Atkins v. Parker - Oral Argument

ORAL ARGUMENT OF SAMUEL A. ALITO, ESQ., ON BEHALF OF THE FEDERAL RESPONDENTS IN NO. 83-6381 AND IN SUPPORT OF PETITIONER IN NO. 83-1660

Chief Justice Burger: We will hear arguments next in Atkins against Parker and the consolidated case.

Mr. Alito, you may proceed whenever you are ready.

Mr. Alito: Mr. Chief Justice, and may it please the Court, this case concerns a 1981 amendment to the Food Stamp Act that slightly reduces benefits for households with earned income.

In order to implement this change in the law, it was not necessary for a state to gather any new information about any recipient or to make any new factual determinations.

Instead, the state merely had to make a small mathematical change in the formula used for computing benefits.

Before the amendment, 20 percent of earned income was disregarded in calculating benefits, and after the amendment 18 percent of earned income was disregarded.

Both of the lower courts below in this case held that the due process clause prohibited Massachusetts from implementing this simple mathematical change without providing advanced notice to all affected recipients explaining to them exactly how their new benefit amounts had been calculated.

Unidentified Justice: Mr. Alito, did the Court of Appeals make this constitutional decision before it had treated whether the regulations or the statute might require it?

Mr. Alito: The Court of Appeals also found that the statute was violated, but it did so only because it believed that Congress would not have required the provision of a constitutionally defective form of notice.

It did not devote any independent analysis to the language of the statute or to the legislative history, and so we believe that the statutory issue is before this Court, and is fairly subsumed by the constitutional question that was raised in the state's petition.

Unidentified Justice: And you think we should address it, Mr. Alito?

Mr. Alito: It is an alternative ground--

Unidentified Justice: We shouldn't send it back to them?

Mr. Alito: --You may send it back for them to decide the statutory issue.

Unidentified Justice: I am suggesting, do you think we ought to do that?

Mr. Alito: No, I believe this Court ought to decide it.

Unidentified Justice: Ought to decide it.

Mr. Alito: I don't think the issue has any merit.

In the brief time that--

Unidentified Justice: The court's has already decided it, hasn't it, below?

Mr. Alito: --That's correct.

It has, but in our view it based its holding--

Unidentified Justice: Yes.

Mr. Alito: --purely on the constitutional question, on which we believe it was wrong.

Unidentified Justice: Well, if you send it back now without saying anything, they couldn't say anything but what they have already said.

Mr. Alito: I assume they would adhere to their decision based on their erroneous view of what the due process clause requires, and in the brief time that is allotted to me this afternoon, I want to argue that in the situation involved in this case, advance notice is not constitutionally necessary.

Counsel for Massachusetts will then assume for the sake of argument that some form of notice is necessary, and will argue that the notice furnished in this case satisfied statutory and regulatory requirements.

Let me make clear at the outset exactly what our submission is.

We acknowledge that the due process clause requires notice and a hearing when a state terminates or reduces benefits based on a factual determination about the recipient.

That is the situation in Goldberg versus Kelly.

But we don't think the same rule applies here, where there is no new factual determination, where the only thing that had to occur was a new computation using data that was already in the file and already in use.

Why is this so?

First of all, I think it is quite clear that the due process clause does not restrict Congress's authority to change the level of food stamp benefits.

A food stamp recipient has a property interest in receiving the level of benefits specified by law at any particular time.

The recipient doesn't have a property interest in getting any greater benefits, and the recipient doesn't have a vested interest in getting future benefits.

So, if Congress amends the law and reduces benefits, as it did in 1981, it does not deprive the recipient of property.

It merely redefines the recipient's property interest.

Now, since the plaintiffs in this case, who were food stamp recipients, had no vested interest in continuing to receive benefits at the pre-1981 level, one may well ask on what theory they claimed that implementation of the 1981 reduction deprived them of property and triggered the due process clause.

And their theory, as I understand it, is as follows.

First, they correctly note that they have a property interest in getting the right amount of benefits.

Then they say this interest is threatened when the law is changed, because the risk of administrative accident in calculating benefits increases at this time of confusion, and therefore they say we are entitled to advance notice explaining to us how our new benefit level was calculated so that we can double check the state's computation.

Now, the first thing that is wrong with this theory in our view is the premise that a great risk of administrative error occurs when a simple mathematical change like that enacted in 1981 is implemented.

This premise is devoid of empirical support, and it is intuitively incorrect.

This is a simple mathematical operation, and it does not give rise to a great risk of error, but assuming that it is correct for the sake of argument, let me briefly explore some of the implications of this theory.

First of all, for all the talk about reductions in food stamp benefits, it turns out that it doesn't matter under this theory that benefits were reduced in 1981.

All that matters is that the law was changed, and therefore plaintiffs claimed the risk of error increased, so the theory would logically apply just as well if Congress had increased benefits in 1981 or if it had simply made some other alteration in the formula for computing benefits.

Second, it is clear that this theory extends far beyond food stamps, and let me give just two examples.

A state decides to increase the salaries of its employees to reflect an increase in the cost of living.

State employees have a property interest in getting the salaries specified by law.

A Change in the pay scale is a mass change in the law, so according to the plaintiffs that increases the risk of administrative error.

So under their theory state employees are entitled to advanced notice as a constitutional requirement explaining how their new salaries were calculated.

Another example.

Tax rates have been charged several times in recent years.

This has affected the amount withheld from wages.

Wage earners have a property interest in their wages.

Charging the tax rates is a mass change in the law, so under the plaintiff's theory, wage earners were entitled to advanced notice specifying how their new wage levels were calculated.

And I think plaintiffs' theory goes further still, because what really triggers, what directly triggers the due process clause under that theory is not the change in the law but the increase in the risk of administrative error.

So what if the risk increases for some other reason?

The state gets a new computer program, gets a new computer.

There is a fire at the computer center.

Logically the theory should apply there as well, but then I am not even sure why an increase in the risk of error should matter.

What if the normal, everyday error rate in a non-computerized state is higher than even the increased error rate in a state like Massachusetts when it implements a change in the law?

Is the non-computerized state then under some kind of perpetual duty to give out notice every time it issues a check?

All of this, of course, is absurd.

The due process clause requires notice and a hearing when there is a real and imminent threat to a property or liberty interest.

Now, there is such a threat in the Goldberg versus Kelly situation.

The state makes a factual finding about the individual and concludes that the individual is ineligible for benefits, but there is no such threat here.

The only threat is the statistical chance that an accident is going to happen, but for all of us there is always the chance that the government is going to accidentally deprive us of life, liberty, or property.

The elevator in this building may crash, but that does not mean that we all have a due process right to advance notice and a hearing on the issue of elevator maintenance.

Respondents... the plaintiffs in this case have the last word on this constitutional question in their reply brief, and it seems to me that they ended up by conceding virtually everything that I have just said.

On Page 11 of their reply brief, they write,

"By definition, accidental deprivations of property by the government cannot be predicted, and therefore advanced notice of them is not possible, much less required."

"This reality, however, does not lead to the conclusion that no notice is due when the government intends to deprive one of property and will predictably make mistakes in doing so."

But here, neither Massachusetts nor the federal government intended to deprive anybody of property.

What they intended to do was to see that every recipient got exactly the level of benefits voted by Congress in 1981, no more and no less.

The plaintiffs in this case are worried only about accidental deprivation of property, but in the case of such accidental occurrences, advanced notice in a hearing is not necessary.

Post-deprivation proceedings are fully sufficient, as this Court held in Parrott versus Taylor.

Unidentified Justice: Mr. Alito, focusing on that language, your disagreement is, they say when they intend to deprive, and you are saying the correct statement would be, they intend to change the property.

Mr. Alito: That's right.

Unidentified Justice: Which is not a deprivation.

Mr. Alito: The Congress is not depriving.

They flip back and forth in their argument between different definitions of what their property interest is.

But it is quite clear, and I believe they conceded it in their opening brief, that they have no property interest in continuing to receive benefits at the 1981 level.

Congress is free to change the level of benefits at any time, as this Court held in United States Railroad Board versus Fritz, and in Fleming versus Nestor, the Court went so far as to say that under the Social Security system, where people do make payments, there is no vested right to future payments, to future benefits--

So, it must follow that under the food stamp program recipients do not have a vested right in continuing to receive benefits at any particular level.

The only thing they are worried about here is an accidental deprivation of property, and as to that they don't have a constitutional right to advanced notice or a hearing.

Chief Justice Burger: Ms. Janos.

ORAL ARGUMENT OF ELLEN L. JANOS, ESQ., ON BEHALF OF THE PETITIONER IN NO. 83-1660

Mr. Janos: Mr. Chief Justice, and may it please the Court, my argument is promised on the assumption that the Constitution requires some form of notice, and our argument is essentially that the notice that the Department of Public Welfare sent out in December, 1981, in fact met and exceeded the constitutional requirement of due process.

Unidentified Justice: Ms. Janos, may I ask, there is a regulation, isn't there, that requires you to give some notice?

Mr. Janos: Yes, there is, Your Honor.

Unidentified Justice: And also I gather that same regulation makes provision for continuing benefits in certain circumstances.

Mr. Janos: That's correct, Your Honor.

Unidentified Justice: Are those provisions going to have any relevance to your argument?

Mr. Janos: Only insofar as Massachusetts exceeded those regulatory requirements and we allowed, if someone appealed, we continued their benefits, if they appealed for any reason.

The regulation is a little bit more restrictive, but in this case if anyone filed an appeal from this notice, their benefits were continued pending that appeal and pending the final decision.

Unidentified Justice: They were continued in all instances?

Mr. Janos: Yes.

That's correct, Your Honor.

Unidentified Justice: I see.

Mr. Janos: In December, 1981, the Massachusetts Department of Public Welfare mailed a notice to 16,000 food stamp recipients that were affected by the change in federal law.

The lower courts found this notice unconstitutional because of its vocabulary, because of its print size, because of its ink quality, and because it did not contain individualized financial information for each particular household.

The courts used this notice to set forth unworkable and burdensome standards to govern future notices of legislative change which are not rooted in the due process clause.

First, the notice was accurate, and it conveyed the information about the change in federal law in a correct manner and in a manner that was in accordance with the Secretary's regulatory requirements.

Secondly, the notice used language that is commonly on food stamp forms and notices, and most important, language that was understood by the three class representatives in this particular case.

Third, there was no finding that any particular recipient did not ultimately receive all the benefits to which they were entitled.

Unidentified Justice: I am sorry, Ms. Janos.

Looking at that regulation, I just want to be clear.

You have told me benefits continued in the case of all appellants--

Mr. Janos: Yes.

Unidentified Justice: --until their appeals had been resolved.

But the regulation seems to require continuation of benefits, does it not, only if the issue being appealed is that food stamp eligibility or benefits were improperly computed, but I gather you didn't limit it to such appeals, did you?

Mr. Janos: We did not.

Unidentified Justice: I see.

Mr. Janos: We did not.

Unidentified Justice: Thank you.

Mr. Janos: Finally, even if... if someone had a question or wanted to challenge the application of this legislative action to their particular case, the procedural safeguards that were afforded to all of the people that received this notice were extensive.

Page 2 of the notice, which is at Page 5 of your joint appendix, is entitled "Important Notice, Read Carefully".

It explains that the federal law had lowered the earned income deduction from 20 percent to 18 percent.

It explained the effect of the law on the household's benefits.

It then explained in detail the simple procedure by which an appeal could be claimed.

Although the class representatives understood the language of this notice, the District Court applied a mechanical reading test, a formula to this notice to see whether it met the requirements of the due process clause.

That reading--

Unidentified Justice: Ms. Janos, are the reproductions of the notices in the appendix substantially as the notice is actually worded?

Mr. Janos: --They are the size and the exact format, Your Honor.

Of course, that was on a card, and it was on a colored card, but the size of the print and the style is an exact reproduction.

Unidentified Justice: Is identical.

It isn't the easiest thing to read, of course, is it?

Mr. Janos: There may have been some people that had difficulty reading it, Your Honor, but it was clearly written.

It was on a brightly colored card.

It was entitled "Important Notice, Read Carefully", and then it--

Unidentified Justice: It is like reading income tax instructions.

Mr. Janos: --It was easier than that, we submit, Your Honor.

The language in there, which may not be familiar to the average lay person, is language that is commonly used on food stamp forms and applications, and commonly part of the interview process that households go through on a periodic basis.

the District Court found that the notice was unconstitutional because it contained words such as "household", "appeal", "eligible", and "benefits".

Unidentified Justice: What was the theory of the District Court's ruling that unconstitutional?

Mr. Janos: The District Court applied a mechanical reading test to this notice That reading test is based on a list of 3,000 words, so-called familiar words.

Those are 3,000 words that were familiar to fourth graders in 1948.

Any word that doesn't appear... any word that is on the notice that is not on that list is considered an unfamiliar word.

Unidentified Justice: Where did the District Court get the idea of a 1948 3,000-word test?

Mr. Janos: That is a reading test that is used routinely to examine the readability levels of textbooks used by educators.

It is a common reading test when you just want to examine objectively the grade level of a particular passage.

It is--

Unidentified Justice: Is that the Dale-Chall test?

Mr. Janos: --That is the Dale-Chall test, and it is based on a list of 3,000 words.

Unidentified Justice: What was the reason for a second notice as distinguished from the first?

Mr. Janos: The second notice in this case was issued, Your Honor, in response to the District Court's temporary restraining order.

The first notice that went out was dated 11/81, and the second notice--

Unidentified Justice: December 26th.

Mr. Janos: --was dated December 26th.

Unidentified Justice: Do you feel it was an improvement on the first?

Mr. Janos: The critical part of the notice, Your Honor, was identical to the first notice.

Page 2 was virtually identical to the November notice except for the fact that it now had a specific date on it.

The first page of that notice was an attempt to explain why they were in fact receiving a second notice on the effect of the temporary restraining order.

in addition to everyday food stamp words, the other kinds of words that contributed to the unconstitutionality of this notice were such words as "recent", "within", "enclosed".

The list of those words appear in your appendix, and we submit that they have no application to the determination of whether a notice informs someone of a pending action.

the due process clause does not incorporate a statistical reading test.

It merely requires that a notice be reasonably designed to convey the required information.

The logical extent of this rule, of course, would require states to match the reading abilities of the intended readers of a particular notice with the notice itself.

it imposes burdensome and unworkable requirements on states, and most importantly, those are decisions for state administrators to make, for Congress to make.

They are not decisions that are to be made by federal courts, and they are not decisions that are related to the construction of the due process clause.

the District Court found a second basis for holding this notice unconstitutional.

The District Court found that there was a risk of erroneous deprivation inherent in this notice.

As Mr. Alito pointed out, the risk of error in the implementation of this across-the-board statutory reduction was minimal.

It was a simple recalculation using existing factual data.

There were no disputed factual issues that came into play in the implementation of this particular change.

And more importantly, if someone believed that the legislative action should not be applied to them, they were afforded extensive procedural safeguards.

The notice stated that they could call their local welfare office if they had any questions.

All they had to do was send back into the department a slip of paper that accompanied the notice, and thereby claiming an appeal.

As I stated, if they sent in that slip of paper, their benefits were restored pending the appeal.

The appeal was an evidentiary hearing.

The appeal was subject to judicial review.

So that the procedural safeguards went far beyond the regulatory requirements for one, and certainly went far beyond the constitutional requirements.

Unidentified Justice: And I take it the government wouldn't seek to get back the payments that were made pending resolution of the appeal even if the government prevailed.

Mr. Janos: The regulation requires that we do in fact, if the recipient does not prevail on appeal, and the recipient is so notified and was so notified in this notice, that they will attempt to collect that money back.

Unidentified Justice: Have you done that?

Mr. Janos: I don't believe we have, Your Honor, and I don't know.

Sometimes it is... the administrative difficulties of trying to collect $5 outweigh the need to get that.

The rule announced below is essentially this.

When announcing a change in the law, a recipient must be able to determine on the face of the notice whether there has been a calculation error.

As Mr. Alito pointed out, this rule is not restricted to the food stamp program.

It is not even restricted to public assistance programs generally, but could be applied wherever the government takes any action where the property interest is implicated.

There is... the due process clause simply requires that someone be on notice that something is happening to them, and not be given their entire case file so that they can check the computations and calculations of the state agency.

I just want to turn for a moment, Your Honor, to the... and just to back up for a minute on the risk of error, as I stated earlier, and as the Court of Appeals recognized, there was no showing that anyone ultimately received less benefits than they were entitled to.

Unidentified Justice: Ms. Janos, suppose the appeal was or the ground that the benefits were improperly computed.

Suppose that is the appeal that is made by a given appellant.

How does that appellant ever learn, or when does the appellant first learn how in fact the benefits were computed?

Mr. Janos: As soon as a party files an appeal, or even before they file an appeal, they have a right under the regulations to review their entire case file.

The department is required to make available to them all of the records in their case file so that they can in fact see what is in there and whether there are--

Unidentified Justice: I mean, may one go in and say, look, this is what you tell me I am now to get, how did you arrive at that figure?

Mr. Janos: --Absolutely, Your Honor.

Unidentified Justice: He may?

Mr. Janos: And that is available to everybody.

They can call.

They don't even have to go in, or certainly they can go in and examine it themselves, before a hearing, or if they want to make a decision as to whether a hearing is even necessary.

In the food stamp program, people are recertified periodically, and at the recertification it is equivalent to a new application.

For some households it is three months.

For some households it is six months.

And for a very few, it is a year.

And at that recertification period, they sit down with a face-to-face interview with the social worker, and they go through their entire case file, so it is not as if they don't have contact or are not used to having contact with particular workers.

Unidentified Justice: Ms. Janos, do you know how many families in Massachusetts are on the food stamp program?

Mr. Janos: At the time of this trial, Your Honor, there were approximately 190,000.

There were 16,000 people that had earned income, that is, people that were employed that were affected by this particular change.

Unidentified Justice: Most of them in Boston, or all over the state?

Mr. Janos: They are all over the state, and there are local offices all over the state.

Unidentified Justice: I should say commonwealth, not state.

Mr. Janos: That's right.

So that someone was not required from the western part of the state--

Unidentified Justice: Did you say 190,000 families, households?

Mr. Janos: --Families.

Families.

Unidentified Justice: What is the 16,000 figure?

I thought there were only 16,000 people involved.

Mr. Janos: No, 16,000 people received the notice in this case and were part of the class action that brought this lawsuit.

Those 16,000 people were people that had earned income, that had someone in the household that was employed, and this particular change affected only those households, and this notice went to only households with earned income.

Unidentified Justice: May I ask on the question of the adequacy of the notice?

Assume we get there, and I understand your first argument agrees with the Solicitor General, but if we do review the standard... the notice, what standard of review?

Is it just a clearly erroneous standard, or what--

Mr. Janos: We don't believe so, Your Honor.

We don't believe that the kinds of facts that are involved in a case like this are the types of facts that require deference.

They are not factual determinations based on credibility, which is normally the province of the trial judge.

They are predictive kinds of facts.

Unidentified Justice: --The First Circuit applied the clearly erroneous.

Mr. Janos: The First Circuit felt very bound by that clearly erroneous standard, and at times throughout the opinion appeared to want to examine it more closely, but stated that they had in the past followed that, and continued to follow that.

We don't believe that that is the appropriate standard when reviewing this type of case.

I will reserve my remaining time for rebuttal.

Thank you.

Chief Justice Burger: Very well.

Mr. Hitov.

ORAL ARGUMENT OF STEVEN A. HITOV, ESQ., ON BEHALF OF PARKER, ET AL.

Mr. Hitov: Mr. Chief Justice, and may it please the Court, there are three major points that the plaintiffs would like to make in their presentation today.

The first is that the Food Stamp Act does indeed require the type of individual notice of reduction or termination in benefits ordered below, and that is for two reasons.

The first reason is so that families who are about to experience a correct reduction in their benefits can plan for that.

That has always been the structure of the food stamp program as expressed in the Secretary's own regulations.

The second reason for this informative notice is so that families who are about to be incorrectly reduced, or who believe from what they have been told that they are about to be incorrectly reduced, can challenge that reduction and prevent those benefits from being reduced while they are going through a hearing on that issue.

Unidentified Justice: Well, is this what the court below held?

Mr. Hitov: That is correct, Your Honor.

Unidentified Justice: Did they articulate those very grounds?

Mr. Hitov: They did not articulate the first ground, Your Honor.

They specifically said that it cannot be the case that a person is entitled to a hearing and given notice that they are entitled to a hearing but not be given enough information to determine whether or not they should request a hearing.

That was in the First Circuit's opinion.

Unidentified Justice: Mr. Hitov, do you agree with respondents that as they administer this program, the filing of an appeal automatically results in the resumption of the payments at whatever they have been until the appeal has been decided?

Mr. Hitov: I can't say for certain, Your Honor, in each case of the record, but it is the common law stated policy that they will, as Ms. Janos stressed, reinstate, not continue--

Unidentified Justice: Reinstate.

Mr. Hitov: --but reinstate benefits if they have already terminated them and then somebody requests an appeal, within a specified... within a very short specified time, within ten days of whatever date is on the notice.

Unidentified Justice: But if you do, the payments are reinstated, and then the end result is a reduction of the... I think Ms. Janos told us there may be an effort to recoup benefits.

Mr. Hitov: That's right.

The regulations call for an effort to recoup the money paid between the date when the notice and the reduction, and reduction was to take effect.

Unidentified Justice: I gather the effort to recoup is rare.

Mr. Hitov: I am sorry, Your Honor.

I am not going to answer that question.

The state recently at least has not confided in me as to their recoupment procedures.

The second major point that we wish to stress here is the prospective injunctive relief issued by the District Court--

--May I, before you leave the first point, you said the statute required the notice to help in planning and to correct errors.

Is that... what section of the statute?

I am sorry, Your Honor.

That is 7 USC Section 2020(e)(10).

Unidentified Justice: That is on Page 1A of the government's brief.

It provides the granting of--

Mr. Hitov: I know for certain that it is included on Page 1A of our brief, the red covered brief, of the appendix.

Unidentified Justice: --Do you think there is language in there that explains all that?

Mr. Hitov: Yes, I do, Your Honor.

If I might, I would be happy to address that either now, Your Honor, or I might just finish my synopsis and then that would be my first point.

Unidentified Justice: All right.

Mr. Hitov: So our second point in the overall presentation is its prospective injunctive relief, Number One, was quite conservative, and Number Two, was entirely justified.

As to the contents of future notices, each of the families in this lawsuit received a notice of reduction or termination of their grants based upon the specific facts of their case.

That was the type of notice that was sent here, and the District Court merely ordered the defendant, the Department of Public Welfare, in the future to issue notices of reduction or termination that comported with the language of the statute itself as that language was determined by the First Circuit.

Unidentified Justice: Well, Mr. Hitov, how much of that prospective injunctive relief remains after the opinion of the First Circuit?

Mr. Hitov: None, Your Honor, absolutely none.

The First Circuit left intact in terms of remedy only the declarations of the District Court.

Unidentified Justice: Which were the declarations that this would be... this was required by law?

Mr. Hitov: That's correct, Your Honor, that Section 2020(e)(10) of the Food Stamp Act requires advanced notice of any reduction or termination except in the one specified exception right there in the statute.

Unidentified Justice: So that the governments are subject to a declaratory judgment but not to an injunction.

Mr. Hitov: That is correct, Your Honor, and since that point, without a stay of the First Circuit's mandate, the Department of Public Welfare has issued another notice under exactly the same circumstances which did not comply with that mandate, but I will get to that also in the main body of my argument.

Second, as to the form of future notices, when the Court examines the record, you will notice that no form has been dictated.

What the District Court did was tell the Department of Public Welfare to develop some mechanism to ensure that future notices would be understandable to the people that they were sent to.

Finally, the third aspect of the relief afforded by the District Court was the return of the benefits withheld in violation of Section 2020(e)(10) of the Act, and the plaintiffs will demonstrate that the return of these benefits is in fact mandated by another section of the Act, 7 USC Section 2023 (b), not only as a matter of statutory construction, but also for sound policy reasons as well.

Unidentified Justice: Well, sound policy reasons based on something other than the statute?

Mr. Hitov: No, Your Honor, sound policy reasons that derive directly from the statute.

Justice Stevens, if I might now return to your question as to the language of the statute, if you would bear with me for just one second, I would like to present to the Court what the notice did say, what it didn't say that the lower courts found it should have said, and then discuss where they derived that... from where they derived that conclusion.

Despite the fact that 16,500 families in this case each suffered a reduction or a termination... they weren't told which in advance... based upon the individual facts of their case unique to each one of those families, the department sent them not an individual notice but a general notice which, if one were able to fight through the language of the notice, and if one were able to read it, and as I will discuss later, at least three people who testified, including an expert witness, had to use a magnifying glass to do so--

Unidentified Justice: You say that 16,000 people received determinations based on facts unique to their case.

Mr. Hitov: --Exactly.

Unidentified Justice: What sort of factual determinations were these?

That their income was between 18 and 20 percent?

Mr. Hitov: No, Your Honor.

Actually, that was not the issue here.

The two facts subset, the two facts at issue for each of the families in this case, and which were unique to each of those families in this case, first... there were two determinations made here by the Department of Public Welfare.

The first was that each of the families receiving this notice... as Ms. Janos pointed out, it was less than 10 percent of the general population.

Each of the families receiving the notice had earned income.

That in fact was often incorrect.

One of the named plaintiffs didn't have earned income and yet received this notice, and was told that she would either be reduced or terminated.

The second determination that was made was that assuming a person had earned income, how much earned income, because if the amount of that earned income was incorrect, the department was working with the wrong figure, not only the resulting grant would be incorrect, but the amount of the reduction as a result of this change would be incorrect.

In other words, if there were an underlying data base error, the amount would have been magnified for those people for whom the department had an incorrect amount.

Unidentified Justice: And it is those two determinations that you say were unique to each individual?

Mr. Hitov: Absolutely, Your Honor, each... I mean, that is not to say that two members of the class didn't have the same income, but that is, of course, a coincidence, and nothing specific to this change.

These were the type of normal reductions--

Unidentified Justice: But is it not true that if those two errors existed or either of them existed, that even without the statutory change, they would have been receiving an incorrect amount?

Mr. Hitov: --A different incorrect amount, Your Honor.

Unidentified Justice: Yes, but an incorrect amount.

Mr. Hitov: Absolutely, Your Honor, and that is not... that is absolutely correct.

Unidentified Justice: Had there been no statute, would that error have given rise to any statutory or constitutional right?

Mr. Hitov: No, Your Honor, not under the statute.

The statute specifically says that when the department intends to reduce or terminate benefits.

I assume that Congress could have said every time the Department of Public Welfare wishes to speak to a household they should give notice, but I think that Congress wisely decided that that was--

Unidentified Justice: But the individual determination that you talk about is a preexisting error that causes this effect on the statute is put into effect, or a preexisting inaccuracy in the records as to certain individuals?

Mr. Hitov: --That's correct, Your Honor.

Any time the welfare department works with a person's grant they are making certain assumptions about that person's grant, but here they were proposing... they weren't proposing to send the person a check.

They weren't proposing to send them more money.

They were proposing to take money away from them.

They were saying, we have been told to change the way we work with your grant.

We are going to take some of what we are now giving you away from you, and we are doing it based on two assumptions.

Unidentified Justice: There are two things that worry me.

One is, when you got the notice of your money, you knew something had happened to it.

You had lost $5.

Mr. Hitov: I am sorry, Your Honor.

You only knew that if you knew that.

It is not... some people never knew that.

Unidentified Justice: You mean some people never knew that they got $5 less than they got the month before?

Mr. Hitov: No, Your Honor.

They certainly knew that when their food stamps showed up, not at the point when they received notice, but when their food stamps actually showed up, they could tell that they got less, assuming that they were getting what they got last month.

Unidentified Justice: They go to the office, and it would have been explained to them.

Mr. Hitov: In this case, Your Honor, that did not happen.

The record indicates... the record is devoid of an instance in which a person was able to get any useful information from the Department of Public Welfare.

Numerous witnesses testified that they called their workers, and the response was, we know nothing about this, it was done in Boston, you know more about it than we do.

Unidentified Justice: Well, then you get to my second point.

How can the average food stamp recipient find the difference between 18 percent and 20 percent of $685?

Mr. Hitov: I am not certain if I am following--

Unidentified Justice: I just want to know that the average recipient understands percentages.

Mr. Hitov: --I can't answer that, Your Honor.

My assumption is that--

Unidentified Justice: You can't?

Mr. Hitov: --There was no evidence in the record as to people's mathematical--

Unidentified Justice: It is not in the record.

Mr. Hitov: --Outside of the record, I would assume that some people are proficient at math and other people are not proficient at math.

The expert witness who testified in this case, Dr. Mark Pendick, who works for the American Association of Welfare Administrators... he is a person whose expertise is in the prevention of fraud and abuse... testified for the plaintiffs in this case and said it was to the department's benefit to provide exact notice, and this is where I hope to respond to Your Honor's question, he said in fact that the department should provide exact calculations, that they should tell people exactly what they are doing with their grant, and that that helps the department.

The District Court did not go that far.

Unidentified Justice: Well, I don' t understand yet how an average recipient can tell the difference between 18 and 20 percent.

Mr. Hitov: I am not certain that that is necessary--

Unidentified Justice: To the dollar.

To the nickel.

Mr. Hitov: --Your Honor, I am not certain that that is necessary in this case.

What the District Court ordered in this case, what the District Court found would help the recipients in this case was to be told that their benefit used to be a certain amount, and it is going to be a new amount, in other words, the amount that the department proposed to take away, and the salient factor for the recipient, the thing that they do know, whether they know how to do math, whatever their reading level is, we propose to take away $4 or $10 of your benefits because we believe you have $685 in earned income.

Now--

Unidentified Justice: Mr. Hitov, would you be satisfied... well, with what in the notice would you be satisfied?

Mr. Hitov: --Thank you, Your Honor.

The notice, in addition to saying that Congress has changed the law and we are going to... the earned income disregard has been lowered, which is what the notice said when one thought through it, and then said, we are either going to reduce you or terminate you, without specifying which, and then said, you can appeal if you disagree with this decision.

What it should have said in addition to that, Your Honor, that would have made it the type of notice that Congress envisions in Section 2020(e)(10), is, we plan to take away X amount of dollars, and we intend to do it because we think you have X amount of earned income, since that is what was at issue here, was a reduction based upon each recipient's earned income.

I should stress that to do so according to the department's own expert witness was free.

It cost not a nickel to provide informative notice as opposed to uninformative notice, to--

Unidentified Justice: Mr. Hitov, would it affect the timing of the notice?

Mr. Hitov: --Absolutely not, Your Honor.

Unidentified Justice: You couldn't get out a simple notice saying the statute has changed more quickly than making all the individual determinations?

Mr. Hitov: No, Your Honor.

I think it is important to stress here that this notice is not floating ephemerally in space.

It is attached to an action.

It is a notice of something.

Unidentified Justice: I take it it is all a computerized operation, isn't it?

Mr. Hitov: In Massachusetts it sometimes is and sometimes isn't.

Unidentified Justice: In some states it is not, is it?

Mr. Hitov: That's correct, Your Honor.

That does not affect--

Unidentified Justice: In states where it is not, it might take a little longer, might it not?

Mr. Hitov: --It shouldn't.

Your Honor, of course, it could be made to take longer, but there is no reason for it to take longer, and this is--

Unidentified Justice: Well, I mean, the notice you got out, if you have a computer, you can put this additional information on, I gather, without taking much time.

Mr. Hitov: --As long as it takes the printer.

Unidentified Justice: But if it is not on there, and you have to go through records and put it on in ink or something, that may take a little longer, may it not?

Mr. Hitov: There, Your Honor, again, only as long... the difference in time would be the difference in time that it take a printer to print it and the time it takes a person to write it, like it used to be done before.

We have progressed to computers.

Because, and this is the critical issue, something is happening here to these people's grants.

These were not, hopefully, and I believe in this case they weren't, random reductions in people's grants where they pick out every fourth person and said, we are going to reduce your grant.

They reduced people's grants pursuant to figures that they had worked with.

Somebody made those calculations, and the notice was to tell them about it.

If the calculations were made, the person couldn't have been paid their food stamps.

So what we are talking about here, and this is not counsel's opinion, this is in the record and unrefuted by the department, this is what an expert in the administration of welfare programs testified, that this... the time involved here is the time it takes to write what you are doing anyhow, and in Massachusetts that, of course, was miniscule.

The computer expert said, if there is enough room on the paper, we can do it.

When asked--

Unidentified Justice: How much are we talking about with the individual family with which you are concerned, $5 a month?

Mr. Hitov: --Excuse me, Your Honor?

Unidentified Justice: How much in actual benefit are we talking about for the average family with whom you are concerned?

Mr. Hitov: The average monthly benefit, which is all I can speak to, because different families have different certification periods, the average monthly benefit was reduced anywhere between apparently $1 and $10, and that could have been for a certification period of either one month or up to 12 months, although the vast majority were approximately--

Unidentified Justice: Ten dollars is the maximum?

Mr. Hitov: --That's the maximum that can be established from the record, Your Honor.

There is no... a range was given in the record, and the maximum in that range was $10.

Unidentified Justice: Ten dollars a month.

Mr. Hitov: A month, Your Honor, and I should point out that we are talking about a 2 percent reduction in the earned income disregard, which I suspect Your Honors have already discovered is not the easiest concept to apply to the actual outcome of the food stamp grant.

What this meant in terms of reductions, if the Court looks at Joint Appendix Page 44, where a sample page from the department's computer printout is listed, the average grant reduction is just about 5 percent, it is 4.78 percent, as I recall, in a family's grant.

That is a... in terms... we are talking small dollar amounts, but we are also talking about people living on a very--

Unidentified Justice: Is $10 a substantial percentage of the food stamps a given household may receive?

Mr. Hitov: --From the sheet in the record, Your Honor, $10 would be a very substantial percentage.

This is... I am doing an extrapolation in my head right now, but I would guess 15 to 20 percent.

Unidentified Justice: Fifteen to 20 percent.

Mr. Hitov: But there were, of course, reductions of all sizes and the average for that page comes out to 4.78 percent, so the average family on that page lost 5 percent of their benefits.

When one takes it in terms of percentages and thinks perhaps of our salaries or what have you, it is a more substantial loss.

It is not how many dollars you are losing, it is what percentage of what you have, of course.

This was not an insignificant reduction, nor was it an insignificant change.

The defendants have attempted to paint this as... we have just added a couple of numbers.

They are--

Unidentified Justice: But it is a statutory change.

Mr. Hitov: --Your Honor, Congress changed the provision about the earned income disregard.

There is no dispute about that.

Congress also provided the mechanism through which they wished to have that implemented, and that finally, Your Honor, brings me back to your question, which is the language of the statute.

Where did the First Circuit find in Section 2020(e)(10) the requirements for this notice?

The First Circuit first looked at... and the Court is, of course, invited to look at their opinion to see that I am not misrepresenting it.

They first said, advance notice of any reduction or termination is required here.

Why?

Unidentified Justice: Didn't the First Circuit first look at the Constitution?

Mr. Hitov: Absolutely, Your Honor.

Unidentified Justice: Do you defend their doing that?

Mr. Hitov: No, in our briefs, we specifically said that we believe that was a mistake, that they were presented... of course, as counsel, we presented them with both, because we couldn't be certain that they would agree on the statutory interpretation.

They unfortunately looked at the constitutional issue first and then the statutory.

My suspicion, without attempting to defend them, but my guess as to why that happened is that there was a full blown trial in this case in the District Court that drew in all these constitutional issues.

And so the court, I think, just went along with that without stopping to say, wait a minute, if we are deciding this on a statutory ground, there is no reason to have done that.

Unidentified Justice: But your answer to my question is going to be based on the statute, as I understand it.

Mr. Hitov: Word for word on the statute, Your Honor.

The statute says that whenever a person receives an individual notice of agency action reducing or terminating benefits is--

Unidentified Justice: Where do you find that?

Mr. Hitov: --That is the second clause of Section 2020(e)(10), Your Honor.

Provided whenever a household requests such a hearing--

Unidentified Justice: Such a hearing, but the hearing then takes you back to the first clause, which is, a state plan of operation shall provide for the granting of a fair hearing and a prompt determination to any household aggrieved by the action of the state agency, right?

Mr. Hitov: --That's correct, Your Honor, and what that says--

Unidentified Justice: But isn't the... the government's argument is that the action which caused the change was the action of the United States.

Mr. Hitov: --The statute, though, Your Honor, if Your Honor reads the statute through, does not speak to the cause of the state--

Unidentified Justice: It says by the action of the state agency.

Mr. Hitov: --Right, the action of the state agency here was to reduce a person's grant.

They could have done that because they ran out of money, which I am just taking as a hypothetical, because it ran out of money, because Congress told them to, because they had a misperception of the facts in a person's case, because somebody reported some information that either was or wasn't true.

Those are all things that would trigger the agency taking action--

Unidentified Justice: But it says, by the action of the state agency under any provision of its plan of operation.

Mr. Hitov: --That's correct, Your Honor.

Unidentified Justice: Well, doesn't that limit the generality?

Mr. Hitov: No, Your Honor.

The statute under a state agency plan, they specifically agreed to follow the statute.

When the statute is amended, that becomes part of the stage agency plan.

The state agency plan could not be out of conformance with that.

Unidentified Justice: Well, that sounds very circular to me.

Not only that, but the provision says, the plan shall provide for the granting of a fair hearing.

Mr. Hitov: That's correct, Your Honor.

Unidentified Justice: It doesn't say that you must give advance notice saying you must give a fair hearing, does it?

Mr. Hitov: If I might, Your Honor, it says, any household which timely requests such a fair hearing after receiving individual notice of agency action reducing or terminating its benefits.

Unidentified Justice: Oh, I see your point.

So you are saying--

Mr. Hitov: Within the household certification period, shall--

Unidentified Justice: --You are saying after receiving individual notice assumes that there is a notice requirement.

Mr. Hitov: --It explicitly assumes.

This is not an implicit assumption.

It explicitly assumes notice, and it explicitly assumes individual notice.

Now, individual notice can mean two things.

The parties... I think this is one of the few things the parties seem to agree on here, is that can either mean send the same piece of paper to each house, or it can mean send a notice that is specific to that household to that house.

And we would suggest that only the second is consistent with the statute and the Secretary's own interpretation.

The Secretary for years has had two types of notices listed in his regulations, three types actually, but two that are relevant here.

One is called a general notice, and that is exactly what was sent out here.

It is a notice, it is the same notice, the same piece of paper, and it is sent to each individual household.

Unidentified Justice: Yes, but it seems to me if you say after receiving individual notice of agency action, and so forth and so on, that that implies that there must be notice because there is a hearing, and it also implies there must be a hearing for every one of these cases, if you read it literally.

Mr. Hitov: I don't believe so, Your Honor, because it starts with, for any household that timely requests it.

That is exactly Congress's--

Unidentified Justice: But timely requests a hearing after receiving individual notice.

Mr. Hitov: --Right, so that presupposes individual notice--

Unidentified Justice: It is after he requests such a fair hearing, which takes you back to the first, which would make the hearing requirement apply to every family.

Well, anyway, I--

Mr. Hitov: --I am sorry.

No, Your Honor, I do believe this is important, because it is the crux of the statute.

The hearing is a requirement in every case if a recipient asks for it.

That is the first clause.

That does not trigger the continuation of benefits, which is the second clause.

The second clause says that after receiving... if a person requests a hearing, after receiving individual notice of reduction or termination, that person shall continue to participate and receive benefits at the level prior to the notice.

So Your Honor is entirely correct that the purpose of this individual notice is in fact tied to the hearing that a person is going to request.

It could not have been Congress's intent to require a notice, tie it to the potential request for a hearing, and as both the First Circuit and the District Court found, expect that notice to be such that people had to guess whether or not to ask for that hearing.

Congress said specifically in the statute, continue to pay benefits if they ask for a hearing.

It is neither sound fiscal management, and it is not a rational interpretation of the statute to say we just intend to pay benefits at random to people when they guess whether or not a proposed action might or might not hurt them.

That could not have been Congress's intent.

They exactly did require individual notice for that purpose.

That is entirely consistent with the overall scheme of the foodstamp program, which, as all the parties agree also, primarily uses households as the source of information.

They are the ones who tell the department, here are my individual circumstances.

The department then calculates their grant for a given certification period.

Those same households under the statute are used as the primary source of error protection, because the one thing they know for certain, or believe they know for certain, is the individual facts of their cases.

The department says to them, we did this formula, this formula, and this formula.

They may not be able to follow that.

But the department says to them, we think you have $685 for an income, they know if they only have $485, and that is when they are going to say, I have a reason to appeal this, because they are working on the wrong facts.

Unidentified Justice: --Well, how do you define when notice is required?

Mr. Hitov: Notice is required by the Food Stamp Act whenever the agency proposes to reduce or terminate a person's food stamp benefits.

Unidentified Justice: And where is that in the statute?

Mr. Hitov: That is in Section 2020(e)(10).

Unidentified Justice: What does it say?

Mr. Hitov: It says that any household which timely requests a fair hearing after receiving an individual notice--

Unidentified Justice: I know.

It doesn't say when they are supposed to have notice.

Mr. Hitov: --Your Honor, it presupposes notice whenever--

Unidentified Justice: Well, you imply it.

Suppose Congress passes a law and said food stamps can't be used to buy pig shanks, and so do you think you would have to send everybody a notice of that?

Mr. Hitov: --No, Your Honor.

That would neither reduce nor terminate their grant.

Unidentified Justice: Well, it may not, but certainly they couldn't buy pig shanks with it.

Mr. Hitov: That's correct, Your Honor, but that would not--

Unidentified Justice: So there are some kinds of limits, new limits that can be imposed that you wouldn't have to send a notice for.

Mr. Hitov: --Absolutely, Your Honor.

It has never been plaintiff's contention.

Unidentified Justice: Well, the government's contention is that why should you have to send a notice just to carry out a mathematical calculation.

Mr. Hitov: Your Honor, that--

Unidentified Justice: That is their position.

Mr. Hitov: --I understand that.

Unidentified Justice: Let's assume that that's all that was going to happen.

That was a perfectly obvious mathematical computation that nobody could make a mistake on.

Would you think you would have to have a notice?

Mr. Hitov: Under the statute, Your Honor?

If I can't answer that without saying it doesn't reduce a person's benefit or--

Unidentified Justice: It does.

Mr. Hitov: --If it does, you need notice.

Unidentified Justice: Even though it absolutely could not possibly be a mistake?

Mr. Hitov: That is what the statute says, Your Honor.

Unidentified Justice: Well, it isn't what it says.

It isn't what the statute says.

That isn't what the statute says.

It doesn't tell you when you have to have notice.

It just says that there is a hearing after a notice, but you can't get that circular... you can't say that every... rely on that section to tell you when a notice should be sent.

Mr. Hitov: Your Honor, I do not believe it can be gainsaid that it presupposes notice, that it doesn't say, you shall send notice.

That is correct.

I agree with that statement.

What it does is, it says that when--

Unidentified Justice: It certainly assumes that in some cases there is going to be notice sent, but it doesn't tell you which cases are those.

Mr. Hitov: --That's correct, Your Honor, but then if you move to the last clause of Section 2020(e)(10), it lists a specific exception.

It says, however, a state agency may act immediately to reduce or terminate a household's benefits and may provide notice of its action to the household as late as the date on which the action becomes effective in those circumstances where they are acting on a direct statement from the recipient.

That is the final clause, and that is exactly what the First Circuit determined in this case.

Unidentified Justice: It still doesn't tell you... you disagreed a while ago that there are some cases that imposes some limit on... that didn't exist before in which there wouldn't have to be a notice.

Mr. Hitov: Yes, Your Honor.

As I said, based upon... if it did not entail a reduction or termination of benefits, then it would not be covered by 2020(e)(10).

Unidentified Justice: The however language that you just read it seems to me is quite consistent with limiting the notice to an individual action type of thing where information is proposed that this particular recipient may no longer be qualified, rather than a very generalized situation where, say, Congress says all food stamp recipients shall be cut 10 percent.

Now, there your theory is that they still have to give notice to everybody, even though everyone is getting exactly the same treatment.

Mr. Hitov: That would go more to what would be necessary in that notice, Your Honor, to allow somebody to know whether or not they should request a hearing.

Unidentified Justice: What on earth would they request a hearing about when their benefits have been out 10 percent?

Mr. Hitov: They almost definitely would not, Your Honor.

That is exactly the point.

Unidentified Justice: So what is the point of the notice?

Mr. Hitov: If there are no factual issues in dispute as a constitutional matter... I believe that what we are looking at is constitutional underpinnings here.

The statute, of course, can require what the statute wishes to require.

Unidentified Justice: Certainly, but we don't ordinarily think of Congress as having imposed a perfectly irrational requirement.

Mr. Hitov: No.

Exactly, Your Honor.

Unidentified Justice: What would be the point of requiring a notice in a situation where Congress says every single food stamp recipient shall be out by 10 percent?

Mr. Hitov: For example, Your Honor, 10 percent presumably of their preexisting grant.

Unidentified Justice: Yes.

Mr. Hitov: If the preexisting grant... if ther department then out somebody 50 percent, or if they took their preexisting grant which was $50, let's say, and assumed it was $75, both of which are entirely possible, the person would in fact be out a wrong amount of benefits.

It would be an error that they would want to challenge.

What we are saying is not that the department can't go and--

Unidentified Justice: They can challenge that, I would think, after they receive the amount of their benefit.

The only purpose of challenging it before it seems to me is to challenge a deliberate action, that we intend to cut your payments because this new evidence is coming in--

Mr. Hitov: --And that is what we have here.

Unidentified Justice: --not because we intend to cut your payments because Congress told us to cut everybody 10 per cent.

Mr. Hitov: Your Honor, what we have here is an individual action in each one of these cases.

We have the department looking at each person's file after receiving instructions from Congress and saying they have X amount of income and therefore we are going to cut them X amount of dollars, and they never told the people that.

Unidentified Justice: Well, but as Justice Stevens pointed out, one of the factors of what you say are the two factors involved is preexisting determination.

It is not a new determination at the time Congress acts.

Mr. Hitov: Your Honor, Congress itself recognized that exactly those times were the times of greatest error.

The Food Stamp Act--

Unidentified Justice: Well, when you say Congress itself recognized that, are you relying on the language we have already talked about?

Mr. Hitov: --No, Your Honor, we are relying on legislative history, the statements of Senator Dole, who you probably know is very active in the food stamp program, and Representative Foley, who at that time was very active in the food stamp program.

Unidentified Justice: But the closest thing in point so far as actual law as opposed to legislative history is the language we have discussed in 2010(e)?

Mr. Hitov: There is one other, Your Honor, which I would like to get to, which is 7 CFR of the Secretary's own regulation, the one that--

Unidentified Justice: I was talking about the statute.

Mr. Hitov: --In the statute, Your Honor, 2020(e)(10) is the section.

In the regulation it is 7 CFR Section 273.12(e)(2).

Unidentified Justice: The statute also does not attempt to spell out what must be contained in an individual notice, does it--

Mr. Hitov: No, it does not, Your Honor.

Unidentified Justice: --even if that is required?

Mr. Hitov: That is correct, Your Honor.

That is where the First Circuit found that if the notice... that Congress would not have intended notice so that you could request a hearing, and then not intended that you had enough information to decide whether or not to request a hearing.

That is where we take exception with what the solicitor has argued.

The First Circuit did not simply say because it violated the Constitution it also violated--

Unidentified Justice: Well, but the Committee report in 1977 of the House Committee said hearings would, of course, be unnecessary in the absence of claims of factual error and individual benefit computation and calculation.

Mr. Hitov: --That's right.

That's correct, Your Honor.

Unidentified Justice: And you are saying and the court below said the only way they would ever know that is if they had these figures in front of them, the recipients.

Mr. Hitov: That legislative history, Your Honor--

Unidentified Justice: That is the crux of it, I gather.

Mr. Hitov: --That legislative history, Your Honor, was in fact written in 1976, not in 1977 when the language at issue here was not in the statute, was not even proposed for the statute, and that following that... the insertion of that language in the statute is when the Secretary then issued his regulation, his individual notice regulation that said you can only appeal if you are challenging the calculation, and that is language that requires, that you have information to challenge that calculation.

Thank you very much.

Chief Justice Burger: Do you have anything further?

Mr. Janos: No, Your Honor.

Chief Justice Burger: Thank you, counsel.

The case is submitted.