seek in terms of the Equal Protection Clause -- in terms of the conclusive presumption matter, we believe that a -- that as this Court has repeatedly held, a person is entitled to prove the facts of his or her entitlement and that Congress may not arbitrarily decide that an evidentiary conclusive presumption -- a presumption in this case of a falsehood can be substituted for the person's right to prove the actual facts.

In Mrs. Salfi's case and in thousands of others, there was no marriage in contemplation of death, there was no lack of genuineness.

These are all conceded facts Your Honor.

Mrs. Salfi was turned away without any examination of the facts of her case.

However when this case was filed, the United States or rather the Social Security Administration had no hesitation whatever in do -- in entering into a stipulation that all the facts we have relied upon here were absolutely true.

That stipulation incidentally will be found since the -- since there's some suggestion in the brief of the appellants in this matter that they did not stipulate to the allegations of the complaint, I refer you to appendix, page 29, paragraph, “there are no genuine issues,” this is a stipulation, “there are no genuine issues or material fact in dispute concerning the adjudication of the constitutionality of the challenged provision and that this three-judge panel may finally determine the constitutionality of said challenged provisions on the basis of the facts set out in the complaint, and affidavits heretofore filed.

To return if I may to the issue of equal protection just very briefly, a classification in our view would be fatally over broad if it classified 99 innocent persons with one malefactor and punished them all.

Here we have a classification which excludes thousands of innocent persons right now for the sake of dealing with the purely hypothetical danger that a fraudulent application may someday come along for there is no evidence in the record, no attempt to produce any evidence that this concludes it presumption refers to anything which has ever been a problem.

Chief Justice Warren E. Burger: Would it be fatally over broad if Congress eliminated the benefits entirely on the theory that they didn't want to get into deciding how many people of the total number were malefactors as you put?

Mr. Don B. Kates Jr.: I -- you mean if -- if you're asking Your Honor whether Congress could eliminate benefits to widows entirely, it certainly could, yes.

Chief Justice Warren E. Burger: In these circumstances?

Mr. Don B. Kates Jr.: In these circumstances?

Chief Justice Warren E. Burger: Yeah.

Mr. Don B. Kates Jr.: I -- I'm -- you mean --

Chief Justice Warren E. Burger: Just simply say no benefits at all.

No question that they can do that, is there?

Mr. Don B. Kates Jr.: I'm a little uncertain, you mean, whenever a person died of --

Chief Justice Warren E. Burger: No, no.

Independent of the remarriage, just eliminate the benefits to solve the problem?

Mr. Don B. Kates Jr.: Well, Congress definitely could eliminate all widows' benefits, Your Honor.

Chief Justice Warren E. Burger: Very definitely over breadth, isn't it?

Mr. Don B. Kates Jr.: Well, at that point Your Honor I think that Congress would've made a substantive decision that it didn't want to have widows' benefits.

Chief Justice Warren E. Burger: What you say is that they can't make one, they can't try to slice it as thin as they sliced it here when the knife cuts some innocent people?

Mr. Don B. Kates Jr.: Yes, Your Honor.

I think that then -- when the knife -- they have sliced it thin on their side but very thick on our side Your Honor.

Justice Byron R. White: And what the -- the next Congress could've made a judgment that a person or widow, a wife who's been married for nine months or a year or two years is more entitled to benefits than one who's only been married for a day or a week.

Mr. Don B. Kates Jr.: Congress --

Justice Byron R. White: And might need them more?

Mr. Don B. Kates Jr.: Congress might have made that judgment Your Honor, but Congress didn't make that judgment --

Justice Byron R. White: Well, what if they didn't but they could've?

Mr. Don B. Kates Jr.: That doesn't have anything to do with our case Your Honor.

Justice Byron R. White: Well it does in the class of equal protection terms.

You -- if you could dream up of good reasons for a law you -- good reason for a discrimination, you --

Mr. Don B. Kates Jr.: Well, Your Honor --

Justice Byron R. White: And you save the law with it?

Mr. Don B. Kates Jr.: I can only say with regard to that that would -- as to the children's benefits, make this statute a redundancy.

A stepchild must prove by actual evidence that he has been supported by the stepfather.

That's a requirement under the Social Security Act, a widow on the other hand has never been required to prove dependency, that's simply never required by the Act.

And --

Justice Byron R. White: Well, I would suppose that arguably Congress could've decided that the wife has only been married a short time, are more confident to take care of themselves, their husband died than if they have been married longer?

Mr. Don B. Kates Jr.: Well, Your Honor, if it had that with itself have been a conclusive presumption that would've raised certain problems.

I would point out that with regard to dependency, this is in our brief, a woman becomes dependent not nine months after the marriage, but at the time of marriage because --

Justice William J. Brennan: That's legally?

Justice Byron R. White: Yeah.

Mr. Don B. Kates Jr.: Well not just legally Your Honor, factually.

If she's going to give up her job that normally occurs before the marriage and honeymoon, if she's certainly -- if she looses alimony or welfare or pension benefits from a past marriage, she loses them on the day -- to the marriage, not nine months or after.

Justice William H. Rehnquist: But if she quits her job at the time she is married and tries to go back to that or a similar job a month afterward, she's going to have an easier time than she's been out -- if she has been off the market for a year, isn't she?

Mr. Don B. Kates Jr.: Marginally Your Honor, yes.

But --

Justice William H. Rehnquist: Well, isn't Congress entitled to take into consideration this kind of things that you -- you say are marginal when its drafting anything as this, much of a tapestry as a Social Security Act?

Mr. Don B. Kates Jr.: Well, Your Honor I would concede that Congress would be entitled to take this things into consideration.

Our argument is that in the light of the statute as it exist in its position, vis-à-vis the other provisions of the statute, Congress didn't and could not have been considered to be considering those factors.

If it had, it wouldn't have bothered posing this nine-month requirement for stepchildren at all because that's already being tested directly by the Act.

You don't need a wide overreaching conclusive presumption where you've already tested the matter directly and if Congress had desired to test the matter as to widows, it would simply require widows to prove that they had become dependent upon their husbands.

I will pass now if I may to the issue of sovereign immunity as raised by the United States.

Before undertaking a discussion of the technical aspects of that doctrine however, I'd like to make one general consideration clear.

This case is very different from those previously dealt with by this Court which have dealt -- have concerned attempts to enforce contracts against the treasury or attempts to require or prevent the disposition of unquestionably sovereign property.

The Social Security trust fund is not only entirely separate from the general treasury.

It receives no funds from the general treasury.

The Social Security trust fund is stocked purely by contributors, contributions from wage earners and their employees -- employers, I'm sorry.

The Federal Government collects, invests and distributes these funds but it does not make any contributions on its own.

Justice Byron R. White: So far?

Mr. Don B. Kates Jr.: So far, yes Your Honor.

In other words, it acts conceptually as no more than a trustee.

To hold that the Government has sovereign immunity from a suit by wage earners to a fund which they've contributed to and the Government has not would be to go far out of our way to extend the doctrine of sovereign immunity, a doctrine which is almost universally deplored by modern thinkers as a grotesque and acryonism from the Middle Ages.

There is yet another prefatory comment I'd like to make before going into general discretion of sovereign immunity and that is -- first of all, let me make one thing very clear.

We're concerned here not with sovereign immunity from this suit as such, but only with sovereign immunity as to benefits back -- benefits for the class back to the date of original entitlement.

Now, there is an important issue in that regard which may have been lost sight of completely since SSA has studiously ignored it.

This is that there is an SSA regulation which requires exactly what we got in this case, retroactive benefits.

Whenever an application has been found to have been improperly denied that regulation is 20 CFR 404.957 and it is quoted in our brief in a footnote.

Justice William J. Brennan: Is this an argument of that itself as a waiver of sovereign immunity?

Mr. Don B. Kates Jr.: No Your Honor.

Well, whether it is a --

Justice William J. Brennan: (Inaudible)

Mr. Don B. Kates Jr.: Whether it is a waiver or not we believe that the court was entitled to an order -- to order and its order is entitled to be affirmed insofar as it simply requires the Social Security Administration to treat the members of the Salfi class the way it would treat anyone else who came in and showed that they had erroneously been denied benefits.

Justice William J. Brennan: Because you -- I gather you say here if the -- that SSA had admitted that it did made a mistake in this case then the operation of that regulation would've paid these benefits back to the date of Mr. Salfi's death?

Mr. Don B. Kates Jr.: Yes Your Honor.

It would pay back to four years and that would of course handle -- the Salfi's.

It would handle appreciable number of the class although it would not handle all the class which is six years back.

Justice William H. Rehnquist: Are there any members of this class who'd -- have not -- would not have been in compliance with Section 402 (j) (1), the one that limits it to a one year before the application?

Mr. Don B. Kates Jr.: I would imagine that their -- according the estimate of SSA which we accept because we have no facts on the matter, although I don't know how they came about theirs, there were 20,000 members of the class, approximately over a six year period, presumably a substantial number of those class members are before that six-year period.

However, most of those members would be covered by this four year period of the SSA regulation.

Now let me for a moment consider the -- that SSA's estimate that paying benefits back to the date of entitlement for the class would cost $35 million.

We do not agree to that estimate at all.

We note that it's based on an unverified assertion in an affidavit which utterly fails to specify how these figures were arrived at except insofar as its obvious that they arrived at by pure speculation because no one could know this matter.

No one actually knows how many of these applications were put in at all.

Moreover, the affidavit assumes what is totally false which is that everybody who has been turned down in this group of 20,000 even if notified is going to reapply.

Some of these people are dead.

Others may for various reasons not want to apply.

Moreover, it also assumes that all of these people will be entitled to benefits.

Some of them will not be entitled to benefits for a large number of reasons, including the fact that they're not as Mrs. Salfi is, 50 years of age and disabled or that they're not less than 60 years of age or they may be entitled -- Mrs. Salfi for instance because she is on disability gets a certain amount of Social Security benefits anyway.

So her entitlement is not to a full survivorship benefit, but to a survivorship benefit discounted by the amount of her Social Security disability.

The same would apply to anyone who was on old age or retirement benefits.

SSA has naturally seized upon this figure of $35 million as representing an exorbitant award to the class, which will minis the liquidity of the Social Security System.

Justice William J. Brennan: Is that – would there be a reduction of benefits if Mrs. Salfi were working and earning?

Mr. Don B. Kates Jr.: I believe there would be Your Honor.

Justice William J. Brennan: As -- that same that we had in Wiesenfeld, a dollar for every dollars there?

Mr. Don B. Kates Jr.: Yes, Your Honor.

Of course if she --

Justice William J. Brennan: (Inaudible)

Mr. Don B. Kates Jr.: -- if she were able to work, if she went completely disabled, she wouldn't be on disability and shouldn't be eligible at all.

Justice William J. Brennan: Well, (Voice Overlap) in this class and maybe many will have to go to work, they haven't been getting any benefit (Voice Overlap) --

Mr. Don B. Kates Jr.: Yes Your Honor [Attempt to Laughter] that's probably true and their lack of benefits might even have some relationship to my comment that some of them may no longer be around.

In fact however even if its accurate, this $35 million figure does not represent an exorbitant return for the class.

It represents $1750.00 average for each class member, $1750.00 to which these people were entitled and would've received have they not been deprived by an unconstitutional law.

More important, the restitution of this amount does not in any manner threaten the Social Security System which has a total trust fund, permanent trust fund of $46 billion.

Indeed, the amount which was denied the class over a six-year period represents only a little more of one -- a little more than 1/20th of 1% of the amount which was paid out by SSA last year alone and last year, SSA actually increased the trust fund because Social Security tax has exceeded benefit payments by $1.5 billion.

It had been my intention to discuss in some detail the question of whether -- since Congress has as SSA concedes, waived sovereign immunity in a 405 (g) case, we are allowed to bring an action under or our award below is authorized by 405 (g).

SSA says that we can't rely on that because we failed to exhaust the administrative remedy provided in that Section.

This Court just today in the Wiesenfeld case, page 5, note 8 has cited and relied upon previous cases which assumed or hold that it is unnecessary to exhaust this or any other administrative remedy where the sole issues are constitutional or where the administrative remedy which the --

Justice William J. Brennan: Well, if -- going to -- that's the whole story Mr. Kates, after all there was a stipulation and I tried to get, I couldn't from Mrs. Shapiro when relied on that as the reason they never raised this sovereign immunity question in Wiesenfeld?

Mr. Don B. Kates Jr.: Well, Your Honor the --

Justice William J. Brennan: But the fact is they did and you don't have a similar stipulation here, do you?

Mr. Don B. Kates Jr.: They stipulated that they had no jurisdiction to decide constitutional issues.

They have --

Justice William J. Brennan: (Voice Overlap) to their agency, has it?

Mr. Don B. Kates Jr.: Right.

They have no more authority in this case.

Justice William J. Brennan: (Voice Overlap) stipulation in Wiesenfeld.

I thought it went beyond, isn't it?

It was that you don't have to exhaust your remedies in Wiesenfeld because it will be futile to do so.

Mr. Don B. Kates Jr.: Well, they stipulated that it would be futile, yes Your Honor.

It would be equally futile here.

Let me -- we did not exhaust the administrative remedies.

But as a matter of --

Justice William J. Brennan: Well, may I ask this, do you read 405 (g) as waiving sovereign immunity, whatever its fact may weigh, conditionally upon the exhaustion of remedies?

Mr. Don B. Kates Jr.: No Your Honor, we do not, not at all.

But let me just a moment talk about what happened in this case.

We didn't exhaust the administrative remedy, but somebody else did.

Somebody in our class took our pleadings, put them into the -- to an admin -- our pleadings in the District Court, put them into the administrative hearing officer.

The administrating hearing officer said, “You're talking about the constitutionality of a statute.

We have no authority to decide that matter” and the Secretary of HEW affirmed that decision, that is right in the record in this case.

So as far as we can tell, there is no question that the exhaustion would have been futile --

Justice William J. Brennan: (Voice Overlap) for back payments, do you regard the suit you brought as a suit under 405 (g)?

Mr. Don B. Kates Jr.: Yes Your Honor.

We believe that it is justifiable under 405 (g).

Justice William J. Brennan: Because 408 says that -- because they got it misstated when they talk about -- what is it, Section 7142, but that there's no other avenue for this kind of recovery except the 405 (g) recovery, hasn't it?

Mr. Don B. Kates Jr.: No.

We believe that as in Wiesenfeld, we were entitled to bring it under 1331 or under a number of other statutes upon which we rely.

We brought -- we believed that it can be affirmed under any of a number of statutes.

Justice William J. Brennan: I'm limiting to the question I asked because it was limited to this back benefits?

Mr. Don B. Kates Jr.: These back benefits, we believe that --

Justice William J. Brennan: That's still 1331?

Mr. Don B. Kates Jr.: The waiver of sovereign immunity in our position Your Honor is that it is either of two things.

Either one, the waiver of sovereign immunity allows us to bring a suit under 1331 or any other source of jurisdiction limited to the Social Security Act or two, the waiver of sovereign immunity allows us to bring a suit under 405 (g) and --

Justice William J. Brennan: Well, what bothers me on your first argument is, in this -- and to the extent you're going before back benefits, is the provision of 405 (h) which says, “that no proceeding shall be brought under -- I forgotten the exact language -- Section 71 of 28 or 42 U.S.C., I forgot which one, 28 I think, was apparently from history, 71 is all of the --

Mr. Don B. Kates Jr.: Well, that would include 1331 Your Honor.

Justice William J. Brennan: That's right.

Mr. Don B. Kates Jr.: And that's what Wiesenfeld was brought under.

And that would be jurisdictional so -- as it is -- as its considered in the opinion of this Court, and this Court didn't dare consider it was a jurisdictional defect.

Justice William J. Brennan: Well, the Court (Voice Overlap) because the Government didn't raise it, we didn't have to wrestle with it in Wiesenfeld, but I suppose we could in this case?

Mr. Don B. Kates Jr.: Very well Your Honor.

Now, there has been a suggestion here that somehow the 60-day statute of limitations in 405 (g) would apply to our class and it somehow, the members of the class avoided this or tried to avoid this 60-day statute of limitations.

Well, I note my time is up Your Honor.

I shall attempt briefly to summarize if I may.

Chief Justice Warren E. Burger: Have you covered this in your brief?

Mr. Don B. Kates Jr.: No, we have not covered this point in our brief.

Chief Justice Warren E. Burger: We'll give you a minute to do it very briefly.

We're running 30 minutes behind today.

Mr. Don B. Kates Jr.: Thank you, Your Honor.

The 60-day statute of limitation is tied very strictly to the exhaustion requirement.

That's what it grows out of.

If the exhaustion requirement is inapplicable, the 60-day statute of limitations is inapplicable.

The application of that 60-day statute of limitations works a very substantial injustice to our class as well.

This class members are ordinary citizens who rely upon SSA for eligibility information, information which is its duty to provide to them.

When these people, the vast majority of whom are not constitutional lawyers are told that they're flatly ineligible because of this statue, they're not going to rush off and file a suit in United States District Court.

They just assume in justifiable reliance upon the information they've given that they're ineligible.

Having been misled by SSA, misled in good faith, but misled nonetheless, the statute of limitation should be considered tolled until 60 days after these people have now been notified of their entitlement.

Thank you very much.

Chief Justice Warren E. Burger: Thank you Mr. Kates.

Mrs. Shapiro, do you have anything further?

Rebuttal of Harriet S. Shapiro

Ms Harriet S. Shapiro: The stipulation in the District Court was to the facts.

It was not to the jurisdiction.

We contested the jurisdiction in the District Court as we did here.

The regulation which my opponent refers to concerning retroactive benefits -- retroactive payments went back for -- four years after benefits are denied is designed to recognize that in individual cases in which errors and adjudications are noted.

The administration can go back and correct those errors on an individual basis.

That doesn't open up the possibility of a whole scale reconsideration, that would be the case here.

The other point is that if it were jurisdiction under 1331 which as we pointed out in our brief, we don't believe there is, the members of the class by my opponent's arithmetic would be entitled to an average of $1750.00, couldn't meet the $10,000.00 jurisdictional amount.

Chief Justice Warren E. Burger: Well, average is --

Ms Harriet S. Shapiro: Average --

Chief Justice Warren E. Burger: (Voice Overlap) jurisdiction, do they?

Ms Harriet S. Shapiro: No, they don't.

But this indicates that sweeping a whole bunch of people in -- under the class action may mean that you have very serious problems about the individual eligibility of each person.

Justice William H. Rehnquist: Well, didn't (Inaudible) last year hold that each member of the class had to meet the $10,000.00 requirement?

Ms Harriet S. Shapiro: That's right, it did.

And it's very hard to know whether any of these are -- which ones these members of this class, and of course the other that the class retroactivity problem involves is it's -- it just going to mean that the Social Security Administration will have to determine whether for -- if you go back for four years, you're going to have to look at month by month earnings to determine whether the individual people were entitled and resurrecting those accounts could be exceedingly difficult.

I believe that's all I have.

Chief Justice Warren E. Burger: Thank you Mrs. Shapiro.

The case is submitted.