Cases by Issue - Constitutional Poverty Law

Kadrmas v. Dickinson Public Schools - Oral Argument

Wed, 13 Apr 2011 20:11:34 +0000

Case:

Kadrmas v. Dickinson Public Schools

Media File:

86-7113_19880330-argument.mp3

Related Transcript:

86-7113_19880330-argument.xml

Transcript:

ORAL ARGUMENT FOR PLAINTIFF BY DUANE HOUDEK, ESQ. ON BEHALF OF APPELLANTS

Chief Justice William H. Rehnquist: Very well, you may proceed whenever you are ready.

Mr. Houdek: Thank you, Mr. Chief Justice, and may it please the Court.

In this case the Court is called upon to examine the constitutionality under the "equal protection" clause of a fee charged of some North Dakota parents to bus their children to school.

The fee is imposed only in a minority of districts which includes the Dickinson district, where the Plaintiffs reside.

In a majority of districts in North Dakota, busing is provided to all free of charge subject to local mileage limitations.

That is a statutory mandate in all of those other districts which compromise some 260 out of the 310 districts in the state.

Within the Dickinson district, the fee is imposed against all save handicapped or special education students without exemption, without regard to ability to pay or the financial status of the parents.

The effects of these two aspects of the Dickinson bussing policy and the authorizing statute come together and converge in this case where a poor family, unable to pay the fee, lives within one of the few districts where the fee is permitted to be charged.

The parent who brought this case, Paula Kadrmas, lives with her husband and three children called New Hradec, North Dakota, on a farm that is some 16 miles from the school their oldest daughter is designated to attend by the district.

She encounters the fee at all, again, only because she happens to live in that type of district.

If she lived in any other districts, there would not be any kind of bussing fee that could, by law, be charged to her.

Unidentified Justice: There are two types of school districts in North Dakota; the Organized and the Reorganized, is that it?

Mr. Houdek: They've come to be known, and it's a rather awkward set of terms, Justice O'Connor, Reorganized and Non-reorganized.

Unidentified Justice: Organized and Non-reorganized.

Mr. Houdek: And the Reorganized districts have done so pursuant to statutes that were passed in the '40s to encourage an economy of scale, if you would.

Unidentified Justice: And in terms of numbers of students, is it about equally divided among the two types of districts?

Mr. Houdek: I think it is.

I don't have the exact figures, but I think it's pretty close.

And what that shows is that the Non-reorganized districts are generally the districts in the larger cities or towns and have a higher population of students, than the smaller districts.

Unidentified Justice: Are the Appellants still living in the same location and their circumstances have not improved, I take it?

Mr. Houdek: They're living in the same location, their circumstances have greatly deteriorated.

At the time of trial it was found that after paying taxes of some $2500 they had about $12,500 left for a family of five.

Since that time, they have started on a cattle enterprise, if you will.

They got a loan to try and raise some calves--

Unidentified Justice: That should be no problem.

Mr. Houdek: --That remains to be seen, Justice White until calving this spring.

But the point of it is that out of this money that was allocated to them, prior to them getting any income at all from this operation, they were given only $12,000 to live on for the year, half of which inadvertently went to the former landowner, so they had $6,000.

Unidentified Justice: Now, Serita has not actually been denied access to school in fact, has she, to public school education?

Mr. Houdek: She has been denied access to the bussing system.

Unidentified Justice: My question was whether she has, for purposes of this lawsuit been denied access to education, the public school education.

Mr. Houdek: She has not missed school because of it.

She has made it to school.

Unidentified Justice: Is there any kind of ripeness problem?

Excuse me?

Mr. Houdek: No, I don't think there is at all, Your Honor, for one thing part of the challenged statutes include payment of the fee or the demand for the fee, and that goes on whether or not she actually made it to school or not, so I think that remains.

Unidentified Justice: You would not urge, if that's all that's left, though, you wouldn't urge any heightened scrutiny on the requirement to pay a bus fare, as you do of the ability to go to school?

Mr. Houdek: No, if that was all that was left, we would not.

Unidentified Justice: It's ordinary protection analysis?

Mr. Houdek: Yes.

I believe, implicit in my analysis there is more left than that, Your Honor.

Unidentified Justice: Well, what?

Her folks took her to school.

They drove her to school, didn't they?

Mr. Houdek: They did.

What happened there, Chief Justice Rehnquist, because of a North Dakota case decided in the North Dakota Supreme Court.

The court stated that if anybody signed a contract, one of these busing contracts that are frequently used, or were used in the Bismark district, at any rate, then they could not challenge the constitutionality of having to pay that fee.

And so the plaintiffs in Dickinson, once the District was adamant about demanding them to sign such a contract, were put in a position that if they did so, they would not have been able to bring their case in state court.

So they were left with that on one side; the compulsory attendance laws of North Dakota on the other side, forcing them to in some manner get their children to school, and the only thing left was to drive them themselves.

Unidentified Justice: Mr. Houdek, do you lose your case unless the Court applies some form of heightened scrutiny?

Mr. Houdek: No, no, Justice O'Connor, I don't believe that's true at all.

It seems to me that recently this court has stated that even under the minimum rational basis test of equal protection, it is looking when there are rights that are important, such as the one we're dealing with here, are rights that have been called by this Court important to the fabric of our society, and to all the political processes that citizens need to engage in.

Unidentified Justice: Excuse me, this is just the right to money, isn't it?

She doesn't want to pay money for the bus ride; other people don't have to pay; she has to pay.

What are we talking about except money?

Mr. Houdek: We are very much talking access for someone who doesn't have that money, nor the ability to drive those children to school herself.

Unidentified Justice: But this person got to school.

Mr. Houdek: She did for this year, but it is clear ion the documents that were filed in response to the Motion to Dismiss, they can't be expected to do that every year.

They did it at great personal expense; they did it by incurring debt that sooner or later that credit is going to be cut off to people of their means.

They did it only through the most extraordinary.

Unidentified Justice: Maybe at that time you will have a different lawsuit, but it seems to me now she's been deprived of bus transportation because she couldn't pay for it.

Now that raises an obvious equal protection problem.

But she hasn't been deprived of going to school, has she?

Mr. Houdek: No, Your Honor, she has not.

She has gone to school.

I believe it is necessary to recognize that this transportation scheme in North Dakota is part and parcel of the education system, and not merely some benefit like a band uniform might be or something else.

Unidentified Justice: Well, what if it were a charge of something to get a driver's license?

Do we have the same problem if the person can't afford to pay it?

Mr. Houdek: No I don't believe we do.

Unidentified Justice: Or a charge for taking garbage away?

Mr. Houdek: Sure.

That was raised in one of the amici briefs, I believe, as kind of a user fee analysis.

Unidentified Justice: Yes.

Mr. Houdek: Here this is not a user fee situation, Justice O'Connor.

Unidentified Justice: You don't think a little charge for transportation is a user fee in a sense?

Mr. Houdek: No.

And here's what I think is the fundamental difference.

A driver's license is a privilege the state gives someone and someone can apply for it or not.

Here attendance at school--

Unidentified Justice: But desperately important, is it not?

Mr. Houdek: --It is important.

Granted.

But attendance at school, and at school, not education in your home, but attendance at school in North Dakota, is compulsory.

It is mandatory.

The state in the vast majority of the districts recognizes that and provides transportation free-of-charge, and that has been a historical tradition in North Dakota, so much so that the compulsory education laws were not enforced against people who lived away from the school, and for whom the district did not provide transportation.

So it is more than simply a benefit that one might avail themselves of.

Unidentified Justice: What about this statute in North Dakota that says

"No students rights or privileges shall be denied for non-payment of fees? "

Mr. Houdek: Yes, if I may answer that from a couple of different approaches: first, that has not been judicially construed to say whether or not it would include transportation.

Unidentified Justice: Have you argued that it does include transportation?

Mr. Houdek: We brought this waiver statute to the attention of the trial court and to the other side, as a matter of fact.

No one has ever--

Unidentified Justice: Do you take the position that the statute protects your client from the payment of the fee?

Mr. Houdek: --That has never been established that it--

Unidentified Justice: Do you take the position that it does?

Mr. Houdek: --I would say, Your Honor, that if that statute is so-construed, that that would go a long way to resolving the constitutional problems that are here.

Unidentified Justice: Yes, I suppose you certainly would want to argue that it covers your client, if you have any interest in protecting them at all.

Mr. Houdek: Certainly so, certainly so.

If as the Appellees have seemed to indicate, that that statute takes care of the entire problem, yet it is more than a little curious that that statute has been raised by them for the first time in this Court after some two years of litigation.

Unidentified Justice: That doesn't take care of the entire problem.

You're not saying it takes care of the entire... you still have an equal protection problem that people in some counties have to pay for the busses, you know,--

Mr. Houdek: That's right.

But I--

Unidentified Justice: --up to the point where you're below the absolute poverty line that you can't possibly get to school.

You'd still be disadvantaged as regards everybody else in the state.

Mr. Houdek: --That's right.

I interpreted the question, Your Honor, as it would apply to our clients.

They would be covered by such a statute because they would certainly fall within those whose privileges or educational opportunities would be taken away because of a lack of an ability to pay.

And if the statute prohibits that, then they would be covered.

It does not, as you suggest, cover any kind of geographical disparity that exists within the state.

Unidentified Justice: I don't think Justice O'Connor was asking you to concede or to asking your position as to whether your clients qualify under this statute if it's interpreted the way your opponents say it should be.

You're not sure they would qualify under it, are you?

Mr. Houdek: Yes, Your Honor.

Unidentified Justice: You are?

Mr. Houdek: All I could say to that is that someone with their income and their family composition does not qualify, then that statute would not be protecting their children.

Unidentified Justice: Then you're right, the case is gone if that statute's interpreted, though.

Mr. Houdek: Well, it's interesting: all along, it seems, the Appellees have said

"There's no need for a waiver in this case; we have one in the statute. "

"We do this as kind of a noblesse oblige, but if in fact they are saying that statute applies, and if they will say that that is the law in North Dakota, that they will not deny a student access to that bus system if they haven't an ability to pay, and they will not attempt to collect from a parent as an ability to pay the fee that may otherwise may be involved, then we're a long way towards settling this case. "

But up to this point, that has never been done.

They have never been willing to admit that.

Unidentified Justice: This statute doesn't say anything about inability to pay, does it?

It says, "Nonpayment of fees".

Is that what... are we talking about the statutes quote on page 29?

Mr. Houdek: Yes, Your Honor.

Unidentified Justice: It doesn't say anything about inability to pay.

Mr. Houdek: No.

It does say that--

Unidentified Justice: It doesn't say anything about bussing.

It says, "Rights are #" if it means you shall not be denied the right to get on the bus because you don't pay the fees, if you read it that way, why hasn't she been riding the bus all these years?

Mr. Houdek: --That's right.

If that statute meant that, then she should have never been turned down.

Unidentified Justice: Seems to me that's rather strange.

I assume there's no way to read this in such a way that it would remove the liability for the fees.

All it means is you have to get this particular student to school, or I presume her parents would continue to be liable for the fees which the school could try to collect from them, or the state could if and when the state had sufficient funds.

Mr. Houdek: Yes, absolutely.

I think in that way it's analogous, perhaps to providing indigent counsel and then trying to recoup that if the person thereafter comes into funds.

I agree.

I believe in--

Unidentified Justice: Let me just clear up one other thing in my mind: they have said that they won't let her ride on the bus not only because she doesn't pay the money, but she has to sign this contract?

Mr. Houdek: --Right.

Unidentified Justice: So that this statute wouldn't cure that.

She's got to... and that contract required her to waive the kind of claim she asserts in this case?

Mr. Houdek: Right, so it's a real catch-22.

If they maintain that position, then they would never know whether they would get into a situation where the statute pertained.

And I might add, that refusal to sign the contract has been characterized as something that was done to, like our clients thought it up to maintain standing.

It was demanded of them... for the very reason that, if they did it, they couldn't challenge any of the fees.

It came from exactly the other way around.

To summarize that point, if I might, I think everyone here involved in this case and the Court below, recognized the essential nature of transportation to education in North Dakota where we have these very large districts and centralized schools and a rural population.

I mean, the majority did; the dissent below did; the Appellees seem to concede that.

Unidentified Justice: As I understand your argument, though, if North Dakota didn't furnish bus transportation to anyone in order to get to school, you would say that that... practice was unconstitutional as with respect to poor people?

Mr. Houdek: Yes.

I think, of course, Justice White, that this Court, because of the circumstances of this case need not go nearly so far.

Unidentified Justice: Your argument here, that's your principal argument.

Mr. Houdek: Our argument is that--

Unidentified Justice: Your principal argument is about poor people.

Mr. Houdek: --Yes, it is also about--

Unidentified Justice: I suppose your equal protection argument would be just as good with respect to the difference between Reorganized and Non-reorganized districts... if there weren't any poor people, I suppose somebody who could afford to drive their child to school could make it just as good an equal protection claim as you could with respect to the difference between the districts.

Mr. Houdek: --That's correct.

I believe that's true.

But again, I don't think any decision of this Court would have to rest on that ground alone because our clients clearly fall within however you might define poor people.

Unidentified Justice: That may be so, but if we rely on that, then we would have to be saying that North Dakota is constitutionally required to furnish bus transportation to poor people, who have no way for their children to get to school.

Mr. Houdek: I think what it would... that's a fair characterization, Your Honor.

Unidentified Justice: I think it is, too.

Mr. Houdek: That would come in to play if within the context of the present system, where were they compel attendance to school, where that is mandatory; where if there's someone 20 miles from the school they provide who has absolutely no way of getting in there--

Unidentified Justice: Is there any evidence that North Dakota has ever prosecuted anyone under the truancy statute who was simply unable to afford the bus to school and therefore did not come?

Mr. Houdek: --That there is... it's not recently, Your Honor.

Recently, the cases have taken on a home-school kind of issue and people keeping them back for because of their choice in education.

But there has been at least one case where the North Dakota court has held that where a person was offered only a $.50 per day transportation allowance and not actually brought to school could not be subject to prosecution for compulsory attendance.

Unidentified Justice: Could not be?

I don't think you said, "could not be"?

Is there any case ever holding otherwise in North Dakota?

I mean, are there many prosecutions under the truancy statute?

Mr. Houdek: In the context you mean, I am not aware there are a lot, Your Honor.

Unidentified Justice: So what's reality at issue is what you say is the denial of the right to public school education, not the dilemma that you're going to be prosecuted for truancy if you cannot afford to go on the bus?

Mr. Houdek: While I agree that the denial of the public school education is an extremely important factor, and denial of such a right does raise these constitutional issues.

I think that the part about compulsory attendance merely brings it into finer focus.

I mean, here's a state that's saying education is so important you've got to get there; you've to do it in our schools; we're going to give transportation to most of the districts, but we're going to withhold some.

And we're going to do from the poor within those districts as well, without any kind of a waiver situation, because that's the way it has been applied.

I believe the appellees can say all they want that informally they will do this or they will do that; but unless our clients have some legal guarantee, I think that's an empty promise.

The administrations change; circumstances and people change, and unless it is backed up by some active legal significance, I don't think that promise is enough.

I would like at this point to reserve the rest of my time at this point for rebuttal.

Chief Justice William H. Rehnquist: Thank you, Mr. Houdek.

We'll hear now from you, Mr. Dynes.

ORAL ARGUMENT BY GEORGE T. DYNES, ESQ. ON BEHALF OF APPELLEES

Mr. Dynes: Thank you, Mr. Chief Justice and may it please the Court:

I think some more facts might be illuminating.

This matter of charging a fee actually, although it is a state law, did originate in Dickinson back in 1973 and it was a plebicite of the bus uses that it came about.

Prior to that it was a practice of picking up the children at the main road which could mean a half-mile or a mile or a quarter of a mile; and the bus patrons said we would rather pay a... that didn't cost anything.

They said we'd rather pay a fee if you'll come to our yard and pick up the children and return them there in the afternoon.

So that is what happened and that's what is still going on.

Subsequent to that, actually, the law was passed in 1979.

The fee at the present level and for the past several years as in the case of Serita Kadrmas was $97.00 for the full year.

She's sixteen miles from school, so if you figure in and out each day, that comes to 1.7 cents per mile, far less than anybody could afford their own children.

And as the evidence showed, that the Kadrmases, by their own testimony during the 1984-85 year... '85-86 year, excuse me, which was the year that this case was tried in trial court, that they spent $114 each month for actual expenses, and this was gas and similar expenses to haul the child back and forth, versus the fee which would have been $10.70 a month.

Unidentified Justice: And that proves what?

Mr. Dynes: That proves that, although it may have been an imposition, they were able to get that child to school and clearly could have paid the fee which was--

Unidentified Justice: It doesn't prove they could afford it, does it?

Mr. Dynes: --I think it does, yes.

Unidentified Justice: What if they went into debt and their debts were overwhelming and they continued to go in debt?

Mr. Dynes: I think it would have been prudent to pay the fee.

Unidentified Justice: It might have been prudent but I don't believe it proves anything else.

Mr. Dynes: Of course, with a family they are, they certainly aren't at a high level of income, but they did have resources to devote to various things, and it would appear that that's something they should have done.

I understand they're doing that now.

Unidentified Justice: What do you mean by

"resources to devote to those things? "

They didn't have very much.

Mr. Dynes: Pardon me?

Unidentified Justice: They didn't have very much.

Mr. Dynes: No, it was certainly limited.

Unidentified Justice: Are you inferring irresponsible spending on their part?

Mr. Dynes: No, not at all.

And I'm sure that there wasn't enough at the end of the month, which was true for the good share of the people that ride that bus.

Unidentified Justice: With all the resources of the state, you could have found out how much money they had, couldn't you?

Mr. Dynes: Pardon, Justice Marshall?

Unidentified Justice: Couldn't you have found out exactly how much money that family had?

Mr. Dynes: Well, the testimony... they testified as to what their income was, and it was $15,000.

Unidentified Justice: Are we bound by that or are you trying to add to that?

Mr. Dynes: No, no.

That's the only testimony, and that is the finding of the court.

The poverty level at that time was $12,500.

Unidentified Justice: Mr. Dynes, what about... it might have been more economical, but what about the contractual requirement?

They did have to sign this contract, in order to get the child on the bus?

Mr. Dynes: That's true, they were asked to sign a contract.

However, they weren't asked to pay the fee if they weren't able to pay the fee in advance.

They were able to pay the fee when they could, and Mrs. Kadrmas testified that she understood that to be the policy.

As a matter of fact, for the previous year--

Unidentified Justice: But the contract, let me just go back to the contract that would have required them, would have prohibited them from bringing an action in this case, is that right?

Mr. Dynes: --I guess it would have, yes.

Unidentified Justice: What is the reason for that?

Mr. Dynes: I guess not, they could still bring the equal protection on the argument between the districts; and I think they could still... I don't know if it would prevent them from bringing the action; but of course they would have committed to pay the fee.

They couldn't have contested the legality of the fee, that's correct.

But I'm not sure if they'd still have a lawsuit or not.

Unidentified Justice: Why do you have such a contractual provision?

It seems sort of a strange thing to me?

Mr. Dynes: It's a matter of lining up during the summer season to know who's going to ride the bus.

They have... these are district-owned busses; they try to fill them to capacity; they don't want to have any empty seats in them; they have kindergarten children who just ride one way; they have some others who just ride one way because they want to stay after school for extra-curricular and things like that, so they do the best--

Unidentified Justice: Well, that would explain my--

Mr. Dynes: --They do the best the can to schedule.

And of course, they do want a legal commitment.

They do want the people to pay if they're able to.

Unidentified Justice: --What about... what is the reason for the waiver of the right to challenge the fee?

Mr. Dynes: What is the reason for the waiver?

Unidentified Justice: Yes.

That's what puzzles me.

One of the things that puzzles me about the case.

Mr. Dynes: You're speaking about the statutory waiver?

Unidentified Justice: No, as I understand it... I don't have it in front of me; the contract would have foreclosed a lawsuit like this... at least some of the claims.

Mr. Dynes: Well, they would have agreed that they were obligated to pay the fee.

There's no question that that's true.

There would be a legal obligation.

Unidentified Justice: And that they could not contest that fact?

Mr. Dynes: I don' know that it said that in there.

It didn't go into the legal matter.

It wasn't drawn up by a lawyer; it was just a contract that was drawn up by the bus administrator asking people to agree to pay a certain fee, and it's I think probably was somewhat of an outgrowth of this case in Bismark where Mr. Houdek mentioned there was a suit and the case was denied on a constitution attack because the individual had signed the contract.

Unidentified Justice: Mr. Dynes, I guess no matter how we view the case, we have to address the argument here that there's an equal protection denial by virtue of different treatment in North Dakota of reorganized school districts for bus transportation and non-reorganized districts?

Mr. Dynes: Yes.

Unidentified Justice: And the supreme court apparently found that the statute authorizing bus fees in non-reorganized school districts, but not in the reorganized ones, was rationally related to the legitimate government purpose of encouraging reorganization?

Mr. Dynes: I think we have to take that in two parts, Justice O'Connor.

The reorganized school districts started reorganizing under laws that were passed in 1947, and that process basically has been completed.

It could still continue.

But pretty much all the little ones have become bigger ones now.

And under that law, it did say that each district, when they reorganized, has to have a plan.

Now it's not the same plan.

They create their own plan which they vote on.

Then the electors in each small district being reorganized into the larger district would have to approve that plan in order for the reorganization to be completed.

And that is what the supreme court was referring to when they said the rational basis was to encourage reorganization in the larger districts.

Unidentified Justice: We now have this scheme on the books and if it's a reorganized district, they can't charge bus fees, and if it isn't they can, and that's being challenged?

Mr. Dynes: That's right.

Unidentified Justice: Now what is the legitimate governmental purpose now, do you suppose, in that difference?

Mr. Dynes: That as the reorganization has been completed, the plans are in place; they've been voted on in the individual districts and the legislature when they passed this fee statute, simply left those districts alone because they had those plans in place, with not charging any fees.

Unidentified Justice: So I'm asking you for what governmental purpose we should look in the discrepancy here?

How do you defend it?

Mr. Dynes: The first purpose was to reorganize, which they did.

They have a plan in which they're honoring; they're not disturbing that plan.

The other districts, like Dickinson, never had any... they weren't reorganized; never have been--

Unidentified Justice: And never will be.

Mr. Dynes: --And never will be.

Unidentified Justice: Too big.

Mr. Dynes: They were never required to have any bus system, you see.

The statute now and for many years past, has said that a school like Dickinson need not have a bus system at all.

But they can elect to do it simply by action of the board, as opposed to, in the reorganized districts, where it was an action of the people, and it was part of the plan.

Unidentified Justice: This was a local option?

Mr. Dynes: Local option... and those plans, you have to remember, were different, and are different.

It's been suggested that they have free bus transportation; well, it's true they don't charge a fee, but they don't haul all of the children either.

They typically won't haul any children that are within two miles of school, for instance, and they very often don't go door to door like we do in Dickinson.

Unidentified Justice: In the case of a non-reorganized district, which I take it Dickinson is--

Mr. Dynes: That's correct Your Honor.

Unidentified Justice: --Is the district simply left free to decide whether or not they will charge a fee?

Mr. Dynes: That's true.

Unidentified Justice: It's not as if the state says you will charge a fee to some districts and you won't to others, and with the districts that aren't reorganized, they are left a local option?

Mr. Dynes: They are left a local option and the statutes are completely silent on whether or not they could charge a fee.

Unidentified Justice: But with the reorganized districts, the state tells them you can't charge a fee?

Mr. Dynes: Well it doesn't say that.

It says you have to have a reorganization transportation plan.

And the statutes are silent as to whether or not you can charge a fee.

I think they may very well be.

Unidentified Justice: All of these systems that are local option on bussing?

Mr. Dynes: Well, in a way, except that the reorganized districts are done by vote of the people at the time the districts was organized, the unorganized districts--

Unidentified Justice: I thought that the supreme court said that the reorganized districts could not charge a bussing fee.

I thought that was the assumption on which they took the case?

Mr. Dynes: --The statute is silent on that.

I don't remember that that was in the decision.

Unidentified Justice: Well what does the supreme court say?

Mr. Dynes: I'm not sure, Your Honor; I'm not sure about that.

They don't, and nobody wants to in those districts, and I think the reason is because they have this plan in place.

But the other districts either have the option of having the bussing plan of any kind, and they also have the option of charging a fee or not within the limitation, of course; and they also have the option to determine how far away from school they require people to live in order to take advantage of the system.

Unidentified Justice: In your view, so far as the North Dakota statute are concerned, it's optional to charge fees for the school bus in both kinds of districts?

Mr. Dynes: No.

The statutes don't say that.

That would be another lawsuit.

Unidentified Justice: But well, I think what several of us are trying to find out is, do the North Dakota statutes mandate one way or another as to whether a fee should be charged for a school bus trip in (a) the reorganized districts; and (b) the other districts?

Mr. Dynes: In the reorganized districts it says nothing about fee.

It doesn't say they can charge it; it doesn't say they can't charge it.

And they don't charge it.

Unidentified Justice: The reason that fees are not charged for bussing in the reorganized districts is that those reorganization plans provided for free bussing?

Mr. Dynes: I think that's true.

And there has been no attempt to change that.

Unidentified Justice: A reorganized district might possibly not charge a fee at all?

Mr. Dynes: Absolutely.

Unidentified Justice: They could have a transportation plan that says $1.00 a mile.

Mr. Dynes: That's true.

And they charge different fees.

They're more expensive in some of the--

Unidentified Justice: So in effect, all the reorganized districts have opted themselves to provide free transportation?

Mr. Dynes: --That in effect is true.

But as I said, they don't haul all of the children.

And I wanted to mention that the--

Unidentified Justice: Also their transportation plans really differ one from another?

Mr. Dynes: --That's right.

They're--

Unidentified Justice: They don't charge but their mileages are different or things like that--

--Mr. Dyne do you know--

Mr. Dynes: --Some of them pick them up at the door and some of them don't.

Unidentified Justice: --The opinion of the supreme court, I thought, stated that the North Dakota statute allows only those school districts which have not been reorganized to charge a fee for school bus service?

Mr. Dynes: That's true, Your Honor.

Unidentified Justice: And that's what they said.

But you say we don't pay any attention to that?

Mr. Dynes: No, Your Honor.

I'm not saying that.

I'm saying the statute addresses, that talks about those fees, talks only about the non-reorganized districts.

It simply doesn't apply in any respect to the districts that are reorganized.

Unidentified Justice: But don't we have to accept the interpretation of the statute placed on them by the supreme court of your state?

Mr. Dynes: I think it's correct.

I don't know that they have said... that the reorganized districts can't charge a fee, but Your Honor, that really isn't the issue.

Unidentified Justice: I thought that was one of the issues raised by the Appellant?

Mr. Dynes: All right, I stand corrected, I guess they have raised that issue.

We will accept for the purposes of argument that certainly the reorganized districts can't charge.

I know that they don't charge it.

Unidentified Justice: What's the reason, then, for the distinction between the two kinds of districts?

What is the rational justification that's offered for the distinct treatment?

Mr. Dynes: Justice Kennedy, as I mentioned, I think the Court recognizes the argument for the rational basis for the reorganized district, having a busing plan.

They're required to have a bussing plan.

The other districts have never been required to have a bussing plan.

It's been optional.

The charging of the fee, the rational basis is simply to allocate available public funds.

The cost of this bus is paid in Dickinson and it'll vary from district to district may charge a fee about 11 percent by the users; about 11 percent by the local taxpayers, which of course, includes all those who have used the bus and who don't and the rest of it is state money.

Only a very small percentage of the students ride the bus, about 13 percent.

The other 87 percent furnish their own transportation to and from school because they live within the four mile and within the three-mile limitation.

Unidentified Justice: Mr. Dynes, before you sit down, please follow up on Justice Kennedy's question.

He asked you about the rational basis, or the reason for the distinction was, and you gave a reason which was quite different from the reason that your state supreme court gave.

They said that the purpose was to encourage non-reorganized districts to reorganize.

That was the only purpose they gave.

During your argument you've said that's just not going to happen.

Mr. Dynes: I don't believe you've read the entire opinion.

Unidentified Justice: I'm reading on page 64 of the Appendix which after explaining at some length why it's a rational basis standard, they say,

"The obvious purpose of the legislation is to encourage school district reorganization with a concomitant tax base expansion and enhanced and more effective school system. "

"The legislation provides incentive for people to approve school district reorganization. "

That's what they say.

Mr. Dynes: That's the separate legislation that requires that they have a bus plan in place, which they do, the reorganized districts.

But the separate rational basis for letting them charge... for letting these other districts, charge a fee who don't have to have a plan in place--

Unidentified Justice: Where do they describe that in the opinion from the part I've read?

Mr. Dynes: --I could pass a note through Mr. Spaeth later if you'd like.

I'm pretty sure it's in the opinion.

Unidentified Justice: Well, I didn't find it.

Mr. Dynes: It's been neglected in the briefs, I think.

Chief Justice William H. Rehnquist: Thank you, Mr. Dynes.

We'll hear now from you, General Spaeth.

ORAL ARGUMENT BY NICHOLAS SPAETH, ESQ. AS AMICUS CURIAE, IN SUPPORT OF APPELLEES

Mr. Spaeth: Mr. Chief Justice, Members of the Court: may it please the Court, before beginning the argument I've prepared, I would like to pick up on a question Justice Stevens just asked because I can tell that the Court is interested in it.

The reorganization statute which was passed by the legislature quite a long time ago, did have as its purpose to encourage reorganization, and it did encourage reorganization in the vast majority of school districts in this state.

It would be a mistake to examine it solely in the context of Dickinson where there was no reorganization.

It's done its work throughout the rest of the state, and it's done it in a pretty fair and rational way.

It's purpose was to encourage consolidation, and as a quid pro quo, where there was consolidation, to guarantee that there would be school bus transportation provided to parents who were fearful that when their local school closed, they would have to face the responsibility of bussing or transporting your child in from a great distance.

And that system has to be looked at based on its impact on the entire state.

Unidentified Justice: General Spaeth, can a reorganized school district charge for school busing?

Mr. Spaeth: No, I do not believe so.

I think you are absolutely correct.

Unidentified Justice: So we can put that at rest?

Mr. Spaeth: We can put that at rest, that's right.

Only unreorganized school districts may and it's their option.

Unidentified Justice: All right, and so on the equal protection challenge, as to the difference between the reorganized and the unreorganized districts, what is the legitimate governmental justification for it?

Mr. Spaeth: It was a local option to provide each school district with the choice of deciding first of all whether it wanted to reorganize; then if it decided not to reorganize, whether it wanted to charge a fee?

The statute is actually neutral on its face.

It does not say, in some districts, a fee must be paid and others not.

Unidentified Justice: You are saying, I think, if I understand it correctly, that it once had a purpose, to achieve reorganization.

It really doesn't have any purpose any more except, I suppose, if you know that the incentives that the government promises one time, everybody else will get anyway; the next time they offer an incentive you won't believe in it.

You're saying the only current reason for the distinction is that if the government should now say that everybody will get bus transportation free, people will say,

"gee, you can't rely on the government. "

"We thought that one of the incentives for reorganizing was that we'd get bus transportation; but now they've given it to everybody anyway so you simply can't trust the government when it promises things. "

"That's the only current existing reason for the distinction. "

Mr. Spaeth: No, it still has a rationale in the sense that it provides the non-reorganized school districts with an option.

It gives them the choice: do we want to fund this service or do we not.

That is certainly is a rational basis.

Unidentified Justice: General Spaeth, the option, if I understand you, at the time of the legislation, they were concerned about poor families living a long ways from the new central school, and what would happen to them if they didn't provide bus service?

Mr. Spaeth: Not just poor families.

Unidentified Justice: Well, at least those who are a distance away.

And now you say that some reorganized and some didn't, but those that didn't reorganize are functionally just like those that... the problem that the legislature was concerned with... some distant families not near enough to the school to get there without free bus transportation.

So now how do you say under your... why should one family in that posture which has the same economic situation, same distance from school, why wouldn't the legislature express the same concern about that family as about those that were motivated to... who got into the plight just because they agreed to the reorganization?

That's the problem.

Mr. Spaeth: What happened here, Justice Stevens, is there was a very rational scheme was put in place given the needs of the state as a whole, and you're focusing on the Dickinson school district, where it isn't.

Unidentified Justice: No.

I'm focusing on what the legislature was concerned about when it said, if you get yourself in this particular structure with a central school and people living a long ways away from it, we'll take care of you.

But we won't take care of a similar set of circumstances in another district.

What's the justification for that?

Mr. Spaeth: Because when the legislature was considering this problem, the legislature emerged from a political compromise and realized that, in order to provide some districts with an incentive to reorganize, it was going to have to put in some guarantee that transportation would be provided.

It didn't need that same incentive if they weren't going to reorganize, because generally... of course, not in every case... but generally there wasn't the same transportation problem; that the students would live close enough to their school where they wouldn't need free transportation.

Unidentified Justice: What you are saying is that the legislature had no intention whatever to benefit people distant from the schools; it just wanted to eliminate a possible obstacle to their voting for reorganization?

Mr. Spaeth: That's correct.

Unidentified Justice: It has no beneficent desire here at all?

It was just wanted to get their votes?

Mr. Spaeth: The primary focus was to encourage this process of consolidation, and in order to get this legislation through, that important protection had to be put in to encourage the consolidation process, and that's what we're talking about here.

Now, there's one other issue that troubles the court, and I want to talk about it, and that is, how did this case get here?

In the jurisdictional statement, the question presented is whether a state may deny equal access to education to a distinct class of people, basically minor people whose parents are below the poverty level; I don't think on the record here that question is presented.

I think, Justice O'Connor, that this case may not be ripe is entirely a correct one: first of all, there is no question they weren't denied education.

Serita attended school through the entire course of this litigation.

Second, she wasn't even denied transportation on the school bus.

All that was required was that her parents sign this contract.

Unidentified Justice: I guess it's enough to raise the challenge, isn't it?

Mr. Spaeth: Well, the state law would have provided for a waiver of fee; and no waiver--

Unidentified Justice: Well, let's talk about this state law.

It would have permitted Serita to board the bus, whether her parents paid or not?

Mr. Spaeth: --That is correct.

Unidentified Justice: Would it have excused her parents from paying?

Mr. Spaeth: Yes, it would.

Unidentified Justice: You think it addresses that?

Mr. Spaeth: Yes, all you have to do is if you look in the joint appendix, the court's Finding of Fact No. 14, that's located on page 7 of the joint appendix... what the court decided based on the conflicting evidence was all that the Dickinson school district required was that the parents sign the written agreement to pay fees, and make a bona fide effort to pay on these obligations, a bona fide effort.

It's an open-ended kind of obligation.

Unidentified Justice: Well--

Mr. Spaeth: In fact, she'd been bussed for three years without payment of any fees.

Unidentified Justice: --But counsel, if their cattle works out, for example, and they make a lot of money, they're going to have to pay that fee.

Mr. Spaeth: That's correct, and there goes the equal protection argument.

That's what is important about the contract... because economic situations do change.

And even though the Dickinson school district is not going to try to come out and garnish their earnings to pay a fee now--

Unidentified Justice: So as long as they're poor, they don't pay?

Mr. Spaeth: --That's right.

As long as you're poor, you don't pay.

But if you come in to money through cattle or through the lottery, then you are going to be--

Unidentified Justice: I don't want to pay even if I'm rich.

That's how I got rich.

I don't spend money that I don't have to spend, and why should I have to pay for busses when rich people in other counties don't?

So isn't there still an equal protection argument?

Mr. Spaeth: --If you put it in that sense, right.

If you consider that the state has somehow dictated this kind of discrimination.

I don't think it has because the statute is neutral.

But they you're left with some sort of purely geographic difference which the Court from McGowan v. Maryland on, has put a minimal of scrutiny on.

Of course there are distinctions between counties, or the school districts, based on this fee, but those kinds of distinctions exist all over.

They exist in life, and the Constitution has never provided a remedy for that kind of discrimination.

And that's where I think we're left with the barest minimum scrutiny of a statute that on the whole works pretty well.

It's not perfect--

Unidentified Justice: General, may I interrupt?

You do have these distinctions in life.

Sometimes a child moves into a neighborhood and everybody in the neighborhood is a Swede and the child is Irish and he gets beat up on the way to school; and in every school district except yours, the school authorities say we're going to protect the children as they go to school.

But in this district the administration is Swedish and they say,

"Go ahead and beat the kid up on the way to school. "

He gets there though.

He still doesn't have a challenge since he can overcome the obstacles and he gets there?

You can tell Justice Stevens is from Chicago.

0 [Mirth.]

Mr. Spaeth: --I am tempted to respond, Justice Stevens, by saying that is not the case here, but two weeks ago--

Unidentified Justice: Well, we've got an obstacle.

It's an obstacle.

Mr. Spaeth: --Justice Scalia warned the assembled Attorney-Generals in this room that we were not to answer a question that way; that we were indeed required to answer a question anyway, even if we don't believe it applies.

And you might have a different case there.

We're not dealing with the--

Unidentified Justice: And the justification would be the state says each school district runs its own affairs, except that in 9 out of 10 we have regulations that ensure that the children have adequate access to the school.

But in this one, we'll let them run their own show.

And they just happened to do it in this way.

Would that be permissible geographic discrimination?

Mr. Spaeth: --Yes, it would, and in fact, if you look at this Court's decision in McGowan v. Maryland and an earlier case, Calvert v. Maryland, where there were different... Ann Arundel County had different sets of rules than other counties, those kinds of challenges were raised and rejected.

Unless the Court were to create a new form of constitutional protection, those kinds of things would be okay.

The remedy there, of course, is some sort of due process action against the individual entity.

But it is not an equal protection case.

Unidentified Justice: I understand that you say there's no denial of education in this case?

Mr. Spaeth: That is correct.

Unidentified Justice: Well, let's take the State of Texas, and they tell the children in Galveston you can go to school in El Paso, would that be a denial of education?

Mr. Spaeth: It depends, I suppose, on the purpose, Justice Marshall.

It depends upon what the purpose of that.

If the purpose was to disadvantage some distinct minority group, identifiable, yes it might be.

You know, if we're talking about aliens being forced to go to school somewhere else because they're aliens, or even if the State of North Dakota said poor people are going to go to school in Galveston, instead of in Houston, we might have a problem.

But the state doesn't do that here.

Unidentified Justice: How are the poor people going to get there?

That costs you about $300 airplane fare.

Mr. Spaeth: They're going to have to move there, I think, is what the answer is.

Unidentified Justice: It's easy.

Mr. Spaeth: No it's not.

Unidentified Justice: I think if you give one people bus transportation you should give it to the others.

Offer it; not that they have to take it, offer it.

Mr. Spaeth: It's not the state making that decision, Justice Marshall.

It's the individual school district deciding whether or not to fund that.

Unidentified Justice: I thought that state education was a part of the Constitution; that the state, once they offered education should offer it on an equal basis.

The state.

Mr. Spaeth: It does, Justice Marshall.

It offers it on the same basis as everybody.

The state funds--

Unidentified Justice: You can't escape it by turning it over to the counties.

Mr. Spaeth: --No, the state, just for your information, in this case the state funds 2/3rds of the transportation costs to the local district, and it's only the other third that we're talking about right here, the school district--

Unidentified Justice: The other third could be very important to some people.

Mr. Spaeth: There's no doubt about that, Justice Marshall, but we're talking--

Unidentified Justice: It also applies to the millionaire.

He might not want to spend his money on busses.

He might want to put it on yachts.

It seems to me, General Spaeth, that the fact that the state picks up the tab on most of the transportation... is it the same percentage in the reorganized and non-reorganized districts?

Mr. Spaeth: --Yes.

It's a uniform system applied across the board in the state.

Unidentified Justice: Then it seems to me there the principal; it's not so much then the county itself deciding how to disperse the local taxpayers' money, but you have the state financing it.

That seems to me more of a reason to have a uniform rule.

Mr. Spaeth: I disagree.

It's no different than Texas financing system in Rodriguez, where the state didn't provide all of the funding for education to allow the school district to decide how much more it was going to contribute.

In this case the state provides 2/3rds of it; the school district itself picks up another roughly six; and the parents are called upon to provide the remaining six.

It's just one way that benefits... and we're talking about economic benefits here; there are a host of other examples here: medicare, medicaid; where people using those kinds of services have to pay a user fee.

That's also true in food stamps.

We are talking here about some things in life that are even more important than education where the users of those benefits have to pay part of the cost.

Unidentified Justice: I assume that in the reorganized districts where they don't make a charge for the bussing fee, it comes out of locally imposed taxes?

Mr. Spaeth: That's right, the taxpayers there.

Unidentified Justice: So that the people who don't pay bussing fare have to pay something more in their taxes, although it probably wouldn't--

Mr. Spaeth: Right and it generally is property taxes, which are not, you know, which are tax, and you could argue, I suppose that poor people aren't likely to pay property taxes, and therefore are likely to get a free ride in those kinds of accountings.

But I don' think we're dealing with--

Unidentified Justice: --Nice pun.

I like that.

0 [laughter.]

Mr. Spaeth: --Again, I think we are dealing here with something that is an economic benefit, and we have one school district here that's charging a small amount for it.

I don't think it's unconstitutional.

I think it's some thing that probably isn't even properly raised in this case.

If the court wanted to duck this case; I think that the record is such that it could be affirmed almost on an ulterior basis.

Unidentified Justice: I suppose that reorganized districts have got a better tax base, so an enhanced tax base--

Mr. Spaeth: They certainly do.

Unidentified Justice: --and if an unreorganized district, probably because if it can't be reorganized isn't going to achieve a better tax base.

So it's just economically in a different situation?

Mr. Spaeth: In many cases that's right, Justice White, and you know it--

Unidentified Justice: Well, the Supreme Court said... indicated that right?

Mr. Spaeth: --Yes, that's correct.

But that's what we're faced with... $97.00 a year, which is a user fee levied in one county that's at issue here against a background of a system that really did what it was supposed to do, which was to encourage the reorganization of most of North Dakota schools.

We're the most agricultural state in the United States; we're not a rich state by any means; and we're seeing what's happening all over the upper Midwest; and that is a shrinking of the rural population, even out of the small towns into the larger cities.

And that's what's driven this whole process.

It's largely complete at this point, but this program I think has worked well.

Chief Justice William H. Rehnquist: Thank you General Spaeth.

Mr. Houdek, you have eight minutes remaining.

ORAL ARGUMENT BY DUANE HOUDEK, ESQ. ON BEHALF OF APPELLANTS -- REBUTTAL

Mr. Houdek: Thank you Your Honor, I would first like to point out that the concept of reorganization did not create the right to bussing in North Dakota.

It is not as though there was no bussing.

And the reorganization statutes then created that right.

Bussing existed long before 1947 when the reorganization statutes were passed.

As a matter of fact, what the statutes did was to ensure that that tradition would continue.

Unidentified Justice: But did free bussing exist before?

Mr. Houdek: Yes, Your Honor.

Older cases have said that this very statute that gave an option of providing transportation or making in lieu payments, although they were discretionary in which you did, they were mandatory that you did one or the other.

So that has nothing to do with the reorganization statute.

Secondly, this is not a local option case.

This is not a Rodriguez "difference in quality of education".

As Justice Stevens pointed out, these are mostly state funds, and it's more than 2/3rds.

And in may cases it's 80 percent of the funds are state monies that are being distributed to the various districts.

Withholding 80 percent... withholding all of that benefit because of the failure to pay that fee--

Unidentified Justice: General, your opponent suggests that the fee equals only the local contribution.

That the 2/3rds of the state money goes anyway.

Mr. Houdek: --Yes.

That's true, but withholding it from a person who doesn't pay it, withholding all that state benefit, is not something that a local option ought to be able to do.

Unidentified Justice: I suppose you could say you could offer to take 2/3rds of it away with the school, would you?

Mr. Houdek: No, I wouldn't, Your Honor.

What I'm saying is that it's even worse that this fee could deny those people all of the state benefit as well.

The formula apart from that, they don't pay the same percentage in every district; the formula is the same; the state funding of transportation formula is based on whether you use a small or a large bus; and the number of pupil days.

Some districts get over 100 percent; they get more than their cost.

Some get 50 percent, so the percentage is not the same.

Unidentified Justice: I suppose you can say that the person who can't afford the 1/3 fee or whatever proportion of that is charged, has to forego the other 66 percent just because that person doesn't have the money, but another resident of the district who has no children forgoes the whole thing, all the time.

So one doesn't have the money; the other doesn't have children.

It isn't the case that everybody in the district has to get the benefit.

Mr. Houdek: No.

It is like other parts of education; people pay taxes and fund it whether they have children or not because education is important to our society as a whole.

And this is the same concept, Your Honor, at least I see that in that fashion.

The question or the specter that this is a local kind of case It think is most disturbing because we're not talking about the inability of a district to tailor a plan mileage limits based on the size of the cities within their district or anything like that.

They most certainly have the right to do that.

What we're talking about is the denial altogether of the essential part of the education process in North Dakota.

The difference, I think, in the geographic cases that were cited by Mr. Spaeth, here we have that element of compulsion again, and we have the benefit being given throughout the state and then being arbitrarily withheld.

Most of the questions I noted from this Court has been what is the purpose of this?

Why do we have this difference?

The reorganization statute in 1947 reorganized the state as it was destined and designed to do.

The fee statute, 32 years later, had absolutely nothing to do with that.

It served no purpose.

It has little to do with reorganizing those districts as any other statute you might find on the book.

That process, as they have conceded, is complete, and it is not likely to happen in Dickinson.

Unless there are any further questions, thank you very much.

Chief Justice William H. Rehnquist: Thank you, Mr. Houdek.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Lyng v. Automobile Workers - Oral Argument

Wed, 13 Apr 2011 20:09:56 +0000

Case:

Lyng v. Automobile Workers

Media File:

86-1471_19871207-argument.mp3

Related Transcript:

86-1471_19871207-argument.xml

Transcript:

ORAL ARGUMENT OF LAWRENCE R. ROBBINS, ESQ. ON BEHALF OF APPELLANTS

Chief Justice William H. Rehnquist: We'll hear argument first this morning in No. 86-1471, Richard Lyng v. International Union.

Mr. Robbins, you may proceed whenever you're ready.

Mr. Robbins: Thank you, Mr. Chief Justice, and may it please the Court.

In the 23 years since the Food Stamp Act of 1964 was enacted, Congress has many times considered and several times enacted measures designed to restrict the availability of food stamps to households with members who were on strike.

In 1981, the 97th Congress enacted an amendment to the Food Stamp Act now codified at 7 U.S.C. 2015(d)(3) whose Constitutionality is at issue in the case this morning.

That amendment generally provides that households that contain strikers are not eligible for food stamps by reason of the loss of income occasioned by the strike.

It provides moreover that households eligible for food stamps prior to the strike will retain their eligibility but will not receive any additional food stamps by reason of that loss of income.

Unidentified Justice: What is the purpose of that exception do you think, Mr. Robbins?

Mr. Robbins: I think, Justice Blackmun, that Congress sought to strike what I would call a balance of competing interests.

By retaining the eligibility, households were placed in no worse position by virtue of the strike.

Congress simply sought not to permit the loss of income occasioned by the strike itself to increase the eligibility for food stamps.

So in that sense, it doesn't deprive households of an eligibility that vested prior to the time the strike began.

Unidentified Justice: Mr. Robbins, is there any evidence in the legislative history that one of the purposes was to somehow effect or establish national labor policy in any way?

Was this just a budget device to save money, or was the exception in there to further some labor policy of the government?

Mr. Robbins: I think, Justice O'Connor, Congress sought to promote three objectives, and it articulated those objectives in the accompanying Senate report, I believe it's 97-35, that accompanied the legislation in 1931.

Those three purposes are first, as Your Honor mentioned, to achieve what Congress wished to be dramatic changes in its words, in the Federal spending policy.

Congress sought to reduce the overall cost of the Food Stamp program and the Congressional Budget Office estimated in fact that the amendment actually adopted in 2015(d)(3) would save approximately $165 million in food stamp outlays over the three year period 1982 to 1984.

But there were two other objectives as well, apart from simple saving of revenue.

First, Congress believed that it was tying the receipt of food stamps to the ability and willingness to work.

It thought that was consistent with the balance of the food stamp scheme.

It believed and said, that strikers have foregone available employment voluntarily and that union strike funds should be the principal source of benefits during a work stoppage.

Finally and more clearly I think directed to Your Honor's question, Congress attempted to promote additional governmental neutrality in labor disputes.

It believed that providing food stamps to striking workers is an incentive to wait out management, in the Senate Committee's words, rather than to reach compromises.

And it decided that it wished to withdraw that incentive from labor management's disputes.

Now, the District Court for the District of Columbia recognized that these were rational goals and that the legislation enacted in 2015(d)(3) is, to use the District Court's words,

"rationally related to legitimate legislative objectives."

but it struck the statute down anyway.

Applying a rather loose amalgam of rational based and heightened scrutiny, the Court found that the statute irrationally discriminated against strikers, unlawfully impinges on their free association rights as well as the rights of their families and their unions to free association and exacts an excessive price for the protected right to strike.

We believe each of these conclusions to be mistaken and we ask this Court this morning to reverse.

Let me turn first, if I might, to the equal protection claim in the case.

It is common ground that Section 2015(d)(3) as social welfare legislation survives equal protection scrutiny if it is rationally related to a legitimate legislative purpose.

We have no doubt that it is.

But let me say at the outset that we proceed in this argument on the assumption that Congress articulated its real purposes for the statute when it enacted it.

I mention that seemingly uncontroversial point because the amicus party in this case has suggested that Congress' articulated purposes are in fact a camouflage for the anti-labor and anti-union animus that ostensibly in reality motivated the enactment.

But that claim is manifestly false, resting as it does on remarks made in years past by opponents about precursors of the current legislation.

We prefer to take Congress at its word, and I turn directly therefore to the reasons that Congress actually articulated as rational bases for the distinction that it drew in the statute.

Let me start with the cost savings goal.

In 1981, Congress confronted an economy that it believed to be in considerable financial distress.

It therefore resolved to make across the board cuts in a great many Federal programs.

Several of those were made in the Food Stamp Program, and Section 2015(d)(3) reflects one of them.

Now, appellees do not dispute that the Government may legitimately pursue cost savings, but they argue that savings alone cannot justify irrational distinctions.

And we agree.

Distinctions that are otherwise irrational are not made rational simply because they save the Government money.

But the need to conserve funds makes distinctions inevitable.

And when distinctions must inevitably be made, it is equally inevitable that some persons, often with a great deal in common, will fall within and without the favored circle.

Here, Congress drew a dividing line rationally grounded in the determination that strikers at least have a job to go back to and have union strike funds to rely on.

In those critical respects, Congress reasonably concluded that strikers may more easily than other persons absorb the necessary reduction in available benefits.

Once it is seen that Congress drew a rational line in its effort to conserve funds, this Court's decision last term in Bowen against Gilliard instructs that the Statute that it enacted--

Unidentified Justice: Excuse me.

Did I hear you to say that a man without a job is better off than a man with a job?

Mr. Robbins: --I think what I certainly intended to say, Justice Marshall, is that Congress could rationally have decided that a person with a job to go back to when he chooses to is better off than someone who has no job prospects at all.

And that we think is one of the determinations that Congress made in enacting this Statute.

And we regard it as a reasonable and rational one for Congress to have made.

Unidentified Justice: What about the voluntary quitter?

Mr. Robbins: Well, Justice White, the voluntary quitter is treated differently under the Statute in certain respects but Congress could rationally have decided that that distinction was warranted.

Unidentified Justice: He's off the food stamps what, for ninety days?

Mr. Robbins: That's correct.

Unidentified Justice: And the striker is off for as long as he's on strike?

Mr. Robbins: That is correct, Justice White.

And there are we think several reasons why that distinction survives equal protection scrutiny.

Unidentified Justice: And isn't it also true of just the deadbeat who doesn't want to work at all?

Mr. Robbins: No, that is not equally true.

There are work registration requirements that must be satisfied.

The law provides equally that someone must take available work at the applicable minimum wage, and the failure to do so disqualifies both that deadbeat and his household.

Unidentified Justice: How about the voluntary quitter, does he have to take a job, another job to stay on food stamps?

Mr. Robbins: Well, yes he does.

He is disqualified for ninety days and when that ninety-day disqualification has lapsed, he too must register for work and take it if it's available.

And that really tells us, I think, precisely why this distinction that's been drawn and that very much persuaded the District Court really misdirects the eye.

Unidentified Justice: What about the quitter for cause?

Someone leaves a job because there are some unacceptable demands made upon him.

Is he treated the same as a voluntary quitter?

Mr. Robbins: No, he's not, Justice Scalia.

There is a distinction drawn in the Statute that permits a voluntary quitter to leave for cause and not absorb the ninety-day period of ineligibility.

Unidentified Justice: Well, the strikers think they have cause.

Mr. Robbins: They do, and they also have a job to go back to and that we think makes all the difference in the world.

Unidentified Justice: Well, so does the quitter for cause, or he had a job that he could have gone back.

The fact that it isn't there is his choice.

Mr. Robbins: That's true, but he severed the relationship.

In both cases, they have made a choice, it's true, and in both cases the choice may equally derive from a believe that they have good cause.

But we think that Congress could rationally decide that the two persons, one who quit for cause and one who struck for cause are not similarly situated in one critical respect.

One of them has severed that employment relationship and that job is gone.

He can't waltz back in when he's decided that his cause was either not the right cause or not a compelling enough cause.

He's left his job.

There is not a job waiting for him to return to.

And there's yet another distinction.

Congress obviously was trying to serve several ends at once, and one of the ends that it articulated in the Committee Report was the goal of labor neutrality.

We thin that Congress could rationally decide that extending food stamps to persons who have quit does not implicate the government in the support of one side of an on-going labor dispute.

Unidentified Justice: Well, Mr. Robbins, I gather that when the household is disqualified, also the children in the household are disqualified, are they not?

Mr. Robbins: When the household is ineligible, all members of that household by definition are ineligible.

Unidentified Justice: Yes.

Now, how in Heaven's name does that serve the objective of neutrality?

Mr. Robbins: Of neutrality?

Unidentified Justice: To disqualify the children?

Mr. Robbins: I think the answer to that, Justice Brennan, is that the Food Stamp Statute, like many other Federal statutes, is predicated on a household categorization, a household categorization that this Court recognized and accepted two terms ago in Lyng against Castillo.

It is not the intent of the Statute in particular to visit special burdens on the children uniquely, as for example, this Court considered in the Plyler against Doe case.

Rather, it makes a judgment about household income and because the Statute, like many other statutes, like the Statute in Dandridge against Williams, like the Statute in Bowen against Gilliard, because those statutes, like many social welfare statutes operate and attach consequences--

Unidentified Justice: That doesn't tell me how that serves the objective of neutrality.

Mr. Robbins: --I think, Justice Brennan--

Unidentified Justice: Under this Statute.

Mr. Robbins: --I think the answer is that Congress believed that by funding by replacing the household income given up by a striker which Congress thought to be given up voluntarily, it was withdrawing a subsidy that it thought impaired the free flow of labor negotiations.

Now, by necessity, when you refuse to replace income to a household, it has harsh implications in particular cases.

Even, we suggest, were you to look at this only as income not replaced to the individual striker, that wouldn't change the fact that it has implications for his entire household.

The fact is that this statute, like many others, operates on a household basis.

And consequences visited to individuals have consequences for their families.

That is a decision that Congress looked square in the eye and decided was outweighed by the goals it sought to promote.

Unidentified Justice: Couldn't Congress have looked it square in the eye and made a proviso that this shall not apply to children?

Mr. Robbins: They could have, Justice Marshall.

They certainly considered explicitly.

Unidentified Justice: Well, they should have.

Mr. Robbins: Justice Marshall, I am unwilling as a policy matter to second guess a judgment that its quite clear Congress had before it.

There was testimony about the consequences and indeed--

Unidentified Justice: Congress decided to deprive children of milk?

Mr. Robbins: --I don't think that's what Congress meant to do at all.

I think Congress meant to do what it said it was doing and it did so in the face of a sure recognition that there were adverse consequences for the families of strikers.

Unidentified Justice: Including children without milk.

Mr. Robbins: Including children without milk.

Congress has debated proposals like this for twenty years, and for a great many years the opponents of this legislation held sway, articulating precisely these kinds of consequences.

These kinds of consequences, however, Justice Marshall, are present every time Congress makes changes in social welfare legislation.

It was equally true in Dandridge, it was equally true in Castillo, it was equally true in Bowen against Gilliard, and it's true today as well.

Unidentified Justice: So what you're saying is that it was a change in the political climate that brought about the '81 amendment?

Mr. Robbins: I would hesitate, Justice Blackmun, to assign any special factor to that decision.

I think there has been considerable support for this legislation for many many years.

Unidentified Justice: But it never was passed over the years.

Mr. Robbins: It was never passed by both Houses over the years.

And whether it's the fact that the political climate changed, or Congress recognized that the economic crises that it perceived in 1981 had grown too great, that the peril that it thought it was addressing by a broad-based package of legislation now merited some important changes in many programs.

All of those factors may have entered into it.

Unidentified Justice: The practical consequence for the children is that the father has to leave home, isn't it?

Mr. Robbins: No.

I think that's no more true in this case, Justice Blackmun, than it was in Castillo and in Gilliard or certainly in Castillo when precisely the same argument was made and rejected by this Court.

I think the same logic suggests that the impact for purposes of dissociating families is no greater here than in those cases.

Unidentified Justice: Of course, the pro rata possibility could have been considered and was considered in other elements of the statute, wasn't it?

Mr. Robbins: The possibility of?

Unidentified Justice: Of just reducing the food stamp allocation for the striker individually and preserving the food stamps for the children.

This kind of thing is present in other aspects of the Statute?

Mr. Robbins: That's correct.

There are certain parts of the statute that attach a consequence only for the person who has taken certain action.

For example, the fraud provision has that aspect.

Although I might add, Justice Blackmun that many many other parts of the Statute attach consequences for the whole household.

The refusal o register, the refusal to take a job at the minimum wage, the refusal to provide certain kinds of reported information on an annual basis, all of those things attach consequences on a household basis.

And this is consistent with all of those.

Yes, it's true to answer your question that Congress could have cut the line more finely, but it is only Constitutionally required to do so when there is a basis for heightened scrutiny for either the inference of a suspect classification or the inference of a fundamental right.

There is neither in this case and this Court's decisions make quite clear that in the absence of a constitutional warrant for heightened scrutiny, there is accordingly no reason to require the Congress to divide its distinctions more finely.

Unidentified Justice: Mr. Robbins, I think you argued earlier that one of the concerns is that the government would be subsidizing strikers, wasn't it, if they were not disqualified for food stamps.

Mr. Robbins: The concern was for additional governmental neutrality.

Unidentified Justice: Yes.

Well just how much money was involved?

Didn't that 1975 study by GAO show that 89 to 96 percent of all strikers... this is before the '81 Amendment... did not participate in the food stamp program, and further the cost of what there was in '75 was only.2 to.3 percent of all non-public assistance food stamp households.

Isn't that right?

Mr. Robbins: Well, I think, Justice Brennan, when the statute was finally passed, the empirical evidence was a little bit more equivocal than it was before the Congress when it refused to pass the statute many years earlier.

Unidentified Justice: Well, it's not so many years.

Those figures I thought were 1975, isn't that right, and the statute was 1981?

Mr. Robbins: That's correct, Justice Brennan.

The fact is, however, that by 1981, the Congressional Budget Office was estimating that this particular amendment would engender savings on the order of $165 million over a three-year period.

The Senate Report, I might add, noted the prior findings of the General Accounting Office.

It indicated that it found the evidence somewhat ambiguous as to which estimate was correct, that it varied over the lot.

It considered the various empirical findings including the one to which you refer, and in the end it went with the estimate from the Congressional Budget Office.

That is a classically political judgment.

The decision about whether the empirical evidence is persuasive enough is precisely the kind that this Court has consistently said is consigned to the political process, and justly so.

Unidentified Justice: Congress might also have thought that putting a pinky on the scale is no better than putting a thumb on the scale.

Mr. Robbins: That's correct.

The view about neutrality is of course that involvement of the Government at all is unwarranted and it wished to withdraw that support, which may not turn precisely on how powerful that support is.

Unidentified Justice: Mr. Robbins, you assert that the striker is in a different situation from others because he can go back to work.

The respondent's brief contests that, at least in some situations, or the appellees' brief, I should say.

It says that,

"in many instances, a struck employer will not operate during a strike."

Now, what happens in that situation?

Mr. Robbins: It depends on how it is and why it is that the struck employer does not operate.

If it's a lockout or if it's the permanent replacement of a striker, that does not trigger the provisions of the statute.

In that event, the striker is no longer deemed to be on strike and is intended to receive benefits under the Statute.

Unidentified Justice: Including permanent replacement, because that's the other example that the appellees give.

Mr. Robbins: Including permanent replacements.

And the evidence that that is the Secretary's policy was before the District Court.

If, however, the plant closes because it is simply no longer economically feasible to maintain it because of the strike, that does not change the ineligibility provisions.

In that event, the striker has by his voluntary efforts together with the rest of his union ensured that there's no longer a job available, just like the plaintiffs did in the Hodory case and in Baker against General Motors.

Unidentified Justice: What can he do then if he wants to get back on the rolls, what does he have to do, quit?

Mr. Robbins: He can quit.

Unidentified Justice: Suppose he doesn't quit, he just presents himself for work?

He says, I'm no longer on strike, I'm willing to work.

Your plant is closed but that's not my fault any more at least?

Mr. Robbins: Well, under those circumstances obviously there isn't the option, under your hypothetical, of taking the job because it's not available right then.

On the other hand, it's still the culmination of a voluntary effort and to that extent there is still the distinction between the striker who has together with others engendered this state of affairs than other persons who have voluntarily left work.

Unidentified Justice: And he continues to be disqualified even though he is no longer a striker?

Mr. Robbins: Well, he's still a striker in a sense--

Unidentified Justice: No, he doesn't.

He says, I'm ready to work now.

I'm no longer on strike.

Mr. Robbins: --But by virtue of the decision he made earlier, the employer can no longer maintain the plant, and in that event, although he doesn't have the job available, certain other purposes that Congress was also seeking to promote are still applicable in that event, such as the decision not to become involved in an on-going labor dispute, the goal of neutrality and the goal of voluntary unemployment.

Let me turn since my time is almost at an end to the First Amendment challenge in this case.

We think that the First Amendment claim founders on two central misconceptions.

First, we believe that appellees exaggerate the range of protected conduct effected by the Statute.

Like the District Court, they analyze the statute as if its provisions were triggered by the exercise of any of a wide array of First Amendment rights.

In fact, however, it is only the exercise of the right to strike that is at issue, and the right to strike consistent with its rather subordinate place in the Constitutional hierarchy has historically been subjected to considerable regulation by Congress.

Second, appellees overstate the way in which the statute actually affects the right to strike.

The statute, after all, does not prohibit it, does not state the occasions on which it may be offered or may be exercised.

All it does is restrict food stamp eligibility for households that contain members on strike and it does so only for the length of the strike.

That we think is a difference of constitutional proportions.

Unidentified Justice: Mr. Robbins, they tried to get this amendment through in 1977, did they not?

Mr. Robbins: That's correct, Justice Brennan.

Unidentified Justice: And they failed, didn't they?

Mr. Robbins: They did fail.

Unidentified Justice: And didn't the report then say the reason it failed was that the real purpose of the amendment was not to restore some government neutrality allegedly lost because strikers are eligible for food stamps, but on the contrary, to use a denial of food stamps as a pressure on the worker, or more accurately his family, to help break a strike.

The amendment was an effort to increase the power of management over workers using food as weapon in collective bargaining.

That wasn't true in '81?

Mr. Robbins: Justice Brennan, Congress is not frozen in time.

Part of the political process allows for the possibility that Congress can change.

In 1977, the proponents of this Statute were defeated.

In 1981, the opponents of this statute were defeated.

That is something that happens all the time in the political process.

And we do not believe that a claim made by an opponent of the legislation about its precursor is a legitimate way in which to account for the reasons that moved a Congress four years later to do something very different.

Now, let me just say about the First Amendment claim--

Unidentified Justice: Is it possible that the 1977 Committee Report was false?

Mr. Robbins: --Was false?

Unidentified Justice: Was false?

Mr. Robbins: It could be that it was wrong, it could be that it was overstated, it could be that like some other Committee reports, it exaggerates the strength of its arguments, and it could be that what was true then is no longer true about what moved a subsequent Congress to do something that a prior Congress rejected.

That wouldn't be surprising, think, and it wouldn't be the first time.

There are two reasons why the First Amendment claim in this case fails.

And the two reasons are defined by this Court's decision in Gilliard at the tail end of last year's term.

And the reason is that the First Amendment free association claim is only implicated when it is a statute whose

"design and direct effect is to intrude on those First Amendment interests."

In this case, of course, neither of those standards is met, first because it is surely not the design of the Statute to impair free association claims.

It is first of all not triggered by a significantly protected First Amendment right.

The right to strike, as we've outlined in our Reply Brief, has historically been, as Justice Jackson put it in the UAW case, more vulnerable to regulation than the right to organize and select representatives for lawful purposes of collective bargaining.

Indeed, the history of labor law is largely defined by an on-going process of adjusting the competing claims of strikers, their employers and the public at large.

And that historical process is only possible by virtue of the fact, and indeed it reflects the fact that the right to strike is not graven in some First Amendment stone.

And second, the statute does not as in the words of the Bowen against Gilliard case directly impair that First Amendment right.

Because like the decision, like the decision in Harris against McRae and the decisions in Castillo and in Gilliard, it simply withdraws funding where it does not affirmatively fund the protected right.

Unidentified Justice: Do you think your position draws strength from Harris against McRae.

Do you really think that?

Mr. Robbins: I think it draws considerable strength, and indeed, I think this is a stronger case, Justice Blackmun.

Unidentified Justice: Because there it was an extension of benefits that was sought.

Here, it's just the opposite.

Well, I disagree with you, I'd mention.

Mr. Robbins: Well, I think in that case, Congress decided not to include a certain kind of constitutionally protected conduct within the aegis of the Medicaid Statute.

Here, there's not even the same kind of claim, we don't think, that the right to strike has anything close to the kind of constitutional protection that was recognized in Harris against McRae, and it's simply a failure to fund, just as it was there.

Unidentified Justice: Mr. Robbins, what about Moreno?

Mr. Robbins: I think, Justice Brennan, that the Moreno case which after all was also a rational based case, even though the Statute was triggered by an associational claim, is different in that this Court was able to find in the legislative history, statements by the proponents of the legislation that it was animated by anti-hippie animus, that in fact, this was an effort to penalize an historically disfavored and insular minority.

There's no such evidence in this case.

Unidentified Justice: Why do you say historically disfavored?

The hippies weren't historically disfavored, were they?

Mr. Robbins: Well, I think this Court thought in Moreno that this was a group that had been certain kinds of... within the political process, had been given certain kinds of disadvantages and that this statute reflected that.

Thank you.

Chief Justice William H. Rehnquist: Thank you, Mr. Robbins.

We'll hear now from you, Mr. McHugh.

ORAL ARGUMENT OF RICHARD WALKER MCHUGH, ESQ. ON BEHALF OF APPELLEES

Richard Walker Mchugh: Mr. Chief Justice, and may it please the Court.

The 1981 amendment to the Food Stamp Act in issue here treats strikers and their households uniquely.

No other Food Stamp provision sanctions individual actions by disqualifying an entire needy household by the full duration of their need for food stamps.

Whether examined under a Fifth Amendment rational basis test, or under the First Amendment's requirement of a substantial justification, and a narrow tailoring the statute in the words of District Judge Oberdorfer, fails to pass constitutional muster.

Unidentified Justice: Excuse me.

I thought the Government had given some examples of how the chief wage earner's failure to provide necessary information in order to get the stamps, for example, would disqualify the entire family.

Isn't that true?

Richard Walker Mchugh: I'm not aware of any other food stamp disqualification that would act to disqualify the family for the full duration of its need, basically for the length of the strike in this case.

I think the example he was referring to is when he referred to the head of household refusing work or refusing to accept a job for minimum wage, that's a sixty day disqualification or until the head of the household complies.

I think that's also true in the need for information.

Unidentified Justice: Sixty days or until the head of the household complies?

Richard Walker Mchugh: Complies, right, whichever's shorter.

Unidentified Justice: Whichever is shorter.

But if the head of the household just refuses to work although work is available, the whole family's disqualified?

Richard Walker Mchugh: For sixty days, that's correct, Justice White.

Unidentified Justice: Well, I know, but what about the person who just decides he doesn't want to work anymore, ever?

Richard Walker Mchugh: I am not sure what that situation is but I believe you would have a continuing requirement to register for work and to be available for work, and I suppose--

Unidentified Justice: Well, then, as long as he won't work, the household would be disqualified.

Richard Walker Mchugh: --That would be a single act.

That would be a series of acts that triggered the sixty-day disqualifications.

In any event, I don't think it's--

Unidentified Justice: Well, that makes hash out of the work requirement.

Richard Walker Mchugh: --No, I think they would continue to assess sixty-day penalties, but it would be for separate refusals.

In other words, you would have sixty days to register and comply and if you didn't, at the end of that and you continued to refuse, then at that point, they would assess another sixty day disqualification.

Unidentified Justice: But it's the whole family though that would be disqualified.

Richard Walker Mchugh: If the work is suitable and if the person is the head of the household.

Unidentified Justice: Well, that is a provision, then that disqualifies the whole family because of conduct of the head of the household.

Richard Walker Mchugh: That's correct.

Unidentified Justice: You could consider this to be a series of acts, as well.

The worker who is on strike refuses day by day to go to work.

Richard Walker Mchugh: Well, if the plant is either operating and the person can go back, or if the person has not been permanently replaced.

I think that the permanent replacement situation is, I would disagree with my opponent a little bit on that.

Unidentified Justice: That's different.

Richard Walker Mchugh: The District Court made a specific finding that the length of the disqualification was indeterminate for the length of the strike and found that there were numerous instances in the record where people had been permanently replaced and remained disqualified.

The policy that the Government is relying on here is a letter from the USDA officials to other regional USDA officials.

The manual material... that's the State welfare manual material that the workers use, we put in the record material from Kentucky and Michigan, and there was no mention of a permanent replacement, and in fact there's no instance in the record where somebody permanently replaced did get stamps as a result of this alleged policy.

It's not in regulatory form, and I don't think that the Government can really rely on it here to save the constitutionality of this statute.

Unidentified Justice: Well, Mr. McHugh, do you think the Constitution prohibits Congress from disqualifying for food stamps, families of voluntary quitters?

Richard Walker Mchugh: I think that that's a very important consideration in this case.

As was pointed out--

Unidentified Justice: Well, does it, or not?

Does the Constitution forbid Congress from disqualifying families for food stamps of voluntary quitters?

Richard Walker Mchugh: --I think that the Constitution prohibits Congress from doing that when similarly situated families of voluntary quitters or refusers of work are not treated as punitively as the families of strikers.

For example, voluntary quitters have the opportunity to show good cause and there are many situations when people on strike go on strike for identical circumstances as would be good cause for voluntarily quitting, and their families would have no penalty imposed, but since the member of their household is on strike, they're taken off the stamps completely for the duration of the strike.

So I think it's the similarly situated comparison that makes it unconstitutional, not just taking the families off per se under the equal protection theory.

Unidentified Justice: I guess I just don't understand your answer.

Suppose all we had in front of us was a provision that said if you voluntarily quit work, you and your family are not eligible for food stamps.

Is that unconstitutional?

Richard Walker Mchugh: I don't think so.

Unidentified Justice: Well, then why can't strikers be treated the same?

Richard Walker Mchugh: Because voluntary quitters are not treated that way.

Voluntary quitters have a ninety-day disqualification at the worst, and then they are eligible even though they turn their back on income just like the strikers did, and even though they walked away from income and made themselves eligible for food stamps.

And I think that this Court has made clear, in Castillo, for example, that similarly situated individuals have to be treated similarly to satisfy the rationality requirement of the equal protection clause.

And so--

Unidentified Justice: Yeah, but ninety days they're disqualified, they and their families?

Richard Walker Mchugh: --That's correct.

Unidentified Justice: Then they have to register?

Richard Walker Mchugh: That's correct.

Unidentified Justice: And if they don't register and take work, they are off food stamps again?

Richard Walker Mchugh: That would be true, but I think in a typical case--

Unidentified Justice: Meanwhile for sixty days, they are back on food stamps.

Richard Walker Mchugh: --No.

If they refused at the outset, and they went in and on their application they didn't register, they wouldn't be eligible.

Unidentified Justice: And so that would be just like the striker, then?

Richard Walker Mchugh: Well, it would be the same effect in terms of food stamps, yes.

Unidentified Justice: Yes.

Well, if they engaged in the same conduct the striker did saying, I'm not going to work, they would be off?

Richard Walker Mchugh: I think what you're asking me to do--

Unidentified Justice: Is that right, or not?

Richard Walker Mchugh: --Yes.

I think what you're saying is that not only do I have to show that it doesn't comparably treat voluntary quitters, but that it doesn't similarly treat voluntary quitters who also refuse to work, which I think is a pretty heavy burden to carry under the rational basis theory.

Unidentified Justice: But traditionally under rational basis, people attacking a law on equal protection grounds have a heavy burden to carry.

Richard Walker Mchugh: Well, that would be true, Your Honor, and I think that we can carry this burden in this case because it's not the same case as Gilliard or Castillo, which this Court decided in the last two terms.

Unidentified Justice: But the voluntary quitter at the end of 90 days, he has to register, but if it's evident that he won't work, he stays off food stamps, doesn't he?

Richard Walker Mchugh: That's correct.

Unidentified Justice: Just like a striker?

Richard Walker Mchugh: Well, except that strikers are not always able to waltz back into their job, as my opponent said.

There are many cases where... there are cases in the record.

Johnie Blake was permanently replaced.

The union offered to go back to work.

The employer refused to take them back because he had permanently replaced them, which he's entitled to do on economic strikers, and she still continued to be disqualified for food stamps for months after that, her and her grandchildren and her children.

In other situations, they're not operating and counsel has conceded that even in those situations, people are still going to be disqualified.

Unidentified Justice: But you would want to be treated better than the voluntary quitter?

Richard Walker Mchugh: No.

All we need to do is be treated the same as the voluntary quitter.

Unidentified Justice: Well, the voluntary quitter if he doesn't want to work is going to stay off food stamps.

Richard Walker Mchugh: These people, even if they seek other types of work--

Unidentified Justice: And furthermore, your striker doesn't have to go and register for work elsewhere.

Richard Walker Mchugh: --Yes.

Prior to 1981, strikers had to register for work and be available for other work, but not the work at the struck plant.

Unidentified Justice: What about now?

Do they have to register and be available for work elsewhere?

Richard Walker Mchugh: Well, now they're just simply not available.

Unidentified Justice: Exactly.

Richard Walker Mchugh: I mean, they're not eligible.

Unidentified Justice: But under your thesis, the striker would have to do what?

Richard Walker Mchugh: Under our comparison, what we would say is if they treated strikers exactly like voluntary quitters, that would be--

Unidentified Justice: So strikers are off food stamps for 90 days?

Richard Walker Mchugh: --If it's the primary wage earner?

Unidentified Justice: Ninety days.

Richard Walker Mchugh: Right.

Unidentified Justice: And then he has to register for other work?

Richard Walker Mchugh: Right, and be available for all other work except the struck work.

Unidentified Justice: But if he said I don't want to work because I'm on strike, he's off for good?

Richard Walker Mchugh: Right, but that would be fine because I think he should be subject to the same comparable requirements of the food stamp program which requires that you be available for all work except work that's vacant due to a labor dispute.

Only in the case of strikers and their households is the Government saying we're going to take that additional step and provide that economic incentive for someone to have to cross their picket line, and that doesn't seem to me that that's advancing neutrality, which is the rationale that the Government is trying to argue.

Unidentified Justice: Mr. McHugh, do you concede the Statute would be constitutional if it merely disqualified strikers for 90 days, and their families?

Richard Walker Mchugh: Yes, I don't see how we could come before the Court and make a similarly situated argument.

Unidentified Justice: Even though, during that 90 day period, it took the milk away from the children and the family.

So you're really not relying on the First Amendment associational right at all, as I understand you now.

Because that would apply in the 90 day period.

The arguments about infringement of the right of association both with the union and with members of the family would equally apply to a 90-day disqualification, and I understand now you're abandoning those arguments.

Richard Walker Mchugh: I think that where the associational freedom must come in is if we compare the food stamp treatment of voluntary quitters and those who strike.

A person who voluntarily leaves for a number of reasons that amount to good cause under the Statute has no penalty.

However, if they leave to express their disagreement with their employer in concert with other individuals, then they are penalized.

It seems to us that that shows what's triggering the disqualification is not the individual leaving work, but the fact that they're leaving work in concert with others.

And that's the reason there's an associational right here.

Now, under your hypothetical, you're saying we're going to treat even under associational purposes, it seems to me, there's that discriminatory element.

If you're going to treat voluntary quitters and strikers alike, even though one is leaving for reasons of association and one is leaving for his own individual reasons, I'm not sure that that is going to create a constitutional problem, I guess.

Although it may still create a constitutional problem if there's no substantial justification.

Unidentified Justice: So really it seems to me in bottom, you're making an equal protection argument, rather than a First Amendment argument?

It seems to me that's the heart of your case?

Richard Walker Mchugh: Well, I think that the equal protection argument is a narrower grounds for the Court to affirm the District Court.

Unidentified Justice: Well, it really seems to me that you've abandoned the First Amendment argument because you seem to agree that if it were limited to a 90-day disqualification that it would be okay to disqualify people, even though you're taking milk out of the mouths of the babies in the family.

Richard Walker Mchugh: And I'm not sure I need to make that concession because it seems like if it is a right of association, then it seems like to me that the interest that the Government has put forward are not the substantial interests that are necessary under the First Amendment.

They haven't even tried to justify it in the First Amendment context.

Unidentified Justice: Well, it seems to me it makes a big difference in remedy, too, because if this is the correct theory, the District Court presumably should have just enjoined the enforcement of the Statute insofar as it disqualified strikers' families for the 90-day period, for a period beyond 90 days, I mean.

Richard Walker Mchugh: Right.

And so presumably the District Court disagreed with me earlier, I think.

Unidentified Justice: Mr. McHugh, it seems to me that a good many of the laws in the labor-relations area can be said to burden association rights.

For example, there are laws under Taft-Hartley directly restricting the freedom of employees to engage in various kinds of concerted activity.

And we've not held that those violate the First Amendment.

So it's a little odd, anyway, to argue that in this context you can't indirectly do the same thing you can do directly as Congress in restricting associational right.

Richard Walker Mchugh: I think that where the governments cases dealing with the pervasive regulation of the right to strike in labor relations context really fail is there you are regulating striking as an economic activity viz a viz employers.

Unidentified Justice: Well, the government argues that that's one of the purposes of this.

It's a form of labor regulation in effect.

Now, I specifically asked them that at the outset of the argument.

Now, to that extent, I guess this could survive under traditional labor law analysis under First Amendment claims.

Richard Walker Mchugh: Well, in those areas, the Court was concerned about employers' property rights and the public interest involved in regulating strikers.

They haven't put those interests forward in this case, and I guess I would disagree that you can read the legislative history of this provision as being Congress acting in the labor relations context.

I think what they said was in the context of a social welfare program, we think this advances neutrality by withdrawing the support from strikers and their families, but I don't think that they said, we're doing this as part of an addition to the Taft-Hartley Act to regulate striking or any of the other Federal legislation that this Court has upheld.

So it seems like the First Amendment basically limits government, and when government acts viz a viz the individual in a social welfare program and triggers that action based upon the associational nature, it seems like to me you've got a completely different type of situation.

Unidentified Justice: Well, it depends on whether we view it as a social welfare program or as a form of labor policy.

Richard Walker Mchugh: Well certainly the explicit objects of the legislation are to promote the agricultural economy and to alleviate hunger by providing assistance to families whose need is so low that they can't afford to purchase an adequate diet, and it doesn't say that they're also accomplishing labor-relations type activity.

Unidentified Justice: Mr. McHugh, we haven't examined the provisions of the National Labor Relations Act, and specifically the provisions that render unlawful or impose certain adverse consequences for particular types of strikes, we haven't reviewed those under a strict scrutiny standard, have we?

Richard Walker Mchugh: No, I don't believe you have, Your Honor.

Unidentified Justice: Well, how, why wouldn't we if--

Richard Walker Mchugh: I don't know of any cases--

Unidentified Justice: --Well, I don't know of any.

Richard Walker Mchugh: --I'm not sure you've reviewed them at all in the First Amendment light, I guess.

Unidentified Justice: Oh.

You think that the Taft-Hartley Act, in all of its provisions relating to strikes would have to be scrutinized strictly?

Because you have the same factors here if you're relying on the insular nature of the labor union movement and traditionally subjected to disfavorable treatment, as you say, we have--

Richard Walker Mchugh: Well, the District Court, I think at that point was really trying to make the case more like Moreno and less like Castillo, and it seems like to me what the District Court was doing there was looking at the part of Moreno where the Court said that the bare desire to harm a politically unpopular group was not a legitimate government activity.

Now, we're not arguing that the disqualification of strikers would not be a legitimate government purpose.

What we're arguing is that the way they've accomplished it is irrational when you compare it to the treatment of strikers.

Unidentified Justice: --Well, irrational, I have no problem.

If you're just doing ordinary scrutiny, that I understand.

But I thought you were urging strict scrutiny here?

Richard Walker Mchugh: No, we've never argued strict scrutiny before this Court or before the Court below.

I think that in an effort to make us look more like the decisions that you reversed in Castillo, the solicitor has attempted to say that this is a strict scrutiny case or that we want it to be a strict scrutiny case.

But certainly under equal protection what we have indicated is that a rational basis test is enough.

Unidentified Justice: So your argument is essentially the equal protection argument here?

Richard Walker Mchugh: Under the First Amendment, I think there are two discrete independent grounds that the District Court held the Statute unconstitutional.

Unidentified Justice: Yes, I realize that.

But I thought perhaps you weren't making exactly the same arguments that appealed to the District Court in its opinion.

Am I wrong in that?

Richard Walker Mchugh: You think that I'm not making exactly?

Unidentified Justice: Yes.

Are you supporting all of the District Court's opinion in your argument here?

Richard Walker Mchugh: If the District Court in the equal protection context applied more than a rational basis test, I don't think that we need to do that.

I think that under Moreno, this case, Moreno is very applicable to this case, I think.

Unidentified Justice: But then, do I gather that separate from your equal protection argument which you've just made, you're also making a First Amendment attack on the statute?

Richard Walker Mchugh: That's correct.

Unidentified Justice: And you just haven't gotten to that, yet?

Richard Walker Mchugh: That's correct.

Unidentified Justice: Okay.

Well, maybe we should give you a chance to do it.

Richard Walker Mchugh: I'll accept your invitation, Chief Justice Rehnquist.

This Court has held in a long line of cases that while the Government is free to deny a benefit or privilege for any reason, there are some reasons that it can't deny a benefit or privilege.

And these would include the First Amendment limitations on the right of the Government to impose conditions on the receipt of a benefit which would burden the exercise of First Amendment rights.

I think that if you look at the comparison of the treatment of voluntary quitters who quit for good cause for reasons of in opposition if they leave because of discrimination, because of unsafe working conditions or for other unreasonable working conditions, they escape penalty completely.

People who leave in concert with others under the very same conditions--

Unidentified Justice: Well, this strikes me as more equal protection, but perhaps I'm wrong.

Richard Walker Mchugh: --Well, I think the case that best shows the associational nature that this Court has looked at is Citizens Against Rent Control v. City of Berkeley.

Now, in that case, this Court examined an ordinance which limited individual contributions to committees to oppose ballot provisions of $250.

However, an individual could contribute as much money as he wanted as an individual to the cause.

And the Court said well, since you're limiting only contributions from groups, it's obviously a regulation of associational activity.

Now, it seems to me the same analogy holds here.

What is triggering the disqualification is not the economic activity of striking or turning your back on employment.

It is turning your back on employment with other people.

Unidentified Justice: But in Citizens for Rent on the contributions, we had held in Buckley v. Moreno, as some people have said, that money is speech, and therefore there was probably an independent First Amendment ground in Citizens Against Rent Control to analyze the thing in First Amendment terms since it was regulating something that was the form of speech.

Now, do you think that those same grounds are here?

Richard Walker Mchugh: I think that there are other areas where you've looked at associational rights where it's not as clear.

For example, in Speiser v. Randall, which I guess to some extent was a due process case, but has later come in, it seems to me, to the First Amendment, that was the denial of a tax exemption... and I don't think you particularly have a First Amendment right to get a tax exemption... you just have a First Amendment right not to have the tax exemption conditioned on the foregoing of the exercise of First Amendment rights.

And I think that's where the Government misstates what the state of the law is.

In terms of they are saying that since there's no direct prohibition on striking or on associational rights, it only regulates striking.

Then the indirect effects, if you can call them indirect in the sense that they aren't on the face of the Statute, can be ignored.

And I don't think that the District Court felt that that was true, because he recognized it even though it was burdening more than just the right to strike.

It was burdening this associational... the right to express your disagreement with your employer by leaving in association with others.

Unidentified Justice: Mr. McHugh, I still don't understand whether you're urging just ordinary scrutiny or strict scrutiny when you begin talking First Amendment and associational rights, that doesn't mean anything different to me than just talking equal protection, unless what you're implying by that is that we have to examine with strict scrutiny whether the justification for this particular provision is valid.

You can burden associational rights, the Government can, if the reason is significant enough, but we will subject that reason to strict scrutiny.

And that's what you want us to do, isn't it?

Richard Walker Mchugh: I think I would like this Court to say that there's an associational element here and that the Government would have to show a substantial justification.

Unidentified Justice: Strict scrutiny.

Richard Walker Mchugh: And they haven't even tried to do so.

Unidentified Justice: So you are urging strict scrutiny, which brings us back to my prior question.

Why don't we apply strict scrutiny to the National Labor Relations Act?

Richard Walker Mchugh: Well, one reason would be there you are not discriminating among certain kinds of associates, you're not saying that we are disapproving of a type of associational activity, you're only setting up a framework that's basically neutral or helping at least in adjusting the relationships between employers and employees.

But in this situation, you are dealing with a situation where it's the government viz a viz individuals and I think that that is perhaps one difference in the sense that the First Amendment primarily goes to limit governments and doesn't apply to the same extent when you're talking about the adjustment of relations between private parties.

Because then you have other interests such as property interest, antitrust and other things that the Court has pointed to in the Lincoln Federal Labor case and other cases that the Government cites for this pervasive regulation of striking.

So it seems like to me that's what makes this case different.

You have definitely indicated in your cases that where the Government does something directly in terms of acting on people in the associational context that that is different from where it's doing it by just letting it happen between private parties.

For example, you've said in Thornhill v. Alabama, the Court said that it's one thing for the State to regulate the give and take of industrial combatants; it's another thing for the government to come in and limit the rights of speech in the area of industrial controversies.

And it seems like to me that that's the same distinction I'm trying to make here.

Unidentified Justice: Does that suggest that all labor relations type laws of the first category have to be put in the same statute, and that Congress can't in another statute perhaps, a bill sent in by another department, they couldn't have a regulation of labor relations?

Richard Walker Mchugh: No.

I just think this is not a labor relations statute and that was not really the purpose that Congress had.

What they apparently were concerned about was... or at least the proponents of this amendment were... that people might be able to be at a better advantage and not have to settle labor disputes more to the liking of employers.

But I don't think that that makes it a labor relations regulation just because it impinges on strikes.

Healy v. James is another case I think in the First Amendment area is similar in terms of going to this indirect direct distinction that I'm discussing.

There the Court looked at the non-recognition by a State university of a student organization and said that the fact that they couldn't use the meeting rooms or the bulletin boards at the University was enough of an impermissible burden on the right of association to be a serious constitutional problem.

In effect, what happened in Healy v. James was similar to the Government's subsidy argument, the University basically just declined to make available to the student organization, the same facilities that it normally made available to other student organizations.

I want to touch before my time is up on the subsidy funding argument.

It seems to me that there are two things that make this case different from the medicaid abortion cases which the Government attempts to rely on.

First of all, when you look at the comparison between voluntary quitters who quit for good cause and strikers who quit for identical reasons, there is no plausible explanation for that distinction other than the Government's disagreement with the viewpoint that's being expressed by the people who quit in concert with other people.

And this is a First Amendment element that the Court has not permitted even in the subsidy area.

Secondly, in the abortion cases, the Court said that while government is under no obligation to remove obstacles not of its own making when people want to exercise protected rights, in this case the obstacle was poverty.

The Court still recognized in those cases that the government could not turn around and put an obstacle in the place of somebody because they exercised a protected right.

And it seems like to me that that's a fundamental distinction that this Court recognized both in Mahere and in Harris v. McRae.

Clearly this is the situation here where the striker provision is triggered by the exercise of associational rights and is an obstacle placed in the path of strikers based upon their exercise of associational rights.

Unidentified Justice: I don't understand your second distinction.

Why is it different from the abortion disqualification is triggered by the fact that you're getting an abortion?

Richard Walker Mchugh: Well, the Court in the Harris case made the distinction basically saying that you have a range of medical services that are potentially available and the government simply withdraws funding from one of those but doesn't disqualify the woman from medicaid generally, that's different from the situation in Sherbert v. Verner where the person lost all their benefits.

The Court made that distinction in footnote 19 of the Harris opinion.

And similarly here this really isn't a decision to--

Unidentified Justice: In other words, this would be different if in addition to food stamps, you also had some other forms of subsidy like free hospital care and free bus ride and things like that, then that would be like Harris against McRae?

Richard Walker Mchugh: --Yes.

I think if there was a range of services and one was being withdrawn it perhaps would fit more under Harris v. McRae.

But this isn't really a situation--

I see my time is up.

Thank you.

Chief Justice William H. Rehnquist: Thank you, Mr. McHugh.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Bowen v. Gilliard - Oral Argument

Fri, 09 Jan 2009 14:48:31 +0000

Case:

Bowen v. Gilliard

Media File:

86-509_19870422-argument.mp3

Related Transcript:

1986_86_509_argument.xml

Transcript:

Argument of Albert G. Lauber, Jr.

Chief Justice Rehnquist: We will hear arguments next in two consolidated cases, No. 86-509, Bowen against Gilliard, and No. 86-564, Flaherty against Gilliard.

Mr. Flauber, you may proceed whenever you're ready.

Mr. Lauber: Mr. Chief Justice, and may it please the Court:

The question here involves the validity of an amendment to the AFDC program that Congress enacted in 1984, a provision I shall refer to as the standard filing unit provision.

This amendment was one of many budget cutting steps that Congress took in that year, and it was designed to close what Congress viewed as a loophole in the AFDC eligibility scheme.

Under prior law, a family applying for AFDC could try to maximize its AFDC grant by excluding from the filing unit certain family members, typically children who had other sources of income, such as Social Security benefits, child support, or accountable earnings from employment.

This enabled the family to get the maximum AFDC grant for the members in the unit, plus keep all of the other income of the members who were left out of the unit.

In 1984 Congress decided to eliminate this benefit maximizing option by enacting the provision challenged here.

It requires that when a family applies for AFDC, all members of the family who live together must be included in the filing unit, and that the income of all those family members must be added up to figure out how needy the family is for public assistance.

Congress based this amendment on the belief that family members who live near the poverty level and who live together tend to share their income and expenses; and that therefore the most reliable index of the family's need for public assistance was the total income of the family members.

Thus, rather than simply cutting AFDC to families across the board, Congress sought to target the benefit cuts in 1984 to those families that were, because of the members separate income, less needy.

Now, appellees, of course, have no constitutional right to a permanently fixed level of AFDC benefits, and they therefore recognize that they could not bring a constitutional challenge to a decision by Congress simply to cut benefit levels without more.

What they argue, therefore, is that Congress did not really cut AFDC benefits here, but rather took property away from the children who are required to be newly included in the filing unit.

Appellees focus on child support income, and especially on the assignment provision enacted in 1975 which requires a mother who applies for AFDC to assign to the state any right to support that she or her child may have.

This provision was designed to improve collection of delinquent child support by transferring the burden of collection from the abandoned mother to the state with its greater enforcement resources.

Now, the assignment provision by itself works no hardship on the family, because for every dollar of support assigned to the state, one dollar of AFDC comes back to the family.

Moreover, a family that assigns child support also receives an extra $50 a month from the state by virtue of the child support disregard provision.

Unknown Speaker: Well, it comes back to the family... you say it works no hardship; it works no hardship on the family.

Mr. Lauber: That's right.

Unknown Speaker: But one of the contentions here is that it does work a hardship on the child for whom the support is destined.

Mr. Lauber: That's right.

That's appellee's theory, that the effect of the assignment provision is to take the property of the child--

Unknown Speaker: And give it to the family.

Mr. Lauber: --and transmute that into AFDC and give it to the whole family.

Unknown Speaker: That's right.

Now why is that wrong?

Mr. Lauber: Why is their theory wrong?

Well, we think their theory, their taking theory, is wrong for several reasons.

First of all, the premise of their theory--

Unknown Speaker: xxx taking.

Let's not get into the refinement of takings.

Is it... is the substance of what happens wrong?

Under... can... can a mother who receives AFDC in theory distribute it among her children anyway she wants?

Could she continue to give... let's say she gets... she has $250 support payment for Joey.

Could she get $300 from AFDC and decide, I'm going to spend $200 of this on Joey?

Mr. Lauber: --She could.

She is required to spend the money in the best interests of all her children, and she could decide that--

Unknown Speaker: She's required to spend it in the best interest of all her children?

Mr. Lauber: --I think the AFDC program also imposes obligations on mothers with respect to how they spend it.

Unknown Speaker: But she's not giving $200 to Joey because she thinks that's in the best interest of all her children.

It assuredly isn't.

She wished she could spread that among all the children.

But she figures this $200 is Joey's.

Mr. Lauber: It could be Joey, she thinks, is more needy than other children.

Unknown Speaker: No, that's not the reason.

In fact, given her druthers, she'd distribute it evenly among all of them, as I think any mother would.

But she figures she is getting this $200 from her ex-husband for Joey, and that's been converted into an AFDC payment; she is going to continue to spend $200 on Joey, even though in her view that's not in the best interest of all the children.

Would that violate the AFDC rules?

Mr. Lauber: I don't think it would.

It would depend on what the other children needed.

I mean, the way the mother spends the AFDC money--

Unknown Speaker: It would depend on what the other children needed.

So if the other children needed more, and she continued to give $200 to Joey, that would violate AFDC?

Mr. Lauber: --With all probability, the money, the $200, would be going to pay things that are common expenses, like rent, utilities, gas and light.

Unknown Speaker: I know, but just take my hypothetical.

That's not the case.

She gives the 200 bucks to Joey.

Mr. Lauber: I can't say that would absolutely violate the AFDC law.

I don't think it's clear.

It depends--

Unknown Speaker: It could?

Mr. Lauber: --on the family situation.

Unknown Speaker: It isn't clear that she can do that without violating the AFDC law?

Mr. Lauber: It is clear that some use of that money could violate the AFDC reasons governing the duties of the custodial parent.

And I don't think you can say without knowing all the facts of the case.

Unknown Speaker: Mr. Lauber, tell us again, now if a child support payment has been ordered for one of the children in the family and not the others, in the amount of let's say $200 a month, not all of the $200 a month that must be assigned to the state would come back to the family, would it?

Mr. Lauber: No, all of it would come back to the family, plus $50 extra.

Unknown Speaker: Oh, that wasn't my understanding at all.

I thought the $50 came out of the child support payment, and was only paid if the child support payment were made.

Mr. Lauber: The $200 comes to the family in a different form.

It doesn't come qua child support; it comes qua AFDC benefits.

But they get the same $200 from a different source, as it were.

Plus, if the state actually collects the child support, they get $50 more.

So the bottom line is, they have $250, although it comes from a different place, rather than $200 if they just got the child support.

Unknown Speaker: I thought the $50 was never given back to the family unless the parent ordered to pay the support in fact paid the support?

Mr. Lauber: That's correct.

But of course, if the parent doesn't pay, and there had been no assignment, the family would have gotten nothing whatsoever.

If the parent doesn't pay, at least they get the $200 in AFDC benefit by virtue of the assignment.

Unknown Speaker: Well, they get AFDC benefits.

It may not be that $200.

Mr. Lauber: It would be $200 of it--

Unknown Speaker: And indeed, the amount of money received by, or attributed, in AFDC to the child for whom the support payment was made is less than the $200.

Mr. Lauber: --That's correct.

The child's pro rata share, as it were--

Unknown Speaker: I mean, if you look at the child's pro rata share, it's substantially less than the $200 for whom the support has been ordered?

Mr. Lauber: --That's right.

If you look at--

Unknown Speaker: And the whole basis of the father's support obligation in that example would be his obligation to that child that he fathered, is that not so?

Mr. Lauber: --Well, that raises a question under state law.

And this is the first reason we--

Unknown Speaker: Well, isn't that correct, that when state courts order child support, that they are ordering it on the basis of the father's obligation to the child he fathered?

Mr. Lauber: --That's correct.

The father's obligation to pay support runs to his child, and the amount he pays is determined both by the child's need, his ability to pay, his wealth--

Unknown Speaker: Isn't under state law, in this case, didn't the mother have an obligation to spend the child support only on the one child.

Mr. Lauber: --We think that's not correct.

That's what the other side contends.

Unknown Speaker: What if it were?

Mr. Lauber: If the mother had an obligation to pay it only--

Unknown Speaker: To use the child support that's given her for this child to spend it on that child; for the benefit of that child.

Mr. Lauber: --Well, for the benefit of the child is different from giving him the cash.

Unknown Speaker: All right--

Mr. Lauber: And here, the state law clearly permits the mother to assign child support in order to get AFDC for the entire family.

So it's clear that here state law does permit the mother, in the best interests of that child to support... to assign the support money to the state.

Unknown Speaker: --Not only permits it; it seems to require it--

Mr. Lauber: It does require it, in fact, that's right.

Unknown Speaker: --But Mr. Lauber, you could certainly have situations where a local state judge awards child support on the theory, for example, that a particular child needs orthodontic treatment, and orders child support in an amount to cover that.

Mr. Lauber: Well, that would--

Unknown Speaker: And the father felt obligated to pay it for that purpose.

Now if AFDC law requires that all of that be assigned to the state, and it isn't all then available for that child, why shouldn't the father be able to go back to state court and say, look what the federal government has done, judge?

Now, reduce my child support, because what I'm paying is going to the family, not Johnny, who needed the orthodontic treatment.

Mr. Lauber: --Well, that raises a question about how the support is paid.

The AFDC statute permits states to either include or exclude in-kind payments from income for purposes of AFDC eligibility.

Now if the father... in the support decree it said the father would pay the dentist bills himself, that would... rather than pay money to the mother, have her pay the bills, that would be treated, I think by North Carolina, as an in-kind payment that wouldn't count.

Unknown Speaker: Well, I thought we had examples in this record where North Carolina brought charges against fathers for making some in-kind contributions of diapers and so forth.

Mr. Lauber: Well, let me co-counsel respond to that.

I don't know all the North Carolina cases.

But I believe North Carolina has exercised the option not to count in-kind payments as income.

So the key thing under North Carolina law is whether the money comes in cash to the mother, to use at her discretion.

If it does not, if it comes in kind, or if it is paid to a third party by the parent, that would not count as income.

Unknown Speaker: Mr. Lauber, may I just follow up on Justice O'Connor's example of the orthodontic special need of one child for whom the support money is designated?

Supposing it's not done in kind, but is just the reason the judge fixed the support amount at that amount.

And then it goes through the AFDC and comes back to the mother.

Would it violate the AFDC rules for the mother to use the money for the purpose intended by the judge, in other words, giving a disproportionate share to the child for whom the support money was paid?

Mr. Lauber: I don't believe it would.

I think it would depend on how the... what the judge keyed the money to.

If he keyed it to--

Unknown Speaker: Well, it would depend on what the need of the other children were.

It would depend on what the need of the other children was.

Say there were three children.

They all had the same orthodontic problem.

And they'd like to spend money on all three, but the money is there because of the orthodontic problem of the child of the father providing the money.

Could the mother, without violating AFDC rules, prefer one of the three children who is the source of the money?

Mr. Lauber: --I think for something very quasi-optional or a cosmetic thing like that, she probably could prefer one child over another, as any mother could in deciding which kid is going to have braces.

Unknown Speaker: Even though the three have the same needs?

That's my assumption: the three have the same needs, but the need of one is what produced the money.

And that would not violate AFDC?

Mr. Lauber: I think a mother always has the option of deciding how you are going to allocate a fixed... a small fixed pot of money.

But beyond the AFDC--

Unknown Speaker: Your answer is, it would not violate AFDC law?

Mr. Lauber: --I don't believe it would for orthodontics.

But beyond--

Unknown Speaker: Mr. Lauber--

--Well, for anything.

Would it for anything?

Maybe we've picked a bad--

Mr. Lauber: --It would depend on the need.

If it were kind of a critical life-threatening need, it would be a different judgment.

Unknown Speaker: --Well, of all three, three critical life-threatening needs, but the source of the money is because of the support for the one.

Could the mother... would it... is there an AFDC rule that the mother must treat the needy children equally, despite the fact that one of them produces the money?

Mr. Lauber: I don't think there's any rule that she has to treat them absolutely equally.

There has... there's a range of reasonableness.

Unknown Speaker: Gathering from your answer to Justice Stevens and Justice Scalia earlier, is there a fairly elaborate AFDC code of how the mother shall distribute the money to these various children?

Mr. Lauber: No, there is not.

The whole point of it is, let the mother act like a mother, and any other mother, and decide how best to use this money for her children.

And beyond the AFDC, there is also Medicaid assistance available.

Unknown Speaker: Mr. Lauber, I'll give you an easier question that I think will make it even clearer.

It isn't they all three have the same orthodontic need.

Two of them need food, and she gets back the money from AFDC.

Could she use it for the orthodontic purpose for which it was originally contributed by the husband instead of buying food for the other two?

Mr. Lauber: I think she probably could not.

I think it would be real hard to justify that.

But in the case of orthodonture, I'd like to point out again that the Medicaid is available to all the children in the filing unit automatically.

That's one benefit a child receives by virtue of the assignment, is that he then qualifies for Medicaid immediately, and that could well cover some of these medical expenses.

Let me get back to the Constitution.

There has to be some kind of constitutional problem with the statute, or it cannot be declared invalid.

And as I point out, the first problem with the other side's theory is, under state law, a child does not really have an absolute property right to child support.

What he has is a right to have the money used in his best interest.

State law permits, and indeed, requires the assignment of support to get AFDC for the family.

And state law therefore contemplates that it can be in the child's best interest to have his support money assigned to get AFDC for the family.

Unknown Speaker: Well, there may be individual examples where it isn't in the child's best interest, though.

Mr. Lauber: It's possible--

Unknown Speaker: And there certainly are examples in this record where the burden of this arrangement has been so great that it has caused families to split up, and send children to live with someone else, so that they can have the benefit of that child's support.

That's a pretty heavy burden, isn't it?

Mr. Lauber: --But that would follow from any decision by Congress to include the... any kind... wouldn't have to supporting him... any kind of income of a child, in determining the need of the family.

If the child earned money working at MacDonald's, and he lived with the family, that money would be included as family income, and it might be better to him to live with his father, and have it not be included.

But I think it's inevitable if you have a family-based grant, as AFDC is, you've got to look at the income of the people who live in the family to see how needy the family is.

And it could be that that would give an incentive, an economic incentive, for people to live in another way.

But that's an inevitable consequence of this family grant provision Congress has set up.

The second reason we think their taking theory doesn't work is that the participation in the AFDC program is entirely voluntary.

If the mother does not want to assign child support, she need not take part in the AFDC program.

It is simply one of the many conditions for eligibility for getting public benefits.

Unknown Speaker: But they're not arguing that it's being taken from the mother.

It's being taken from the child.

It's not voluntary on the part of the child.

The mother says, I'm going to chuck in your child support in order to get more money for the family as a whole.

Mr. Lauber: The Congress has made the family unit the applicant.

Unknown Speaker: Well, that's very nice, but it doesn't say anything about whether it's a taking from the child or not.

Mr. Lauber: But if the child doesn't want to have his support assigned, he can tell his mother and she cannot assign the support.

I mean, the children depend on their... monetarily depend on their mother to make decisions in their best interest.

Unknown Speaker: So you say... you suggest that if the child had a guardian, secured a guardian ad litem, talked to his or her uncle and said, mother is giving away my child support, let's sue her, do you think they could an injunction against her signing that?

They say, this is mine.

My father is giving it to my mother for me, and she is breaching her trust.

Mr. Lauber: We think under state law they couldn't get that injunction, because it's not the child's absolute property.

The mother has to use it in his best interest, and she can convince--

Unknown Speaker: So this case really then turns on the state law?

Mr. Lauber: --I think ultimately it does.

Unknown Speaker: And if... if we thought that... that this payment belonged to the child, then there must be a taking.

Mr. Lauber: No, that doesn't follow.

You have to have... first--

Unknown Speaker: All right.

What must there be, then?

Mr. Lauber: --Well, first there's got to be property to be taken.

Unknown Speaker: Yes?

Mr. Lauber: Okay, then beyond that, you have to consider that going into the program is entirely voluntary to begin with.

Unknown Speaker: Well, the child say, I'm involuntary.

I don't want any part of the program.

I'm going... the law makes my mother put me in, but I don't want my mother to do it.

That's part of the case.

Mr. Lauber: But if the child is wrong, and the mother in his best interest--

Unknown Speaker: What do you mean wrong?

How can... if under the state law it's his money, and he doesn't want any part of the program--

Mr. Lauber: --Well, if you're right about that, then she could be enjoined from going into the program.

Unknown Speaker: --All right.

And how about a taking?

Mr. Lauber: Well, there would be no taking if she weren't in the program.

Unknown Speaker: All right, so you say--

Mr. Lauber: Well, the point is, if he really has property--

Unknown Speaker: --You say that the remedy is the injunction?

Mr. Lauber: --Right.

If he really has property and she... but state law permits her to assign it, so it's hard to see how--

Unknown Speaker: The guardian ad litem didn't come along until six months afterwards.

So he gets an injunction but he wants back pay; I mean he wants to get the support back.

And it's a taking, there's been a taking.

Mr. Lauber: --Well, I don't--

Unknown Speaker: I mean, that seems to me what the case is all about.

Mr. Lauber: --Well, if there is... if the child does have property such as you describe--

Unknown Speaker: There isn't any case at all unless the child has some property under the state law.

Mr. Lauber: --Well, that's the first problem with their argument.

But there are other problems beyond that as we showed in our brief.

Argument of Catherine C. McLamb

Chief Justice Rehnquist: Thank you, Mr. Lauber.

We will hear now from you, Ms. McLamb.

Mr. McLamb: Mr. Chief Justice, and may it please the Court:

The State of North Carolina administers its AFDC program in conformity with Federal law as explained by the Solicitor General and as stated in the briefs for the Appellant.

I would like to make two points to this Court.

First, the District Court below found an unconstitutional taking based upon its erroneous interpretarion of North Carolina law regarding child support.

Secondly, the court committed a fundamental error in ordering retroactive benefits in this case.

Unknown Speaker: Do we have to disagree with the District Court's... or with the court's construction of North Carolina for you to prevail?

Mr. McLamb: No.

I don't believe there is a taking in this case because this is a voluntary decision; this is an eligibility requirement.

You don't really get to the taking of property.

It's a voluntary decision on the mother's part.

Unknown Speaker: What's the error... what's the error in North Carolina law that--

Mr. McLamb: In... Judge McMillan found that because these children lived together, and they must apply for AFDC as a family unit, and therefore, by law, assignment... there must be an assignment of child support rights.

He found that certain property interests were taken.

But the property interest--

Unknown Speaker: --Of the child?

Mr. McLamb: --Of the child.

The property interest he explained in his opinion was that child support is an exclusive property right in North Carolina.

The other right that I could glean from the opinion is that he says that the child has an absolute exclusive right to enforce the obligation of the custodial parent; and in this case, I'm just going to use mother, that's a little easier, to enforce the--

Unknown Speaker: Will we have to change that interpretation that the judge made of North Carolina law?

Mr. McLamb: --What I would like to show you is, that is an erroneous interpretation.

It is not correct.

Unknown Speaker: We normally of course accept the interpretation of the lower Federal court on matters of state law, don't we?

Mr. McLamb: You should, unless it is... I would not think that this Court would accept the interpretation of state law if it is clearly shown to be incorrect, and that is what I would like to show you today.

Unknown Speaker: And your opposition will show us just to the contrary.

Mr. McLamb: They will attempt to do the exact opposite.

The second property right that Judge McMillan found was taken was, as he described it, the exclusive right of the child to enforce the obligation of the parent to spend child support money only on that child.

What our... this is simply not the law of North Carolina.

What our statutes read is that child support is ordered, the primary obligation is placed upon the mother and the father.

Child support is ordered to meet the reasonable needs of the child.

Then child support is paid to the custodial parent for the benefit of the child.

In North Carolina, the child does have the right to enforce the obligation of the mother to use child support for his or her benefit.

North Carolina has, by statute, passed... passed a law that deems the assignment of child support rights, the obligation to receive support, upon the acceptance of public assistance.

This is a statute that has been enacted in North Carolina.

The rationale of Judge McMillan below--

Unknown Speaker: Maybe that statute was a taking?

Mr. McLamb: --It was not so considered by the legislature of North Carolina, nor the courts of North Carolina, which has considered... which has passed upon this statute.

And I would say that this is an area of family law in North Carolina.

The rationale of--

Unknown Speaker: How did the court below deal with that particular statute?

Mr. McLamb: --The court below ignored it.

It was not mentioned in his opinion.

It was raised--

Unknown Speaker: But you had raised that with the court?

Mr. McLamb: --Pardon?

Unknown Speaker: You had argued and presented to the court--

Mr. McLamb: This was raised to the court below.

The briefs are in the record, the docket that has been sent to you, on page 32 of the appellees' memorandum for motion for further relief.

This was filed May 30th, 1985.

This very statute, the provision... this is contained in Chapter 110 of the North Carolina general statutes.

This was brought to the court's attention.

In order to reach his opinion of this exclusive property right, you have to ignore that statute because--

Unknown Speaker: --You think that whatever... any property right the child might have had was modified by that statute, or it just couldn't have come about in the face of that statute?

Mr. McLamb: --You have to read the North Carolina child support law in conjunction with the statutes.

These statutes have to be read together.

Judge McMillan's rationale--

Unknown Speaker: Which one prevails?

I mean how do you read them together?

Mr. McLamb: --There is no statute in North Carolina that says, child support is an exclusive property right of the child.

North Carolina law places primary emphasis on the obligation of a parent to support his child.

That is the right that the child has, is to enforce that obligation.

Reading the statutes again, the child has the right--

Unknown Speaker: Well, would the mother be breaking the child support law if she received child support and just didn't spend it on the child?

Mr. McLamb: --And didn't... that would be that the mother was not spending the money for the benefit of the child.

This is, to me, another fundamental error in Judge McMillan's opinion.

Unknown Speaker: Well, what if the mother took the money and spent it on another child, all of it on another child, that she thought needed it more?

Mr. McLamb: She is breaking... in that case, she is breaking her fiduciary to that child, if this... if she is leaving her child--

Unknown Speaker: But she... you think if she was receiving child support and she wasn't on AFDC at all, she just received $250 a month, and she just split it three ways among her three children.

Mr. McLamb: --And this was her only income?

Unknown Speaker: No, this was child support income.

Mr. McLamb: In your hypothetical, is that the only income that is coming into that family, is $250 child support for one child?

In that case, the mother... it would be within the mother's discretion... these are not easy decisions, but it would be within the mother's discretion to determine what is the best interest of that child.

She receives child support under our statutes.

The statute does not read, child support shall be received to be spent to benefit that child.

Child support is received for the custodial parent to be used for the minor child's benefit.

Unknown Speaker: And so she can use it for the benefit of all of her children?

Mr. McLamb: It would be a decision that would be within the discretion of the mother.

Unknown Speaker: Yes or no?

The answer is yes, I suppose.

Mr. McLamb: The answer is yes if she, within her discretion, determines that that would best benefit her child.

That, to me, is a fundamental problem with Judge McMillan's analysis in this case, because he is undermining well established law in North Carolina that the custodial parent has great flexibility in determining what is in the best interest.

A parent may not profit at the expense of her child.

If this is determined to be the case, an action may be brought on the child's behalf in order to compel the mother to act in his best interest.

Unknown Speaker: Well, what if the mother believes that it isn't at all in the best interests of the child for whom the support is paid that her other children are going to starve to death if she doesn't use that money?

Mr. McLamb: Then that is her choice.

Participation in the AFDC program is a voluntary decision.

This is within the discretion of the mother, once again.

If she decides that it is not in that child's best interest that it... for whatever reason, she decides that Johnny should have every bit of that money, no matter what, she has a voluntary decision that she can make that she will not participate--

Unknown Speaker: And starve to death?

Mr. McLamb: --This is a decision that she can make.

It is a hard decision.

I am not saying that these decisions are easy decisions.

But these are decisions that are within the discretion of the parent and authorized under North Carolina law.

Unknown Speaker: Thank You Ms. McLamb.

Ms. Wettach, we'll hear from you now.

Mr. McLamb: You will be able to make your entire argument.

The Court won't rise to lunch until this case is submitted.

Argument of Jane R. Wettach

Mr. Wettach: Mr. Chief Justice, and may it please the court:

The actual, palpable, financial loss to the plaintiff children in this case is quite apparent from the evidence.

The two daughters of Joyce Miles, for example, lost $95 every month of their child support.

Similar amounts of money were lost every month by other children in this case.

I think it would be helpful if we just walked through an example of how this practice actually works in North Carolina at this time.

For example, Joyce Miles has five children.

Two of them, the oldest two, are of a different father.

The three younger ones, they have separate fathers.

The two oldest girls are the beneficiaries of a $189 a month child support payment.

It was ordered by the state court judge, who made a decision about the reasonable needs of those children and ordered this father to pay.

Prior to 1984, when the rule was imposed, the mother did not receive AFDC assistance for those children; they were separated from the grant.

She had three younger who were not as fortunate to have a father who chose to support them, and she received $244 in AFDC for those children.

In October of 1984 she received a letter from the State Department of Human Resources, which said, in order to continue receiving AFDC for those children for whom you are getting it, you must add the other children to the grant, and as a part of that, you must make their support available to the state.

The state will take that money, keep the money; it will return $50 because there is now a $50 disregard; and we'll give you AFDC benefits.

Unknown Speaker: And you think prior to that time she was pretty careful to spend... how much was it?

Mr. Wettach: She had $189 to support the two older girls.

Unknown Speaker: And she used to spend that $189 for those two, and how much did she get from AFDC for the other three?

Mr. Wettach: $244 for the other three.

Unknown Speaker: So they got $80 apiece, and the other ones got how much apiece?

Mr. Wettach: $95 apiece.

Unknown Speaker: Do you think she was really careful to make sure that the family's... the child support money she was getting from the husband went to those two children?

Is it a real world we're talking about when we're talking about a mother who has, let's say, five children, one of whom has support money, spending that money... that allotment, on that child?

Is that a real world out there?

I mean, we have these Cinderellas in reverse, one child of five, who has a lot of money, and the other four don't?

Mr. Wettach: Well, in most of these cases, the amounts of money were not significantly different.

In that case, as we said, the difference between $80 and $95 is not a lot, and the evidence in the case that she was spending more money on the children who were the recipients of that child support.

She mentioned that... those were two teenage girls; she tended to spend more money on them.

And--

Unknown Speaker: Because they were teenagers; not because that's where the support money was... the reality that Congress was addressing in this statute is a reality in which a mother spends whatever money she has for all of the children she's taking care of; isn't that right?

Mr. Wettach: --We don't think there's any evidence to show that mothers routinely are violating their court award.

She has a court order.

It tells her that she's got to spend the money in a certain way.

And there's no evidence that nationwide these mothers--

Unknown Speaker: Do you know of any case in which a parent has been sued for spending the money on the wrong children?

I mean, I've never even heard of such a suit.

Mr. Wettach: --I'm not aware of any suit that a mother was actually sued--

Unknown Speaker: And you think that's because everybody is really keeping close track of how much money they're spending on each of their children?

Mr. Wettach: --Actually, I would like to take that back.

There was the case from which the District Court found much of its law of North Carolina, where a father sued the mother for misusing the child support he was spending, and the court said... actually dismissed the case because the father was the wrong party, and said, the child support money belongs to the children.

The father could only bring the suit as next friend.

And implicitly authorized the father to be able to sue for that reason, if there were a substantial misuse of the money by the mother, then I think that would be cognizable under state law, under trust theory.

Unknown Speaker: What about the North Carolina law on the right of the child?

That case that you were just talking about turns around the right of the child, I take it.

Mr. Wettach: Yes.

Unknown Speaker: Is that--

Mr. Wettach: We feel that--

Unknown Speaker: --What about that law?

Mr. Wettach: --We feel that--

Unknown Speaker: Judge McMillan thought there was a property right in the child?

Mr. Wettach: --We feel there is no reason that this Court should depart from the lower court's analysis of North Carolina law.

Unknown Speaker: Well, I know, but what about the... is there some other evidence besides the judge here as to what--

Mr. Wettach: Well, there's certainly... there's all the case law.

Unknown Speaker: --what North Carolina law is?

Mr. Wettach: There's the case law that Judge McMillan of course relied on.

There's also the statutes.

For the benefit of the child is not a particularly difficult concept.

Unknown Speaker: But how do you ignore the state statute permitting the mother to make the assignment?

Mr. Wettach: If... the assignment--

Unknown Speaker: Doesn't that sort of undercut the notion that the child has his or her own right to the money?

Mr. Wettach: --No, I don't think it does.

I think when... when participation in the program vis-a-vis the child who is receiving child support is voluntary, the mother can certainly make the choice that the child support that she is getting is inadequate to meet those needs, and therefore, she would like to apply for AFDC, and the condition of eligibility is that she make this assignment and the state take over the responsibility of collecting that support.

But when this involuntariness becomes a part of it, that changes how that assignment provision works.

Unknown Speaker: Yes, but the state statute permits her to do it, but it doesn't say that when she is... if she would choose, because it's not in the best interest of the child not to do it; but she can't make... that's the problem with the Federal law.

It deprives her of being able to voluntarily choose to apply for AFDC for that child, or not apply for AFDC for that child, because the assignment provision would end up not being in the best interest.

The assignment provision doesn't change anything about that... when money is paid, it is paid for the best interests of a particular child.

Your opponent I understood to argue differently, that the North Carolina assignment law supersedes, to the extent it's inconsistent with some of the very strict you've been reciting.

Mr. Wettach: I think that's just incorrect.

When... if the mother... that whole provision of state law was written when it was a voluntary matter to apply for AFDC.

Unknown Speaker: xxx voluntary, isn't it?

She is not forced to apply for AFDC?

Mr. Wettach: She is forced to apply for AFDC for particular children--

Unknown Speaker: By what law is she forced to apply for AFDC?

Mr. Wettach: --As a condition of getting AFDC for some children, she is forced to apply for all children.

Unknown Speaker: Oh, it's a condition.

Mr. Wettach: It's a... right.

Right.

She's not... of course, nobody is rounding her up and telling her to apply.

Unknown Speaker: xxx deal with the assignment statute?

Mr. Wettach: Judge McMillan talked at length about the assignment provision and how it is the procedural mechanism by which the state--

Unknown Speaker: Yes, but did he consider it in the process of determining whether the child has a property right?

Mr. Wettach: --He was certainly--

Unknown Speaker: He didn't consider the state law that says if you assign the child support to get AFDC that it's deemed to be for the benefit of the child, did he?

Mr. Wettach: --Well, of course, the assignment law in state law doesn't say, and then it is deemed to be in the benefit of the child.

The assignment provision simply says, if you apply for AFDC, you are deemed to have made an assignment of your child support to the state.

That's all it said.

It doesn't say anything about, for the benefit of the children, or transforming the income from the benefit of one to--

Unknown Speaker: But if that's what the state law says, doesn't that do something to the child's property right?

Mr. Wettach: --I don't see how it would in any sense.

When you assign your money you are allowing the state to take it in, but it gives it back when you are on the grant and you make the decision to... you use the assignment provision almost as a trade.

You will trade in your child support of $50, because $50 isn't adequate to meet a child's needs, so that you can get $100 in AFDC back.

But that... when the figures are different, when they say, assign in $100 and get $50 back, that's a very different sort of situation, and a very different sort of choice.

Unknown Speaker: But isn't it true that you always get at least the amount you assign back, and sometimes plus $50?

You example of $189 of child support and $244 they had before, a total of $400 and something; what did they get after she made the assignment?

Mr. Wettach: They got $280 in AFDC and $50 of the support, so there was a net loss of $95.

Unknown Speaker: So they only got... I see.

Mr. Wettach: So that's where the loss.

And of course, the AFDC hasn't gone done; it is the child support that they--

Unknown Speaker: They always get back more than the child support that they're trading in; but they don't get back more than the would have gotten had they had the child support plus their former AFDC without that child counted in?

Mr. Wettach: --If you look at the whole family as a total family unit, the mathematics work out that way.

Of course, our position is that the constitutional rights belong to the children who own the money for whom it is paid.

Unknown Speaker: I just want to be sure about one thing.

Assume there's child support for just a second, and assume that the $189 was income from working at MacDonald's, and that was it, and we didn't have a child support in this case at all.

Would it still be unconstitutional... program still be unconstitutional to require them to count all the money in one pool.

Mr. Wettach: It depends on whose $189 it is.

Unknown Speaker: It's the teenage daughters.

Two teenage daughters, both work, and they earned $189, and they'd like to spend it on themselves.

But under the new rule, they must count that as part of the family pool, and the result of it is to reduce the total amount they get.

Is that unconstitutional?

Mr. Wettach: I think you would have to look at what the state law says about that type of income.

My recollection is that earned income under common law is to be owned by the parents and at their discretion.

Unknown Speaker: You think that depends as a matter of... on state law whether that program is bad or not?

Mr. Wettach: I think it depends as a matter of state law what the nature of the $189 is.

Now, I think that is a different case than when the mother receives it in a fiduciary and trust capacity.

Unknown Speaker: My bottom line question was, would you challenge the constitutionality of this basic arrangement if the child support were not a part of it, if it just applied to income that the children earned?

Mr. Wettach: Well, that wouldn't be the case.

That would not be the case that is in front of the Court--

Unknown Speaker: Even though it might have precisely the same economic consequences?

Mr. Wettach: --Again, I think you would have to look at the nature of the income that you're talking about.

Unknown Speaker: Well, I don't know anything about state law.

I'm just looking at the economics and the burden on these people who have trouble making ends meet.

It would economically be precisely the same situation.

Why wouldn't it be precisely the same legal situation as a matter of constitutional law?

Mr. Wettach: If in fact what was happening was that money was being taken from a child who had no obligation to support other children, then I think it would be precisely the same legal situation.

If the money is restricted in that way.

Unknown Speaker: Isn't the logic of your position not only that the 1984 amendment is no good, but that the whole... even if a mother voluntarily wants to include a child who is entitled to child support in the AFDC program, because, let's say, the father is in fact not paying it, and she'd rather have the government try to pursue the father, assign it to the government and get back AFDC for it, even that would be invalid, wouldn't it?

Mr. Wettach: Not if--

Unknown Speaker: She's giving away the--

Mr. Wettach: --she's not losing anything for the child.

Unknown Speaker: --Oh, but she's not... when she gets it back, she's not going to just spend it on that child, she's going to have to abide by the AFDC regulations, and spend it on all the children.

But that money should go just to that one child, shouldn't it?

And if the government collects it, it keeps it.

Mr. Wettach: It keeps it all but the first $50 of it, that's correct.

Unknown Speaker: So that would be bad too, wouldn't it?

And so would including in the AFDC the earnings of... well, the earnings of a child that he earns all on his own, and he has no obligation to support any other children.

Mr. Wettach: That's a difficult example, because those are not counted for AFDC purposes anyway because--

Unknown Speaker: They're not counted.

Well, just take the child support where the mother wants to assign it to the government; you couldn't do that?

Mr. Wettach: --If it were in... if it were in the best interests of that child, because it was only coming in, say, once every six months, then spread out, she's probably not violating any duty she has.

Unknown Speaker: Oh, I see; one-fifth of something is better than a hundred percent of nothing.

I guess that would be right, if she wasn't collecting a thing.

Mr. Wettach, let me ask you a pragmatic question.

Do you know of any case in North Carolina where all of this has driven the more fortunate child out of the home to live elsewhere?

Mr. Wettach: Yes, Justice Blackmun, there is an example of that exact situation among the five named parties that are the moving parties in this case, where a child has received--

Unknown Speaker: Well, I thought there were, but I haven't heard it mentioned all morning.

And I--

Mr. Wettach: --In the Medland family, there was a child, and she was entitled to $200... her father was paying $200 worth of child support for her, and her mother and father decided, between the two of them, that she should move out of the house, because otherwise she would have to be included in the grant, and her standard of living would go down, and they did not wish that to occur.

Unknown Speaker: --Or if a guardian ad litem came into the picture, he might well take that position?

Mr. Wettach: Indeed.

And we think that's a very serious consequence of the regulation, that that--

Unknown Speaker: Where did the child move to?

Did she move with her father, or to somewhere else?

Mr. Wettach: --In that particular case, she moved with her father.

And of course, it could have been in any number of situations.

Unknown Speaker: Ms. Wettach, I suppose in your view we would have to make a case-by-case determination of how child support payments were used in each household to know whether the Federal provision could be applied or not?

Mr. Wettach: It seems that it would make more sense for the Court and the Congress to determine... to make a presumption that people were obeying their court orders, in the absence of some evidence to the contrary.

I mean, the presumption makes sense that people obey the law, as opposed to, that people don't obey the law.

And if... now, of course, under AFDC law, there is an inquiry in every single case of every single applicant about what money they have in the household, and where it is.

They send in a monthly report every month, and they have to describe these things.

Of course, if there were money being spent, then there may well be accounting for that money, and that's the way it would be... really under current law, there would be that situation, where if she were actually making income available, it would be counted.

Unknown Speaker: Ms. Wettach, wouldn't you say that one of the... one of the benefits that a child could receive, and one of the purposes for which a mother may use... or a father may use the child's support money is to enable the child to live with brothers and sisters?

I mean, let's assume... let's assume a mother is getting support money for one child, and she has a couple of other children, she says, I want this child to be brought up with his brothers and sisters.

In order to do that, rather than sending the other children away to the poor house or somewhere, I'm going to have to spend some of this support money for them.

Wouldn't you think that that would be considered spending that money for the benefit of the child?

Mr. Wettach: There may be individual circumstances where that might be the case.

As a general rule, though--

Unknown Speaker: Wouldn't that be every circumstance in which the mother decides to trade in the support... the support money for AFDC benefits, which will be slightly more than the support money and enable her to keep the family together.

Can't that be considered to be in the benefit of the child who was entitled to the support money, even if he doesn't get dollar for dollar what he used to?

He's getting his brothers and sisters?

Mr. Wettach: --There may well be some benefits there, and there may well be circumstances.

But to say as a matter of law, which we have here, that the mother must make that choice is the difficulty with it.

Unknown Speaker: That's a different question, though.

That's not the takings question.

That's the question of whether there is excessive coercion on a fundamental right or something of that sort.

But as to whether there has been a taking or not, can't you say that indeed the mother has traded in for value the child's support money?

She has gotten back for it the company of the brothers and sisters?

Mr. Wettach: Again, that may be--

Unknown Speaker: The family unit as a whole.

Mr. Wettach: --that would have to be made on an individual basis as to what is in the best interest.

And perhaps somebody could prove to a court... a state court in a... in a hearing on it that it was or it wasn't in the best interest of that particular child.

But on its face, to take money from one child and spend it on the other child takes away from the state... state court order that says, this $200 is to be used for a particular child; it takes away from the father's expectation that he will support his children, and not be expected to offset expenditures made by the AFDC program for other children to whom he is unrelated.

And that disruption is a significant problem.

Unknown Speaker: I don't know.

I just expect that if I had before me a suit involving an allegation that support money wasn't being spent entirely for the child for whom it was destined by the mother, and that she was using some of it to buy bare necessities for the other children just to keep the family together, I doubt that I'd find that mother to be in violation of her trust obligation.

Mr. Wettach: But that may be because there... she's being put under this unconstitutional condition that she has to do that.

And maybe given an unconstitutional condition on this program, once decisions about what's in the best interest, may have to be different.

But should the government be putting her in the position of having to make that choice?

Unknown Speaker: xxx though.

That's not the takings point.

Mr. Wettach: Well, it certainly--

Unknown Speaker: I think I'm right about that.

That is your separate point.

Mr. Wettach: --That is a separate... that's right.

And it's another theory of liability for the government.

Unknown Speaker: Ms. Wettach, have you found examples of state court judges who have reduced child support orders because of the impact of this program on the use of the money for the child for whom support was originally ordered?

Mr. Wettach: Yes, Justice O'Connor, there was one which was cited in our brief that we were aware of because it was local, and the state... it was a situation where the father was providing a certain amount of support, and he went in and said, look, this is what's happening and what happened in that case is, the state judge ordered that the family be severed for AFDC purpose, and he ordered the county to continue to pay AFDC for the other children, and allowed the father to make in-kind payments to off... so that they wouldn't be counted.

And there was another situation that was presented by this case where the father was paying $200 a month voluntarily without a court order.

When the benefits were assigned, and he went... and the county brought suit against him, they reduced the amount to $87 a month.

So that in fact, they... when you worked out the figures, he didn't lose that much by being on AFDC, but of course, the father was willing and able to pay much more for his support.

But it wouldn't have mattered.

His child would have stayed at the same standard of living of an AFDC family, regardless of how much the father had paid; and so the support was reduced.

The state has not talked too much about the remedy that was imposed.

But I'd like to say just a few words about that as it is presented by this case.

The state has mentioned in its brief that the remedy was incorrect in this case for a number of reasons.

We think it's quite clear from the procedural posture of this case that there was a violation of an injunction.

The injunction was entered in 1971, and it was clearly... it was to remedy the exact same thing that was going on in 1971 as part of the state program.

At that point it did not have the cloak of Federal authorization as it claims to have now.

But it was in fact--

Unknown Speaker: There's not doubt it has that, it has Federal authorization now, is there?

Mr. Wettach: --It has Federal statutory authorization under their theory of the statute.

Unknown Speaker: I thought your case was purely a constitutional case here, since the passage of the more recent AFDC amendment.

Do you still claim that it's not authorized by statute?

Mr. Wettach: We have in our brief suggested that the statute can be read in a different way which would not cause the constitutional problems that are caused by the application as it's been given by Secretary Bowen.

Unknown Speaker: But the District Court didn't agree with you on that point?

Mr. Wettach: That's correct.

That's correct.

But in this case, there has... there was the same activity by the Welfare Department in 1971.

That activity was enjoined.

And in 1984, it was flouted by the state.

The injunction was simply ignored, and the state made a decision to proceed as it had been before 1971, and before it was enjoined.

The state has argued that the remedy that the lower court ordered, which was to pay back all the child support money that it had taken, and pay back any AFDC benefits which were withheld, or for families that were terminated as a result of this, would violate the Eleventh Amendment.

We think there is no question that it would not violate the Eleventh Amendment for a number of reasons.

First of all, of course, it is--

Unknown Speaker: xxx.

Mr. Wettach: --Yes.

Unknown Speaker: Has this been preserved below, the Eleventh Amendment?

Mr. Wettach: Yes.

Yes, it was argued below, and it was... the theory was rejected by the lower court, and we would ask this Court to affirm on that issue as well.

What had been argued, and is argued here in their briefs, is that the Eleventh Amendment would bar it because this was effectively retroactive benefits.

The error in that position is the language of Edelman v. Jordan, which says that the date for determining prospective and retrospective relief is the date of a court-ordered obligation to act otherwise.

This court order was entered in 1971.

And from then they had to act accordingly.

That was a prospective order, and that was not barred in any way by the Eleventh Amendment.

The state's position appears to be that as soon as it violated the injunction, anything that it didn't pay was transformed into retroactive payments, and therefore, were barred by the Eleventh Amendment.

And we think that that position doesn't make sense, and is not consistent with this court's interpretation of the Eleventh Amendment.

Unknown Speaker: Ms. Wettach, before you leave, what... what would you suggest the Federal Government have done instead?

Assuming that its finding was correct, the legislative finding, that families use all of the money that they get on all of its... on all of their members for the best interests of the whole family group, including money from support payments.

And they... the Federal Government says, we have to... we're... we have to pay out less.

We have to reduce the amount.

It makes sense to us to reduce the amount to those families that have $800 coming in.

And we know as a matter of fact, never mind that theoretically they're supposed to be spent on only two of the children; we know that that family has $800 which is being used for the whole family.

This other family over here only has $200 that's being used for the whole family.

Now, I want the cut to hit the family with the $800 and not the family from the $200.

How could the Federal Government have done it lawfully?

Mr. Wettach: We think it would be quite reasonable for the Federal Government, and constitutional, to have looked at that family, looked at the AFDC recipients, and determined how much their need was actually reduced by the fact that someone else in the household may have been sharing the burden of the joint expenses.

This is particularly set out in our brief when we talk about an economy of scale reduction that could be made in an AFDC payment.

For example, if there... well, there's a chart that talks about, what's the individual's standard of need in a family.

And we all know that that individual goes down as the household gets larger, because you need... if you have an apartment that--

Unknown Speaker: But you wouldn't allow the support payments to be counted in at all?

Mr. Wettach: --It's not that they're counted.

They're not counted at all.

All they're doing is, you recognize that the need of the AFDC recipients is less because they don't have to share the whole... they don't have to pay for... for example, they don't have to pay for all of the rent, or all of the utilities, the shared expenses, because there's someone else with income who is sharing.

So maybe there's a quarter of it that is paid by someone who is not in the unit, so they only have to pay for three-quarters of it.

So their need is a little bit less.

Unknown Speaker: But that's not the reality that Congress has found.

I don't care what your chart is, if you assume in theory that the mother is spending the money for the house which other people use and whatnot.

The reality that Congress perceived was that all the money that comes into the family unit is distributed among all the family members on the basis of how they need it, period.

And Congress wants to take that factor into account.

You just told me that there's no way that Congrss can do that?

Mr. Wettach: No, I think I told you that there is a way that they can do it.

And they can do it in either of the two ways we suggested.

Actually, they can do it by an economy of scale reduction of the AFDC recipients, or they can do it by an individual analysis of what is going on in a family, and if money is actually being transferred, they might count it.

Let's take an example where there are three people in a household.

The child support child gets $100, the other two get $200 in AFDC.

The mother uses all the money the same.

Their need is the same.

To say... then there's no transfer, and that's when Congress can't take it into account.

But to say that these two need a little less because there's a person outside the unit who is also contributing is reasonable, and Congress could cut in that matter.

And we think that's constitutional, and we would have no complaints with that.

If there are no further questions.

Chief Justice Rehnquist: Thank you, Ms. Wettach.

The case is submitted.

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Featured:

Lyng v. Castillo - Oral Argument

Fri, 09 Jan 2009 14:48:37 +0000

Case:

Lyng v. Castillo

Media File:

85-250_19860429-argument.mp3

Related Transcript:

1985_85_250_argument.xml

Transcript:

ORAL ARGUMENT OF JEFFREY P. MINEAR, ESQ., ON BEHALF OF THE APPELLANT

Chief Justice Burger: We will hear arguments next in Lyng against Castillo.

Mr. Minear, I think you may proceed whenever you are ready.

Mr. Minear: Thank you, Mr. Chief Justice, and may it please the Court, the government defends the constitutionality of Section 3(i) of the Food Stamp Act, which provides that parents and children or siblings who live together shall be treated as a single household for food stamp entitlement purposes.

This case is here on the government's direct appeal from the United States District Court for the Southern District of Texas.

The District Court ruled that Section 3(i) violates equal protection principles by discriminating against families and by impermissibly burdening family decisions to live together.

After briefly describing the food stamp program and the facts of this case, I will explain why the District Court's decision should be reversed.

The Food Stamp Act establishes a social welfare program funded by the Department of Agriculture and administered by state agencies.

It supplements the food purchasing power of low income households.

Under this program state agencies distribute food stamps to needy households on the basis of standard allotments that take into account household size.

The food stamp program has grown rapidly since its creation in 1964.

It is now the nation's second most costly needs-based public assistance program.

In 1983, program outlays were over $11 billion, providing assistance to over 21 million program participants.

The huge cost and dramatic growth of the food stamp program have produced public concern over reports of widespread waste and fraud.

In 1981 and again in 1982 Congress amended the Food Stamp Act to improve program efficiency and to curtail certain types of frequently encountered recipient abuse.

Congress gave particular attention to the Food Stamp Act's definition of the term "household".

Prior to 1981, persons who lived together but purchased and prepared their meals separately could claim separate household status, and thereby receive higher per capita benefits.

As a result families frequently mischaracterized their members as separate households to obtain additional food stamps.

Congress in response amended the household definition to provide that parents and children or siblings who live together shall be treated as one household for food stamp entitlement purposes regardless of their actual meal purchase and preparation habits.

Congress also provided a special exception, permitting elderly and disabled parents and siblings to qualify as a separate household if they in fact did separately prepare their meals.

These amendments to the household definition were specifically designed to assure the nation's limited welfare resources were efficiently distributed to those in greatest need.

Appellee Natividad Castillo and his family challenged the constitutionality of the revised household definition.

They claimed that the new definition violated equal protection principles by denying certain family members the opportunity to claim separate household status.

The District Court consolidated their action with three other suits raising similar equal protection claims.

The District Court ultimately held that the household definition is unconstitutional, and enjoined its application against the appellees.

The court acknowledged that Section 3(i)'s treatment of family members had a rational basis, therefore it meets the generally applicable equal protection requirements.

The court concluded, however, that family-based classifications are subject to heightened scrutiny.

It then held without further analysis that Section 3(i) violated the appellees' Fifth Amendment rights.

Unidentified Justice: Is there anything in the record, Mr. Minear, which shows the difference in cost between the two programs?

Mr. Minear: It is not clear from the record, but it is clear from the regulations themselves, and the regulations provide, for instance, that an eight-member household would receive 75 percent of the benefits that would be given to eight separate households, and that two four-member households receive 110 percent of the benefits of the eight-member household.

We submit that the District Court erred in concluding that Section 3(i) violates equal protection principles.

Instead, Section 3(i)'s household definition represents a rational legislative intent to improve the efficiency of the food stamp program by adopting standards that as a general matter direct the nation's limited welfare resources to those with the greatest need.

We note first, as the District Court agreed, that Section 3(i)'s household definition meets the rational basis test.

Congress enacted the revised household definition in response to serious public concern over the size, effectiveness, and integrity of the food stamp program.

The 1981 and 1982 Congressional hearings revealed that from 11 to 20 percent of food stamp benefits were issued in error, amounting to a program loss of from $1 to $2 billion per year.

Those hearings also revealed that the practice of family members falsely claiming separate household status was one of the most serious forms of abuse.

Finally, the hearings revealed that in light of the large number of families that participate in the food stamp program, there is no effective and efficient means for verifying family household status.

Congress therefore elected to redefine the term "household" as a workable solution to this serious and costly problem.

The refined definition represents the rational Congressional judgment based on thorough investigation and deliberation that food stamp abuses can be reduced and benefits preserved for those most in need by treating family members who live together as a single household.

Furthermore, this definition is carefully tailored to provide special relief for elderly and disabled parents and siblings, those family members that Congress determined were most in need of special treatment.

In short, Section 3(i)'s revised "household" definition represents the type of reasonable classification that is routinely employed in social welfare programs.

The revised definition plainly withstands rational basis scrutiny, the type of scrutiny this Court applies to these types of classifications.

Indeed, the District Court as well as all other courts that considered this issue agree that the "household" definition meets the rational basis test.

The District Court went astray in applying heightened scrutiny to the Food Stamp Act's "household" definition because plainly family members, the class affected by the "household definition", do not represent a suspect or quasi-suspect class.

Furthermore, the "household" definition does not result in any constitutionally significant limitation on individual choice in family matters.

Heightened scrutiny has been applied to laws affecting family-based decision only when the government's action directly and substantially interferes with important family choices.

Here, the household definition does not prevent any group of persons, related or unrelated, from living together, and if they live together, from dining apart.

It simply allocates food stamp benefits to families in light of the cooperative arrangements that families generally employ.

The revised definition may provide financial incentive for closely related family members who live together to purchase and prepare their meals together as well, but it neither compels nor prohibits any family-based decision.

Family members retain the full range of choice in structuring their living and meal preparation habits.

Unidentified Justice: Well, Mr. Minear, were these amendments' principal purpose to prevent fraud?

Mr. Minear: They were designed both to prevent fraud and also to improve program efficiency.

Unidentified Justice: As far as they were designed to prevent fraud, is it rational to assume that families are more likely to defraud the government than unrelated individuals?

Mr. Minear: I think it is clear that families are better situation in fact to falsely claim separate household status, and it also seems that family members are more likely to purchase and prepare their meals together.

In terms of actual intent, are family members more likely to create fraud?

I don't think you can really draw that inference, but I do think it is true that they are best situation in fact to conduct fraudulent activities.

It is also true that family members are the largest component of the food stamp program.

They represent almost three-quarters of food stamp participants.

Therefore by eliminating this potential for abuse from family members, we have significantly reduced the potential possibility for fraud in the program.

Unidentified Justice: That carries with it then the suggestion that it would just be impossible to prove that there is fraud or collusion.

Mr. Minear: I think that that's true, Your Honor.

The problem here--

Unidentified Justice: That certainly wouldn't be true in all the cases I don't suppose.

Mr. Minear: --But it would be difficult, and it would be rather intrusive as well.

If the test depends on whether or not family members are in fact dining together, there is no readily available method to in fact prove whether or not they are dining together or dining separately.

Unidentified Justice: How about unrelated people?

Mr. Minear: It is also true that it is difficult in those cases, but--

Unidentified Justice: But you certainly take all of those cases on.

Mr. Minear: --Yes, but it is also a more limited number of cases.

It also seems more likely--

Unidentified Justice: But a growing number.

Mr. Minear: --Yes, it might be a growing number as well, and it might be, too, that Congress will eventually determine that in fact no one should be able to claim separate household status when they live together.

Congress has considered that possibility.

That has been suggested by the various federal and state food stamp administrators.

But Congress at present is content to retain the special exception for elderly and disabled persons and also for unrelated persons.

The "household" definition's impact on family living arrangements is no different from that of a broad variety of other legislative provisions that consider family status in allocating public burdens and benefits.

In sum, the revised definition of the term "household" represents a permissible classification designed to promote the efficiency and preserve the integrity of the food stamp program.

Appellees defend the District Court's decision on two additional grounds not relied upon by the District Court.

Appellees first contend that the "household" definition creates an unconstitutional irrebuttable presumption.

That contention is mistaken.

The "household" definition creates a legitimate legislative classification like that upheld in Weinberger versus Salfi.

As in Salfi, that provides for distribution of benefits based on objective criteria that Congress has determined relevant to its legitimate welfare policy roles.

Appellees also contend that food stamp recipients have a special right to increased benefits because of the importance of a health diet.

This contention, not raised below, is also mistaken.

Appellees do not have an inherent, fundamental right to federal food purchasing assistance.

Congress may impose limitations on food stamp benefits as on other forms of social welfare benefits, to promote efficiency and to prevent abuse.

At bottom, appellees urge this Court to declare the Food Stamp Act "household" definition unconstitutional on public policy grounds.

However, as this Court has repeatedly stated, the judgement of Congress on questions of social welfare policy is entitled to special deference.

Courts do not sit to pass on policy or the wisdom of the course that Congress has chosen.

In this case, Congress has determined that the refined definition of "household" is necessary to reduce serious fraud in the food stamp program, and to preserve the nation's limited benefits for those with greatest need.

We submit that the judgment of Congress on this quintessential legislative question should be respected, and we therefore urge this Court to reverse the decision below.

If there are no further questions, I would like to reserve the remainder of my time.

Chief Justice Burger: Very well.

Ms. Martinez.

ORAL ARGUMENT OF MARIA NORMA MARTINEZ, ESQ., ON BEHALF OF THE APPELLEES

Mr. Martinez: Chief Justice Burger, and may it please the Court, 7 USC 2012 (i), the family... unconstitutional--

Unidentified Justice: Would you raise your voice a little?

We are having difficulty hearing you.

Perhaps lower the lectern a little bit.

Mr. Martinez: --Seven USC 2012(i), the family rule, unconstitutionally interferes with the appellees' family choices of... family choices of living together.

Not only does it interfere with the right to live together.

The harm caused the appellees outweighs the state's interests.

The District Court found that the family rule, the food stamp family rule put families at a distinct disadvantage.

Unrelated individuals could obtain separate household status simply by purchasing and preparing food separately.

Families, no matter what, could never go in and show that it was impossible for them to prepare food together and show that they could not possibly function as a single economic unit.

The only exception was for elderly and for disabled parents and siblings.

The appellees are eight families, eight guest families and eight host families that live together.

There are more than 30 children involved with these families.

All of the appellees have children, young children of their own to support.

All but one of them had maintained a separate household before economic necessity forced them to move in with their relatives.

There was no question that they were eligible for food stamps as a separate household but for the family... Natividad Castillo and his wife and eight children were migrant workers.

They went up north to Michigan to work in seasonal labor.

When they returned home, they had no income, they had no assets but one old car.

They had to move in with Mrs. Castillo's daughter from a previous marriage.

Theresa Barrera was receiving food stamps.

She had two children of her own, and was receiving welfare.

The food stamp office denied the Castillo family's application for food stamps.

Not only did they deny the application for food stamps, they refused to supplement Mrs. Barrera's food stamp allotment for that first month, so the Castillo family would have been left without any food stamps that first month.

After that they would have received a reduced amount based on both households' income, which in this case was Theresa Barrera's welfare income, even though Ms. Barrera's income was not available to the Castillos.

A similar thing happened to the Cody family, also migrant workers, also went up to Michigan, and went home and had no income.

They were unemployed.

They had two young children.

They moved in with Robert Cody's mother.

She had five children to support off her Veterans Administration check, and she was receiving food stamps.

Robert and Jerry Cody's food stamp application was denied, and the food stamp office refused to supplement Robert's mother's allotment so that Robert and Jerry and two children, the two young children could have food stamps for the first month.

Three of the appellees' families are headed by women who are little more lucky.

They received aid to families with dependent children after they separated from their husbands and moved in with relatives.

Two of them moved in with their parents.

They had lived separately.

They had maintained a separate home all that time, but due to the family rule they could not receive food stamps separately, even though they purchased and prepared separately, even though their host family's income was not available to them.

One of the appellees' families, Cecilia Villafranca, moved in with her brother.

She had been receiving food stamps, but due to the family rule, she would not have received anything because of her brother's income because both families were deemed to be one household.

Two of the families were headed by men.

Elias Ruiz, his wife, and two children moved in with Elias's mother and her son.

They didn't need any help other than a place to live until Mr. Ruiz became unemployed and his wife became too ill to work and was hospitalized.

They then applied for food stamps and could not get them because of the family rules.

Gregorio Alvarado and his wife and three young children moved in with Gregorio's sister and brother-in-law and their children.

Gregorio was unemployed.

His wife was also too ill to work.

They couldn't get food stamps as a separate household.

And finally, Sylvia Nieto, the only one who had not maintained a separate household.

Sylvia Nieto was an adult woman with a child to support.

She was disabled, received supplemental security income benefits.

The benefits she used to support herself and her son.

She had been receiving food stamps as a separate household until the family rule came into effect.

The family rule, whereas it might be reasonable to believe that families are more likely to purchase and prepare food together, it is not reasonable to believe that these families would commit fraud, would like so they could obtain separate household status.

That is why, that is one of the reasons why the family rule is irrational.

When people like the appellees, people who have no place to go, have no money, have children to support, show up at their relatives' home, the relative, who is slightly better off because they have a place to live, who may not be that much better off, because they may also be on welfare, as Theresa Barrera was, has a hard choice to make.

Do they allow their relatives in and deprive their own spouse and children?

Even someone who is better off will have to think about that.

And if they do allow them in and then find out that they cannot support, either partially or completely, their relatives, they will have to decide whether to deprive their own family so that the relatives can stay with them.

That would be a hard choice for anyone, but a lot harder for somebody who is barely existing, for somebody who is on welfare.

And the guest families, the guest family is the one that of course will suffer the most.

They will have no control over their situation.

They will have children to support.

If their host, if their relatives allow them in, the guest family will have to... mercy.

If the host family refuses to do more, the guest will only have a place to stay.

If the host family refuses to apply for food stamps, the guest family cannot obtain food stamps on their own.

And it isn't that unlikely that someone would refuse to apply for food stamps.

Disclosures about employment, wages, all other resources such as life insurance and death insurance, burial insurance, everything is required to be reported for food stamp eligibility, and this information is routinely verified by the food stamp office, employees, neighbors, anyone who knows the circumstances of the applicants can be used to verify the information.

The food stamp office also uses announced home visits to determine if the information is correct.

If the family is slightly better off and has a car worth $6,001, the aggregation of resources would make them ineligible for food stamps.

Even if this family owed $5,900 on that car, the fair market value of the car is what is used.

A first family vehicle will receive a $4,500 exemption.

It would still make them ineligible for food stamps.

The joining of resources such as two cars would cause these people to be ineligible for food stamps also.

A car in places like rural Texas is a necessity.

It is not a luxury.

It could not be considered a luxury as it would be in a city.

Farm workers need their cars so they can get to and from the fields.

Places like Harlingen, Texas, where Robert Cody lives, does not have mass public transportation.

You need a car so you can work.

The government justifies the family rule as necessary to prevent fraud and abuse.

It is the same justification that was used for the unrelated persons provision in United States Department of Agriculture versus Moreno.

In that case, the government said that Congress reasonably believed that unrelated persons were more likely to commit fraud so that they could obtain household status so they could obtain food stamps, so that they could participate in the food stamp program, and that it was administratively inefficient for the food stamp agency to determine when the unrelated people were committing fraud.

They argued that college students live together and were voluntarily poor.

They didn't report the income they received from the outside, and it was extremely difficult, maybe impossible for that determination of fraud to be made.

The Court found in Moreno that the unrelated persons provision served not to exclude those that were intent, those that were most likely to abuse the food stamp program, but only those who were so destitute that they could not alter their living conditions so they could retain the eligibility for food stamps.

The same thing happens here.

The family rule causes people that have no place to go to become ineligible for food stamps or receive the reduced amount, an amount that is not based on their resources.

And alternatives, alternative provisions can be made if it were to be conceded that there is a problem with fraud by families, the burden could be placed on the family to show why they could not function as a single economic unit or why they could not purchase and prepare food together.

Problems like health problems, contagious diseases, where they could not purchase and prepare food together, are things that can be determined from the initial application and initial food stamp interview.

Differential work schedules.

Presently from the food stamp application and from the initial interview.

Questions about where a person works, their employer, the hours worked, and verification of that is made.

From that they could find out about differential work schedules that make it impossible for people to purchase and prepare food together.

Inadequate kitchen facilities where, because of the inadequacies of a poor family kitchen they cannot purchase and prepare together.

That determination can be made from questions.

And it isn't unlikely that a poor family will have an inadequate kitchen, will have a stove that is two burners instead of what is considered the usual stove with four burners with an oven.

That they will not have refrigeration.

That they will not have other than a small table, if they have a table at all, with two chairs, if they have two chairs at all.

These people cannot purchase and prepare, they certainly cannot prepare food together.

Unidentified Justice: Ms. Martinez, could I ask you one question?

Do you think the statute would be constitutional if it established a presumption that the related families did purchase and prepare food together, but that unrelated families did not, and then there would be a burden on the particular family to show that on a regular basis they acted contrary to the presumption?

Mr. Martinez: Yes, I believe so.

At least that the family be given an opportunity that they do not purchase and prepare food together.

Unidentified Justice: How does the agency follow up on determining... say they have an initial interview, and they describe their living arrangements, and they take it at face value.

How is this normally checked later on to see if... for example, an unrelated family, that they really are separate?

Mr. Martinez: It is not in the record, but for unrelated families, they generally take the statement of the unrelated person.

Unidentified Justice: And that is the end of the inquiry?

Mr. Martinez: And that is generally the end of it.

Unidentified Justice: And of course in the related family situation there just wouldn't be any followup at all under the rules now because they are just presumed to always share their food together.

Mr. Martinez: That is right.

The harm done to the children.

The majority of food stamp recipients are families with children.

Children in this case would suffer from hunger.

In Plyler versus Doe, this Court looked at the hard cost to children after saying, after repeating that education is not a fundamental right, and that alien status is not a suspect classification.

The Court looked at the harm done to the children.

The denial of an education caused them such a hardship that the state's interest in conserving money, the state's interest in keeping the legal immigrants out did not outweigh the harm done to the children.

Yes, the Court said that education is not a mere welfare benefit.

But food stamps... and in reality for a lot of these people if you don't get food stamps you don't get food.

You don't eat.

Food stamps are crucial to life.

Food stamps are a necessity.

Other welfare benefits you may be able to do without for a while.

Without food, you won't be able to do without.

The children in this case, if deprived, or when deprived of the necessary food during the years of development of their minds and bodies, can end up in the worst situation, can be harmed a lot more than the children in Plyler were.

The children in Plyler perhaps could receive remedial education.

Children in this case, once they are harmed lack of food, malnutrition, stunting of their growth, mental and physical, can become permanently disabled.

They may never be able... they may be educationally disabled.

They will become a burden on society, economically dependent for the rest of their life.

This regulation, this limitation is not only substantial, because deprivation of food is substantial, although families are not prohibited from living together, the effect of this rule will cause them not to live together.

Once the host family finds they cannot eat if the guest comes in, the effect is, they cannot live together.

For all of these reasons, the appellees ask that the Court affirm the District Court's decision.

If there are no questions, I have nothing else to say.

Chief Justice Burger: Do you have anything further, Mr. Minear?

ORAL ARGUMENT OF JEFFREY P. MINEAR, ESQ., ON BEHALF OF THE APPELLANT -- REBUTTAL

Mr. Minear: Just a few minutes, Mr. Chief Justice, and may it please the Court.

The regrettable problem here is, the government's resources for welfare are limited, and in order to provide maximum use of those limited resources, certain broad categories and general characteristics must be used in order to distribute these social welfare benefits, and it simply is not effective to expend those limited resources on case by case determinations when in fact those resources can be directed to the persons themselves who need them.

Unidentified Justice: What about the unrelated families?

You would be saving a lot of money if you didn't do those case by case.

Mr. Minear: That might be right, Your Honor.

However, those are a much smaller portion of the total number of food stamp recipients in the program.

Therefore what Congress in fact is doing is directing its limited resources to those areas where there is the greatest possible need for special exceptions, and that was in fact Congress's thinking, in fact, preserving this separate household status for unrelated persons and the elderly and the disabled.

Unidentified Justice: Mr. Minear, what about aid based on indigent children, aid to dependent children?

Mr. Minear: Yes, sir.

Unidentified Justice: Are food stamps also being given to families who receive that sort of aid?

Mr. Minear: Yes, Your Honor.

Food stamps are available under both programs.

Unidentified Justice: What about the program with respect to disabled persons?

Mr. Minear: That is correct also.

Supplemental social security--

Unidentified Justice: If you add all three together and they gave them to a family, you would come to some limit?

I suppose you do.

Mr. Minear: --I am not certain about the regulations here, but I believe it might be... some of those sources of income might be treated as income for the food stamp program itself.

Unidentified Justice: But the greater the number of children and the greater the number of disabled people, of course, the greater the aid.

Is that correct?

Mr. Minear: Yes, that's right, Your Honor.

In fact, this was the subject of a 1981 hearing.

One of the things that the GAC pointed out was that in fact in larger family groups families often receive aid from a number of... food aid from a number of different sources, including the school lunch program and also the breakfast program that is provided in a number of schools, and as a result of this, in fact, some food stamp families did receive more aid than the average family spent on food purchases.

Now, I think this is probably the exceptional case, but nevertheless this was one of the concerns that went into Congress's determination in amending the "household" definition.

Unidentified Justice: May I just ask another question just to get it straight in my mind?

If you have, say, a married couple that live together, and they qualify on an income basis, they presumably... in fact, they definitely are held to be one household, and yet they get the same amount of--

Mr. Minear: Yes.

Unidentified Justice: --whereas if two unrelated persons lived together and they came in and filed the appropriate applications and made a representation that one worked a night shift and the other a day shift, so they purchased their food and prepared it separately, they would then get a somewhat larger benefit.

Mr. Minear: That is generally true.

To be slightly more accurate about this, since 1978, the regulations provided that husbands and wives in fact would be treated as a single household.

That was a regulatory provision that has been in force for almost ten years.

In addition, the definition of a spouse provided that persons who are unrelated who are living together, who hold themselves out as a spouse even though they are not married, in fact would be treated as a single household.

Unidentified Justice: Say they come in and say they don't do that, they just happen to live in the same facility, and they work different hours and so forth.

So they then would qualify as unrelated persons.

Say they were the same sex.

Mr. Minear: They would be eligible--

Unidentified Justice: Make it simple.

Say they are the same sex.

Mr. Minear: --Sure.

They would be eligible to in fact apply for food stamps on that basis.

Unidentified Justice: And then after they apply and they are granted initial, what kind of followup is there to find out, well, maybe their hours changed and they now have decided they could eat at the same time?

Mr. Minear: The regulations provide for three types of documentation in these matters, first documentary evidence which might in fact indicate that two persons worked different shifts.

They can provide their work schedules to the food stamp office.

Unidentified Justice: You say they qualify initially.

I am asking what happens, say, 30 days later.

Is there any periodic followup to be sure they--

Mr. Minear: Yes.

Yes, Your Honor, there is.

There is a periodic rechecking of the qualifications to make sure that these people continue to apply.

I am not sure if it is done on a monthly or a quarterly basis, but it is--

Unidentified Justice: --And so that only has to be done for the unrelated persons.

Mr. Minear: --Yes, Your Honor.

Unidentified Justice: I think I missed your first point.

What is the interest of the government in deciding whether people should live together or not?

Mr. Minear: Well, the government has no interest in whether they should live together or not.

It is simply a question of how food stamps should be allocated once they make that decision.

Unidentified Justice: Doesn't that depend on whether they live together or not?

Mr. Minear: Well, yes, Your Honor.

Unidentified Justice: And what interest does the federal government have in whether people live together or not?

Mr. Minear: Well, Your Honor, this is--

Unidentified Justice: Does the federal government have the right to say that you must get rid of your children?

Mr. Minear: --No, Your Honor, it does not.

This is similar to the Califano v. Jobst case, where in fact this is an indirect burden on the family living arrangements.

In Califano v. Jobst--

Unidentified Justice: Well, what are they going to do next?

Mr. Martinez: Well, Your Honor, I simply can't answer that question.

If there are no further questions.

Chief Justice Burger: Thank you, counsel.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Bowen v. Owens - Oral Argument

Fri, 09 Jan 2009 14:48:34 +0000

Case:

Bowen v. Owens

Media File:

84-1905_19860226-argument.mp3

Related Transcript:

1985_84_1905_argument.xml

Transcript:

ORAL ARGUMENT OF MS. CAROLYN B. KUHL, ESQ. ON BEHALF OF THE APPELLANT

Chief Justice Burger: We will hear arguments next in Bowen, the Secretary of Health and Human Services, against Owens.

Ms. Kuhl, you may proceed whenever you are ready.

Mr. Kuhl: Thank you, Mr. Chief Justice, and may it please the Court:

This case presents two issues for decision, first, the constitutionality of certain provisions of the Social Security Act in effect between 1977 and 1983.

The provisions at issue permit payment of survivors' benefits to widows and widowers to continue even after they remarry after age 60, but payment of survivors' benefits to surviving divorced spouses ceases upon their marriage even if that event occurs after age 60.

This differing treatment of widowed spouses and divorced spouses is challenged under the equal protection component of the due process clause of the Fifth Amendment.

The second issue in the case concerns the propriety of the classification entered by the district court, and this issue requires the Court to consider yet again the requirements of Section 405-G of Title 42, jurisdictional provision for review of Social Security benefit claims.

Before getting into the merits of the argument, I would like to clarify just how the provisions in question work, because the terminology used is not always as illuminating as it could be.

A wage earner is entitled--

Unidentified Justice: That's a marvelous understatement.

Mr. Kuhl: --Thank you, Justice White.

I thought that was almost the hardest part of this case.

A wage earner is entitled to have his or her family receive certain types of benefits based on the wage earner's earnings attempt.

The type of benefits involved here are called survivors benefits, and that means that they are benefits paid to certain members of the wage earner's family because the wage earner has died.

Now, the wage earner's widow or the wage earner's widower receives benefits after the wage earner's death, and they... these benefits are called surviving widowed spouse benefits, and they come rather automatically.

That is, the spouse is presumed to be dependent for purposes of the Act.

If the wage earner, however, was divorced before he or she dies, the wage earner's former spouse receives benefits after the wage earner's death if the marriage between the wage earner and the former spouse lasted at least ten years, and these types of benefits are called surviving divorced spouse benefits.

Although the rule used to be that survivors' benefits terminated upon remarriage of the spouse, and this was called the remarriage rule, in 1977 Congress eliminated this remarriage rule for widowed spouses over the age of 60, but all other survivors' benefits still continued to terminate on remarriage, and this was true not only for divorced spouses' benefits but also for benefits to dependent parents of the wage earner and dependent children of the wage earner.

So, in 1977 Congress made a distinction for purposes of widows and widowers but it still kept in another category not only the divorced spouses but also the dependent children and dependent parents.

There are three basic reasons why the step Congress took in 1977 has a rational basis.

First, Congress has always treated married spouses different from divorced spouses, both because the entire structure of the Act is based on the family unit, and because Congress has assumed that divorced spouses depend less on each other for economic support than do couples who stay married.

It was rational for Congress to recognize these differences between married and divorced spouses on the event of remarriage because--

Unidentified Justice: Ms. Kuhl, you say they have always treated them differently.

Is that correct?

Mr. Kuhl: --I believe it is, Justice Blackmun, until 1983 when... which is after the--

Unidentified Justice: What about prior to 1977?

Mr. Kuhl: --Prior to 1977, yes, they were treated differently because initially, of course, widows and widowers... well, widows at least were getting benefits and divorced spouses were not getting benefits at all, and then Congress permitted divorced spouses to get benefits, but that divorced spouses had to be married for 20 years and to meet certain criteria of dependency before they could get benefits.

So, in other words they were treated differently because Congress had a dependency test all along with regard to divorced spouses but it did not have a dependency test with regard to widows and widowers.

To briefly, then, state the second reason why... the second rational basis for Congress's action here, when Congress permitted some divorced spouses to receive benefits, Congress created a situation where there was a potential for two spouses to be receiving... one, a current spouse and one a former spouse, to be receiving benefits at the same time based on the one wage earner's account, and it was--

Unidentified Justice: May I go back a little?

I just want to be sure.

You were sort of interrupted.

What was your first reason again, that they were always--

Mr. Kuhl: --They had always been treated differently, both because there were different assumptions about dependency of divorced spouses, and because there was a... the whole system is based on the family unit.

Unidentified Justice: --Our relevant period is after 1977?

Mr. Kuhl: That's right.

Unidentified Justice: And during the period after 1977, and confining our attention to survivors when the wage earner... after the wage earner's death--

Mr. Kuhl: Yes.

Unidentified Justice: --Congress then didn't treat them differently except for the one thing that's in issue here, isn't that right?

Mr. Kuhl: Well, they still treated them differently because there still was this ten year dependency test, if you will.

Unidentified Justice: They had to have been married for ten years?

Mr. Kuhl: For ten years.

Unidentified Justice: How was that... that's why there are two different classes.

One is a divorce and the other is... the wife had to be married also.

Mr. Kuhl: She had to be married, but didn't have to be married for ten years.

The ten year test is really a dependency test and it's similar to dependency tests that Congress uses for dependent parents.

Unidentified Justice: Is it a dependency test... if the divorced wife was a millionaire, wouldn't she still get the... had been married for ten years, would she not be eligible?

Mr. Kuhl: Yes, but the fact that Congress may have been over-inclusive... I mean, this Court has recognized in many earlier cases that in a Social Security system Congress is forced to deal with sort of broad, generalized criteria.

It can't have individualized tests.

Unidentified Justice: Isn't that a test of genuineness rather than dependency, as Justice Stevens points out?

Mr. Kuhl: I'm not certain I understand the question.

Unidentified Justice: Well, so that there wasn't a marriage just before death in order to qualify?

Mr. Kuhl: No, it wasn't, because of the--

Unidentified Justice: How can you say that?

Mr. Kuhl: --Well, first of all, this Court has, I believe in Califano versus Jobst, there's sort of a chronology that the Court follows through in its opinion, but the way this ten-year test evolved, the way it evolved was, as I mentioned previously, there were no benefits for surviving... for divorced spouses, and then Congress had a two-pronged test of dependency.

The reason was because they were concerned about women in particular who had been married to a wage earner for a long period of time with perhaps having no job themselves and then were divorced, so the criteria that Congress set up were, number one, marriage for 20 years and number two, some... a more specific dependency test that had to do with whether the divorced spouse was receiving alimony while the wage earner was still alive.

Then, I believe in 1972, and again this is recounted in the Jobst opinion, Congress became a little bit concerned about the more specific criteria of dependency because Congress realized that there were states that did not permit alimony under state law.

And so, in response to that problem, Congress said, all right, we'll be even more broadly inclusive and we won't have the specific criteria of dependency but we'll continue in effect the 20-year marriage requirement, subsequently reduced to a ten-year marriage requirement.

If the test... I think if the test was, was it really a sham marriage, it would be a much shorter period of time.

Unidentified Justice: As between the divorced spouse who satisfied the ten-year period, and the widow, no difference?

Mr. Kuhl: No, not as of 1977, with regard to survivors' benefits.

But as we know, and I believe it's footnote 2 of our reply brief, divorced spouses were still being treated differently for other purposes; that is, with regard to what are called spouses' benefits which are benefits that a divorced spouse might receive when the wage earner is still alive, the remarriage rule continued, even after 1977.

So that, in essence, Congress in 1977 was treating divorced spouses more alike and widowed spouses more alike.

Before discussing these points in a little bit more detail and going over two more of the rational bases on which Congress acted, I'd like to say a word about the legal standard to be applied in judging the constitutionality of Congress's actions here.

It seems clear that the standard should be the rational basis test, and district court in this case in fact applied the rational basis test.

In the context of the Social Security Act, this Court has measured classifications based on divorce, in Matthews versus De Castro, and based on remarriage in Califano versus Jobst, according to a rational basis test, and there's no reason to do otherwise here.

The test, then, is simply whether Congress's action can be said to manifest a patently arbitrary classification utterly lacking in rational justification, and I think the district court's error in applying this test is fairly easy to pinpoint, and it goes to the rationale that we have been discussing previously, rationale of differences in dependency between divorced spouses and widowed spouses.

The district court seemed to believe that when Congress gave survivors' benefits to divorced spouses, it committed itself to the position that there was no basis whatsoever for distinguishing between divorced spouses and widowed spouses.

But what the district court failed to recognize is what I've stated previously, that Congress has always treated, even in 1977, has treated divorced and widowed spouses differently, and the fact that Congress chose to treat them the same for purposes of initial eligibility for survivors' benefits does not mean that Congress was requiring them to treat them the same for all purposes.

It was rational for Congress to give effect to he differences between the two groups at the time of remarriage.

I've discussed previously in answer to questions the chronology of Congress's first giving no benefits to divorced spouses, thereby recognizing the reality of the legal severance of relationship at the time of divorce, and then giving benefits to divorced spouses but using two criteria of dependency, 20-year duration marriage requirement plus some more specific criteria, and Congress then being concerned that the more specific criteria were not working well and retaining only the 20-year marriage requirement and then reducing the 20-year marriage requirement to a ten-year marriage requirement but still retaining that as a criteria of dependency.

But all of this suggests that the differences between divorced spouses and widowed spouses have been at least as apparent to Congress as their similarities.

Thus, when Congress considered changing the rule that ended survivors' benefits on remarriage, and when Congress chose as it did to proceed a step at a time with regard to the elimination of this remarriage rule, Congress acted quite reasonably in eliminating the remarriage rule, first for the one category of beneficiaries for whom there had never been a dependency test, and that was widows and widowers.

Congress at the same time then continued, in effect, the remarriage rule for all other categories of beneficiaries, those categories being categories where there were dependency tests attached which was, as I've stated, not only the surviving divorced spouses but also dependent parents for whom there was a dependency test, and dependent children for whom there is a dependency test.

Put another way, Congress could rationally assume that its concerns that had been manifested in prior legislation about divorced spouses who had not worked during the years when they were married, could be set aside on the event of the remarriage of the divorced spouse.

I would like to briefly mention two other things that can be said about the rationality of the distinction that Congress chose here in 1977.

First of all, as I have alluded to very briefly earlier, when a divorced spouse receives survivors' benefits there is a possibility that another spouse may also be receiving benefits based on the one wage earner's account.

Benefits to divorced spouses are not counted against the ceiling amount that may be paid based on one single wage earner's account.

Thus, Congress's decision to pay benefits to divorced spouses creates the potential for... and I don't mean this pejoratively but just descriptively... as sort of a double dipping based on the one wage earner's account, and this is a special kind of drain on the trust fund.

Unidentified Justice: Is that possible in the other situation where the widow's benefit... could the deceased wage earner owe a divorced... maybe was married ten or 15 years and divorced and then had a second wife, could he have double obligation?

I mean, could the account have that double--

Mr. Kuhl: Yes.

If I understand your question correctly, that would be--

Unidentified Justice: --So that either the widow or the divorced wife survivor could be a double dipper?

Mr. Kuhl: --That's correct, although I think as your description of the problem indicates, it really is best to find by the situation of looking where there's been a divorce.

I think that is a--

Unidentified Justice: There's got to be at least one divorce?

Mr. Kuhl: --Right.

Unidentified Justice: Both categories?

Mr. Kuhl: That, I think, is a better rational classification.

Of course we don't have to... I think the Court does not have to look to whether it's better or not, but I think it's a rational classification to look to the situation where there has been a divorce because I think that even creates the probability, not the certainty but the probability, of this, what I've called double dipping.

And it seems clear that it would be rational for Congress to pick the event of the divorced spouse's remarriage and this special rain on the account because at that point Congress... again, a new family unit was formed and a new basis for economic dependency accrued with the new marriage.

Finally, despite the appellee's claim to the contrary, Congress clearly was motivated, certainly could have been motivated by fiscal concerns when it acted in 1977.

Unidentified Justice: I'm interested in your saying it was, and then changing to the possible "could have been".

What in the legislative history supports your argument?

Mr. Kuhl: Well, first of all I do not believe that the rational basis test requires us to discern Congress's actual motivation, so long as Congress could have rationally acted with this purpose, and in this case, first of all, I think as to dependency, Congress's purpose can be discerned from the progress of its concerns over the years with regard to widowed spouses.

With regard to its fiscal concerns, what we have is kind of... is the progress of the legislation itself.

The House would have eliminated the remarriage rule entirely and the legislative history indicates that that would have cost $1.3 billion per year.

The Senate bill had no provision in it with regard to the marriage rule.

Unidentified Justice: Well, I take it you're saying, although you are hesitant to express it, that there is nothing in so many words in the legislative history.

You have to speculate on the fiscal considerations and what Congress might have done.

The legislative history is very sparse.

Mr. Kuhl: Well, yes, it is.

There is a House Committee report.

The Senate did not consider the issue, and the Conference Committee acted really without an explanation in the conference report, but this Court has never held that an actual motivation must be discerned in order for the Court to find that Congress acted on a rational basis.

Unidentified Justice: How did the bill which passed the Senate differ from the bill which passed the House?

Mr. Kuhl: I couldn't tell you in all the particulars, but the bill which passed the Senate had no provision in whatsoever addressing the remarriage rule.

Unidentified Justice: And did the Senate consider it after the House?

Mr. Kuhl: I'm not certain.

I'm not certain.

In sum, to just draw a conclusion with regard to this fiscal concern, I think that the appellees have agreed that the... by choosing the categories that it did in 1977, Congress saved about $17 million per year and this Court should be unwilling to assume that $17 million per year is simply too little for Congress rationally to be concerned about.

The second issue in this case relates to the class definition.

The district court lacked jurisdiction over two groups of individuals that it purported to include in the class.

First, it lacked jurisdiction over persons who did not exhaust their administrative remedies, and second, it lacked jurisdiction over persons whose claims had already become final when the case was filed.

In this respect the district court erroneously included some persons who had received a final decision of the Secretary, more than 60 days before the case was filed.

First, perhaps I should say something about whether the Court needs to reach the class certification issue if it decides the constitutional issue in favor of the government.

The Court in this case does have jurisdiction, indisputably, to decide the constitutional issue because the individual plaintiffs in this case did meet the 405-G requirements.

In similar situations, that is where there is jurisdiction with regard to some plaintiffs in the case but there is a question with regard to the overall class certification, the Court has in some cases ruled in favor of the Government and failed to decide the class certification issues, and it did that in Califano versus Boles.

But in other cases such as Matthews versus Diaz, the Court has in the very same circumstances gone on to decide the class certification issue.

And if I may suggest, the Court may wish to give guidance to the lower courts on this issue, related issues with respect to class certification arise in the next case to the argued, the City of New York case, and the Court of Appeals in this situation here would be required to decide the class issues because it would need to define the collateral estoppel effect of the judgment that it was entering.

As I have stated, both class issues relate to 405-G which requires, first of all, that there be a final decision of the Secretary on a claim for benefits, and secondly that the civil action be commenced within 60 days of notice of the Secretary's final decision to the claimant.

This Court has held that these requirements must be satisfied with regard to each individual class member, and the Court has so stated in Califano versus Yamasaki.

In that case the Court emphasized that class relief is consistent with the need for case by case adjudication, that is evident in the structure of 405-G, only if every member of the class can meet individually the 405-G requirements.

The first requirement that was not met here by some of the class members was the requirement of a final decision of the Secretary.

The district court did not limit the class to those who had exhausted the entire administrative process.

This Court in Weinberger versus Salfi has held that the exhaustion requirement is statutorily required and that it cannot be dispensed with by a judicial conclusion of finality.

The Secretary himself can make exceptions to the exhaustion requirement and the Secretary did so in this case with regard to the individual claimants, but did so because the Secretary had reached the stage of the administrative process where the facts had been found, the issues of law had been determined insofar as the Secretary could determine them, and the only thing that was left to be decided was the constitutional issue which the Secretary could not rule on.

Now, the class members, however, had not been through this process and I think that the importance of exhaustion can be seen in this case by looking at what happened after the district court decided the constitutional issue.

At that point, the agency was required to go through the files of the individual claimant and decide who would qualify for the relief that the Court granted.

This is just the kind of fact finding that is supposed to go on before the case goes to court.

Finally, the remaining issue concerns the requirement that a claimant file suit within 60 days after the final decision of the Secretary.

I think that Califano versus Sanders holding, that motions to reopen are unreviewable--

Unidentified Justice: May I go back to your first point about the fact finding issue.

Is it not correct that if you prevail on the merits you'd never have to engage in all that fact finding, whereas under your view you'd have to do it regardless of who wins?

Under your view, as I understand it, they can't have one decision binding on everyone, you've got to go through all this extra fact finding regardless of what the general ruling would be on the basic proposition?

Mr. Kuhl: --Well, it would not be one decision.

Unidentified Justice: If you win, everybody in the class loses, and if you have all these hearings you'll find out if there a another reason why they might--

Mr. Kuhl: Well, I'm not sure that everybody in the class loses.

Insofar as the Court had no jurisdiction... insofar as the class was improperly certified and the Court had no jurisdiction... I'm not sure what the collateral estoppel effect would be as to those persons who were improperly included in the class.

Unidentified Justice: --It's not collateral estoppel.

They just lose on the merits, if you're right on the basic--

Mr. Kuhl: What I'm saying is that some of those people who were nominally included might be able to come back and make the same claim later if collateral estoppel did not bind them, and I think maybe more importantly, the Secretary may well have to go through the fact finding in each of these claims anyway.

The persons may have other bases on which they would claim benefits and the Secretary may have other matters to adjudicate with regard to these individuals.

If I may, I would like to reserve the remainder of my time.

Chief Justice Burger: Mr. Deford.

ORAL ARGUMENT OF GILL DEFORD ON BEHALF OF APPELLEES

Mr. Deford: Thank you, Mr. Chief Justice, and may it please the Court:

I'd like to correct one statement that my opponent made.

There is no double dipping at issue in this case.

No individual with a surviving divorced spouse or a surviving spouse who is not divorced will receive any extra benefits as a result of this case.

Unidentified Justice: If the rule were otherwise, would it be possible in some cases?

Mr. Deford: If the rule that's at issue in this case were otherwise?

Unidentified Justice: Right.

Mr. Deford: As far as I know, there' no way that a Social Security recipient could receive more than he or she is entitled to under the most liberal possible benefit scheme that he or she is entitled to.

If she is entitled to more than one benefit, she will receive only the highest of those two benefits, not a combination of the two benefits.

Unidentified Justice: I don't think her point was that any beneficiary might receive double benefits.

Rather, a given wage earner's account might have to pay two different people benefits?

Mr. Deford: That's correct, Justice Stevens.

I thought there might be some confusion in the Court about that because of the use of the word, "double dipping".

The constitutional issue of this case is the validity of the Social Security Act scheme which treats two classifications of survivor beneficiaries differently for a reason unrelated to the overall purposes of the scheme.

In so doing, the discrimination contradicts two crucial ingredients on which Congress has premised its distribution of survivors' benefits.

Those two factors, dependency on the deceased wage earner and the encouragement of survivors to remarry, are applicable in all relevant respects to all widowed spouses, both non-divorced and divorced.

The challenged legislation, however, treats them differently upon remarriage, despite the fact that both classifications of widows, again non-divorced and divorced, are entitled to survivors' benefits in the absence of a remarriage.

It is appellees' contention that Congress's disfavored treatment of divorced widows at remarriage was not the product of reasoned legislative analysis but was instead an unthinking and stereotyped response spawned by the urge to reach a compromise.

Now, there are two--

Unidentified Justice: You can certainly say that about a lot of legislation, can't you, that was spawned by the urge to reach a compromise?

Mr. Deford: --That may be an overstatement on my part, a generalization, Your Honor.

I think it is true that this instance more than most indicates that Congress wanted to make a deal quickly and was looking for some way to make that deal, and rather than carefully investigate who the various classifications were and what the reason, what the rationale for that deal was, simply selected a political group that was handy, a discrete group that was handy, to cut the deal.

I think that was clearer in this instance than in most other Social Security Act situations we have where one classification is disfavored as opposed to another.

Unidentified Justice: Supposing that the legislative history in this case were perhaps clearer than it is, so that it was apparent that the Senate's balking at the inclusion of the divorced and remarried... was purely financial, that their view was that it's going to cost us more money than we have now, we may be ready to do it next year but we can't do it this year, we just don't have the money now, so we'll not give benefits to as many people as the House wanted to, in your view is that irrational?

Mr. Deford: I would think that would probably be irrational because--

Unidentified Justice: Irrational.

Mr. Deford: --Irrational, because of the amount of money at stake.

It seems to me that the more that Congress indicates, the Senate or the House or both, that it's planning ahead, this one step at a time analysis, and planning to take care of everything when it can, the more clearly that is set out and the more bases it gives for doing that, the more likely the scheme is to be rational.

But in the situation you describe where all the Senate is doing is simply saying, there's a few dollars more to be spent here and we don't want to spend it at this time, I don't think that that--

Unidentified Justice: How much would have to be involved for the Senate's action to be rational?

Mr. Deford: --Obviously, I'm not in a position to draw that line, but we pointed out in our briefs, the amount of money at stake here at the absolute most was less than one one-hundredth of a percent of the annual outlay of the Social Security system.

Unidentified Justice: What was it, $17 million?

Mr. Deford: It was less than $17 million a year.

We do not know the exact figure.

Unidentified Justice: What, $15 million?

Mr. Deford: It's unclear from the legislative history how much less than $17 million, but that's the maximum that it could have--

Unidentified Justice: But your argument is, anyway, that that small an amount, as you put it, makes it irrational?

Mr. Deford: --No, not that that amount alone makes it irrational, but in the context of what happened between the House and Senate in this situation, I do not think it is reasonable to assume that fiscal concerns motivated Congress in this case.

Unidentified Justice: So you say that with that small an amount, it is irrational to think that the Senate would be motivated by concern for saving money?

Mr. Deford: Well, you hypothesize that the Senate set that out in its legislative history, which of course is not the case we have here.

Unidentified Justice: Yes, I'm hypothesizing, that the Senate said, we are concerned about this $17 million?

Mr. Deford: I would say that even if the Senate had said that, without anything else to explain why it selected this particular discrete classification of divorced surviving spouses, that it's inappropriate for the legislature simply to say, they're not going to get the benefits but people in a virtually identical situation are.

There has to be a rationale that's either set out in the legislative history which we can reasonably infer to have motivated Congress to have selected that particular classification.

Unidentified Justice: Other than a desire not to spend as much money as the proponents wanted?

Mr. Deford: I think just fiscal concerns alone cannot provide the basis for discriminating against a particular classification.

This Court in the Fritz decision, in U.S. Railroad Retirement Board v. Fritz, rested in large part on the fact that Congress was seeking to protect the Railroad Retirement Fund, but it still carefully determined what the rational basis was for selecting the particular group of railroaders whose benefits would be cut.

Unidentified Justice: Of course, there, there were people being cut.

Here it's a question of people getting an additional benefit.

Mr. Deford: I don't think there's any indication that I'm aware of, in this Court's decision, that that distinction should make any difference for purposes of the importance of fiscal concerns.

Fiscal concerns are, of course, always relevant but I think there has to be some basis to draw the line, some rational basis other than fiscal concerns, to draw the line between various classifications.

As I said, there are two consistent themes in the development of the Social Security survivors' programs, and both of those are raised in this case.

One of those themes is Congress's recognition repeatedly over the years of various classifications whose dependency on a deceased wage earner renders them entitled to benefits under the survivors' program.

And the other theme which runs parallel to that is Congress's persistent desire to eliminate the remarriage penalty.

The remarriage penalty, of course, operates so that if a survivor beneficiary remarries someone else, the general rule was, that person would lose her Social Security benefits.

But Congress has gradually eliminated the remarriage penalty in various circumstances, and it is indicated that the general remarriage rule, the remarriage penalty, should essentially be eliminated altogether.

So, those two themes, I think are crucial in understanding appellees' contention in this case.

By 1965 Congress had recognized that divorced surviving spouses' dependency on the deceased wage earner was sufficient that they should be entitled to survivors' benefits.

This rendered them effectively the same in all relevant respects as non-divorced surviving spouses.

The remarriage penalty, however, was still in effect and Congress recognized that it created a serious dilemma for many widows.

In 1977, therefore, Congress set out to remove the remarriage barrier, but as we have noted, removed it only for one classification of surviving spouses, those who were not divorced, what we normally call widows and widowers.

I think it is very important to understand what happened in 1977.

The House voted to remove the remarriage penalty for both surviving divorced spouses and for surviving spouses who were not divorced.

The Senate said nothing about this issue and indicated it had no intention of removing the remarriage barrier for either classification.

The issue then went to conference committee, and that conference committee as we have noted, essentially split the difference and decided to--

Unidentified Justice: May I ask you a question.

Your opponent makes the point that the remarriage rule applies not just to the spouses but also surviving parents and children, I guess.

In the House version would they have removed it entirely, or just in the spousal category?

Mr. Deford: --I believe the House version would have removed the remarriage penalty for virtually every classification, including the ones you've mentioned, and that's why the $1.3 billion figure which has been mentioned is higher than we're talking about because it includes other classifications as well.

Now, when the Conference Committee decided to split the difference, as I've called it, and remove the remarriage penalty only for widows, not for divorced surviving spouses, it provided absolutely no explanation for this decision.

It was clear at that time that Congress as a general rule did want to eliminate the remarriage penalty, but no explanation was provided as to why that penalty should continue for one group of surviving spouses and not for the other group of surviving spouses.

The irony is that far from providing a reason to treat these two classifications differently, remarriage if anything should have provided an incentive, as the district court observed, to treat them the same.

Congress had therefore by 1977 carefully reasoned one two crucial factors.

One, why survivors' benefits should be available to surviving divorced women, namely, their dependency on the deceased wage earner and secondly, why the remarriage penalty should be eliminated as a general rule.

Congress provided by that time no reasoning whatsoever about why the remarriage penalty should continue for this one discrete classification of surviving spouses.

Congress based its reasoning, to the extent there was any reasoning at all, solely on divorce but it did not explain why divorce in that context was a relevant characteristic to discriminate between two classifications.

Consequently the government throughout this case in the district court and the briefs for this Court, today in oral argument, has been forced to offer a series of after the fact rationales in an effort to explain what Congress might have had in mind when it treated these two classifications differently.

Unidentified Justice: Well, is it your position that Congress has got to announce its reasons, or is it true that there must be discernible irrational basis for what they've done?

Mr. Deford: Mr. Chief Justice, it's clear that... to this Court's rulings, that if the lowest standard of review, the rational basis test is used, that the actual reasons do not have to be set out in the legislative history.

It's also clear, however, as this Court has indicated in various opinions, that it certainly would prefer if the reasons were set out, and that if the reasons are not set out, the Court should at least attempt to determine if the reasons advanced by the government could reasonably be presumed to have been the reasons which motivated Congress.

The discrimination in this case, we submit, simply does not serve the purposes of the Social Security Act, especially as explained by the survivors' program and by the treatment of the remarriage penalty.

Last term this Court in another equal protection case, Williams v. Vermont, observed that the distinction between the classifications bears no relation to the statutory purpose, and I think the same thing holds true here.

The overriding purpose of the Social Security Act Survivors' Program has been to recognize dependency on the deceased wage earner and to encourage a survivor to remarry.

These factors are not carried out by the discrimination.

Unidentified Justice: I'm not sure that's quite sufficient to describe it.

Hasn't Congress's obligation in Social Security been to distribute a finite amount of money among beneficiaries that Congress determines should receive that finite amount?

Mr. Deford: Justice O'Connor, I think we're talking here about a portion of the Social Security program, the survivors' program, and the two factors that I have set out, the question of dependency and the remarriage penalty--

Unidentified Justice: But overall, isn't it a fact that Congress just has not had unlimited funds in the Social Security Fund to distribute, and it's had to make some very hard choices, how to distribute those, and what people should receive as benefits?

Mr. Deford: --I think that's true, as a general rule.

Unidentified Justice: This is just a part of the overall scheme?

Mr. Deford: This is a part, and a very small part, of the overall scheme, but I think it's also true that when Congress selects one classification to receive benefits and another classification to be disfavored and not to receive benefits, there has to be some discernible distinction between those classifications which explains Congress's actions.

Unidentified Justice: Historically, Congress has made some differences applicable or attributable to divorce status.

Maybe it's moving away from that today, but I'm sure that you have to concede that over a period of time Congress has opted to make some decisions turn on divorce status.

Mr. Deford: In the past, Congress definitely made some decisions based on divorce status.

But in this case, by 1965 Congress had already determined that divorced surviving spouses were also entitled to survivors' benefits, essentially equivalent to those received by non-divorced surviving spouses.

And, I think that determination by Congress indicated essentially an equivalence in dependency and therefore--

Unidentified Justice: Well, do you think that just tied Congress's hands forevermore and that was the end of it?

Mr. Deford: --No, but I think it indicated that Congress saw so few distinctions between the two classifications that if it were to distinguish between them at a later point, it had to provide, or we had to be able to discern the valid reason for that distinction.

And it's particularly ironic here that the remarriage, the instance of remarriage, is a basis on which Congress uses to distinguish between them when prior to remarriage it does not distinguish between them.

Both sets of spouses, divorced and non-divorced, are entitled to survivors' benefits.

It seems logical as the District Court concluded, that if Congress were going to distinguish between the two classifications it would have done so at the death of the wage earner, not somewhere down the line when remarriage takes place.

Just to conclude on this point, we think in this instance Congress was not discriminating between the classifications in order to further a particular goal.

It was discriminating because it needed some group to single out in order to forge a compromise, and it selected the divorced because they were a group which were handy, and the amount of money at stake was relatively small, and a compromise could be made.

We submit that in light of the overall goal of encouraging survivors to remarry, it was totally irrational for Congress to make remarriage the basis on which to discriminate between these two classifications.

The other--

Unidentified Justice: Before you get to your class action, would you agree it was rational for them to apply the remarriage rule to the parents and the children, not to the widows?

Mr. Deford: --Justice Stevens, I have to confess I haven't given that any thought.

I believe in 1983 the remarriage penalty was eliminated for parents and children as well.

Unidentified Justice: I suppose one could argue that there also should be an incentive in those groups, not to discourage--

Mr. Deford: Certainly there's an incentive, but the reason we brought the case and briefed the case as it is, is because of the similarity between the two groups of spouses, and I'm certain many distinctions could be drawn between parents and children as opposed to spouses, which might make it rational to distinguish between those classifications.

Unidentified Justice: --I may have it wrong, but as I understand it in '77 they decided to put the divorced survivors either with the non-divorced survivors, widows, in other words, or with the children and their parents.

Mr. Deford: I think in 1977... I think all that happened in 1977 was that Congress decided to eliminate the remarriage penalty for widows alone, widows and widowers, but not for divorced surviving spouses, parents and children.

Unidentified Justice: But see, the effect of that was to treat the divorced people in the same way they treated the children and parents.

Mr. Deford: That's correct, but as I indicated, I think the distinctions between children and parents are such that it's not logical to compare those classifications.

The other issue in the case, of course, is the district court's class certification, but I think the real issue and the overriding question involving that is whether the Secretary of Health and Human Services can restrict the size of classes and therefore as a practical matter the number of those who can receive relief through the use of strict, literal and essentially impractical interpretations of provisions of the Social Security Act which were designed for entirely different purposes.

In light of the remedial goals of the Social Security Act, and especially the nature of this claim, constitutional claim, the Court should not permit the Secretary to deflect legitimate constitutional contentions through this mechanism.

Now, the first issue of course is what is known under the rubric of exhaustion, whether an individual claimant has to go entirely through the administrative process before he or she can move into district court and make the contention there.

In this case the Secretary formally and in writing waived full exhaustion for the named plaintiffs.

The Secretary determined that there was a final decision on their claim in the administrative process.

The Secretary determined that there were no factual issues in dispute, and the Secretary determined that there was no statutory interpretation in dispute.

The only claim raised is the one the Secretary was not competent to resolve, namely the constitutionality of the challenged scheme.

This Court in prior cases has recognized waivers by the Secretary of full exhaustion in other constitutional cases.

In Califano v. Goldfarb, in Matthews v. Diaz, Weinberger v. Southey, the Court has recognized the Secretary can waive full exhaustion.

Unidentified Justice: No one is challenging the standing of the people with whom the Secretary... with respect to whom the Secretary has waived, are they?

Mr. Deford: No, Justice Rehnquist.

Unidentified Justice: This is a question of whether dissimilar people can be included in the class with respect to whom the Secretary hasn't waived?

Mr. Deford: Well, the crucial issue is whether or not they're dissimilar, the term you use.

Unidentified Justice: Well, certainly they're dissimilar to the extent that in one group the Secretary has waived and in the other they haven't.

Mr. Deford: The Secretary has formally waived for one group.

The question is whether a district court can infer from that waiver, and from the nature of the case, that as a practical matter the Secretary has also made a final decision for the other members of the class who are, a defined by the class--

Unidentified Justice: But Secretaries issue regulations that define when the Secretary is to be deemed to have waived.

Why should a court be permitted to ignore those administrative regulations?

Mr. Deford: --The court is not ignoring those, nor is the court overruling the Secretary.

The district court in this case... and our argument is that a district court, as this Court has done in other instances, can infer that a final decision has been entered by the Secretary.

In the Diaz case the Secretary herself moved to dismiss the complaint for failure to exhaust.

The district court and then this Court held that despite that, as a practical matter the Secretary had to determine that there was a final decision and that no further exhaustion was required.

So, what we are talking here for the most part is not asking the Court to overrule the Secretary but for the Court to analyze as a practical matter what the Secretary has done with respect to whether or not a final decision has been entered in the administrative process.

We think it's logical for a district court, based on the determination that named plaintiffs have no factual disputes.

It's logical for a district court to infer that final decisions for the class members are also appropriate.

For the class members as well as for the named plaintiffs there are no factual or legal disputes with the Secretary, nor is there any ability of the Secretary to take any action with respect to the claim at issue which is a constitutional claim.

We think it is very important also to recognize what Justice Stevens was hinting at in his questions to my opponent, that there is no practical purpose served by forcing the class members to go to exhaustion when the named plaintiffs have already received a final decision from the Secretary.

The effect of forcing exhaustion in that context is not only wasteful but it's counterproductive.

If the Secretary is ultimately successful at whatever level, district, court of appeals or Supreme Court, then all the factual exhaustion which has taken place prior to the filing of the complaint will have been totally wasted because the class members for the most part are not going to be eligible for benefits anyhow, as the Court has held that the statute is constitutional.

So, not only is a waste of administrative resources, but it's actually counterproductive to the entire system.

We think also that the Court should keep in mind the practical reason why the Secretary is pressing exhaustion in this context, and we think he's doing it because it's a shield to protect him from significant relief when plaintiffs are successful in district court.

There is absolutely no practical reason to require exhaustion for named plaintiffs.

Once they receive an initial decision saying they are ineligible for benefits because their facts are such that they are not eligible under the statute, no purpose is then served by requiring them to go through an administrative process.

Once the Secretary determines that a constitutional claim exists, which the Secretary himself has no competence to resolve, the only logical conclusion to be drawn is that a final decision has been reached, so that no further exhaustion is required.

Now, the other component of the class action issue is what is known as the 60-day rule and that is the question of whether class members moved untimely through the administrative process and in the district court.

Now, it is our contention that the notice filed by the named plaintiff, Mrs. Owens, in October 1982 asking for reconsideration of her initial decision was a notice to the Secretary that a constitutional claim was being raised and that it therefore told the administrative and judicial process, this is a conventional principle, it's been used in many other contexts.

When notice is given, the time is told.

It is commonly used in class actions as a way of protecting the rights of class members.

It's regularly used in Title 7 cases.

Unidentified Justice: Has it ever been applied against the government in any case that you know of?

Mr. Deford: I believe the Honda case, Honda v. Clark.

Unidentified Justice: By this Court?

Mr. Deford: That was a Supreme Court decision, yes, Your Honor.

The Honda v. Clark holding was used to protect the right of the class members.

Unidentified Justice: Ordinarily the rule that several cases in this Court laid out was that when you deal with the government, you turn square corners, and that lots of rules that apply to a private defendant don't apply to the government.

Mr. Deford: Well, this Court of course has never dealt with this express issue under the Social Security statute.

I would point out also that the briefs of the parties are somewhat misleading on one crucial point, and that is that for 99 percent of the class members the totalling at issue here is not what we might call judicial totalling, it's administrative totalling.

By filing a notice with the Secretary, by putting the Secretary on notice, what Ms. Owens did was to stop the running of the time for individuals to move through the administrative process.

She was not... there might have been some individuals who already received a final decision of the Secretary, although I'm doubtful of that fact.

It also would have told the time for them to proceed to district court.

But I think it's important for the Court to recognize, for most of the class members, what was told was the administrative process, until such time as Mrs. Owens had herself received a final decision through the Secretary's ruling on the reconsideration request.

Now, there are excellent reasons, we think, to apply this general totalling principle in this context.

The remedial purposes of the Social Security Act are one, and the nature of the issue of course is another crucial component.

This is a constitutional challenge and it is imperative, as this Court has indicated on many occasions including the Sanders case, the Social Security recipients have an opportunity to bring constitutional challenges before this Court.

As a practical matter if totalling is not permitted, 99 percent or 90 percent of most class actions will be prohibited from raising a constitutional challenge.

They will never seriously have an opportunity to bring their case to court.

The Court, this Court has construed other aspects of the statute which allows individuals to go to district court in a flexible way under the venue provision, the exhaustion provision, the question of injunctive relief, the question of class action in general.

This Court has indicated that the literal terms of 42 U.S.C. Section 405-G do not necessarily control.

There has to be a practical way of guaranteeing that classes can be certified and the individuals can bring their cases in a realistic way.

The class members in this case are not trying to avoid compliance with the 50-A rule.

They are simply recognizing that as a normal principle, when the Secretary is put on notice, the period for proceeding through the administrative process is told.

No purpose, no practical purpose is served here by a literal application of the 50-day rule.

The only purposes served is that of the Secretary which artificially prevents some claimants from obtaining relief.

Thank you.

Chief Justice Burger: Do you have anything else, Ms. Kuhl?

Mr. Kuhl: Just briefly, Mr. Chief Justice.

With regard to Honda versus Clark, I'd like to correct the statement that was made with regard to totalling against the Government there.

The Court specifically said in that case that because the Government was acting as a stakeholder with regard to property in the Office of Alien Property, that the court would allow totalling.

There was no potential drain upon th Treasury there and it was an exception to the usual rule with regard to the Government which is not at all applicable here.

Appellees state that the Secretary is trying to restrict the size of the class, but with all due respect it is Congress that has set forth the scheme under Section 405-G and this Court has recognized in Yamasaki and Ringer that Congress wants these benefits determinations to go forward on an individual basis and wants the legal issues to be raised in an individual context.

ORAL ARGUMENT OF MS. CAROLYN B. KUHL, ESQ. ON BEHALF OF APPELLANT -- REBUTTAL

Unidentified Justice: May I ask, in connection with both that point and the totalling point, the Government disagrees with the date that they picked for the 60-day rule, the date that the named plaintiff received notice.

Do you agree, though, that if the date had been advanced to the date of filing suit, that there would be totalling for all the class, and you redefined the class with reference to that date, the totalling would be proper?

Mr. Kuhl: It would not... we would not consider it a question of totalling.

If someone has a final decision of the Secretary within 60 days before the suit is filed, it's not really a question of totalling but rather that in lieu of filing a separate action they may be considered to have filed vis-a-vis that action, and that's the basis.

Unidentified Justice: In other words, they can be properly included within the class even though they don't file individual actions?

Mr. Kuhl: Yes.

We have not raised anything to the contrary in this case.

The point here on the exhaustion and 60-day principles is that we're dealing with individuals who did have an opportunity to raise the constitutional issue in the administrative process but didn't.

They let their claims become final.

It was res judicata, and what appellees are asking for here is that this Court recognize the principle that allows continuous correction process to occur with regard to the system, and that is not at all what Congress had in mind.

These individuals gave no indication that they wanted further review.

At each stage of the four-stage administrative process there is a notice sent stating, if you wish further review file within 60 days.

The people who are included in the class here who should not have been did not take advantage of that opportunity.

The rule that they are asking for here is almost as if they are asking that when a court of appeals creates a new rule of law, district court people who didn't think to raise the argument and who have... had their cases decided be allowed to re-open them over and over.

Thank you.

Chief Justice Burger: Thank you, counsel.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Green v. Mansour - Oral Argument

Fri, 09 Jan 2009 14:48:31 +0000

Case:

Green v. Mansour

Media File:

84-6270_19851007-argument.mp3

Related Transcript:

transcript.xml

Transcript:

ORAL ARGUMENT OF WILLIAM BURNHAM, ESQ., ON BEHALF OF THE PETITIONERS

Chief Justice Burger: We will hear arguments next in Green against the Michigan Department of Social Services.

Mr. Burnham, I think you may proceed whenever you are ready.

Mr. Burnham: Thank you, Mr. Chief Justice, and may it please the Court, I would like to reserve five minutes of my time for rebuttal.

This case is actually comprised of two Section 1983 class actions.

The claims in the cases are essentially that the defendant state official violated the plaintiff's statutory rights under Title 4(d) of the Social Security Act, thereby depriving them of AFDC benefits to which they were entitled.

The two cases factually parallel each other.

However, I will indicated briefly what those were.

The cases were filed in 1980 and 1981.

The first case, denominated Michigan Welfare Rights Organization versus Dempsey originally, is the child care expense case, in which Michigan in concluding an AFDC budget refused to allow a deduction for the expenses of child care which were necessary to be paid for the recipient to go to work.

This, petitioners believe, violated clear pre-October, 1981, federal law.

This court has decided a case on that very issue, Shea versus Vialpando.

The Department of Health and Human Services, which is charged with administration of the Act, wrote Michigan several letters telling them essentially that, and they nonetheless did not change the policy.

However, in October, 1981, federal law changed, and federal law continued the requirement that there be deductions allowed.

However, Michigan changed its regulation to comply with the new federal law.

The reason for that presumably was because the new federal law imposed a limitation of $160 a month, and Michigan believed, I suppose, that it could live with that, and therefore changed its policy to comply with the new federal law.

The other case, Benas versus Dempsey--

Unidentified Justice: What remains of that first case now, the one that you have just described, after the chance?

Mr. Burnham: --After the change, the defendants, we would submit, are currently in compliance with the new federal law.

Consequently, what remains is our request for summary judgment as to the defendant's compliance with federal law before October of 1981, and the issue, but relief may be granted based upon that determination.

Unidentified Justice: And are you seeking damages for the period before 1981?

Mr. Burnham: We are not seeking any monetary relief at all.

We are not seeking damages.

All we are seeking is a declaratory judgment or some other substantive federal question determination, and an injunctive order requiring the defendant to send notice relief as was done in the case of Quern versus Jordan, which this Court decided in 1979.

Unidentified Justice: Why isn't the case moot or very close to it?

Mr. Burnham: Well, the case is not moot.

It is our position the case is not moot.

First of all, the Sixth Circuit found that it was not moot, and we believe that that analysis is in fact correct, although they decided against us on the Eleventh Amendment issue.

In order to be moot, of course, under Garrity, there must be a lack of any cognizable legal interest, and the issues are no longer live.

Under this circumstances, the issues are clearly live.

Unidentified Justice: You want the notice.

Mr. Burnham: We want the notice, and there is an interest in--

Unidentified Justice: And you want the notice so that these people could apply for relief in state courts.

Mr. Burnham: --Well, probably in the state administrative tribunal.

Unidentified Justice: Yes, to get... to get what you think they are entitled to prior to the amendment of the federal law.

Mr. Burnham: To state it more specifically, we believe that the interest is in being given the opportunity to do that.

In other words, class members may decide that they do not want to pursue that remedy, or they may decide that they do.

If they do pursue that remedy, they may not be able to actually get an award of retroactive benefits because of state law.

Unidentified Justice: But it takes more than just a very tiny thing to keep a case alive.

For instance, an award of costs, the outstanding issue of costs won't keep a case from being moot.

Mr. Burnham: I understand.

Unidentified Justice: It strikes me that this is really awfully far down the line so far as any live controversy about federal issues is concerned.

Mr. Burnham: Well, petitioners would respectfully disagree.

This case is in no different position than the case of Quern versus Jordan was in 1979.

In Quern versus Jordan, the issue involved was a question of whether or not notice really could be ordered.

And in this case, the entire program to which the relief could have related had been abolished for over a year by the time the District Court considered notice of relief and had been abolished for approximately four years by the time that this Court approved the notice of relief.

However, in the case, and I think it is an indication of how that case was still alive, in that case this Court affirmed an en banc Seventh Circuit decision saying that notice really should be ordered, and after notice of relief was ordered, in fact, the class members, some of them, filed for administrative bearings, and then after they had exhausted their administrative remedies, went to the Illinois Court of Claims, and in fact were able to get an award of benefits.

Now, that award of benefits, of course, was under state law as a result of actions taken by the state courts.

Unidentified Justice: There were no damage claims in Quern?

Mr. Burnham: There were no... well, Quern was Edelman versus Jordan revisited.

Consequently there was originally a request for equitable restitution, in other words, a direct award that the state pay those benefits.

This Court in Edelman versus Jordan, of course, held that that violated the Eleventh Amendment.

On remand to the District Court in Quern, the District Court and the Seventh Circuit agreed that no such order, of course, direct order to pay benefits would be entered.

However, limited injunctive relief requiring that a notice be provided of the availability of state administrative remedies could in fact be ordered, and that was the context in which it arose.

In other words, this case is just like Quern in the sense that there is no current live claim for an injunction against future violations.

However, there are live claims for past violations and for notice relief to allow the claims the opportunity to seek redress for those past violations.

Unidentified Justice: Mr. Burnham, as I understand it, you make no claim for prospective relief.

Mr. Burnham: That depends on how one interprets the term "prospective".

Unidentified Justice: Well, identify what you claim as possibly being prospective if the court below thought you had advanced any claim for prospective relief.

Mr. Burnham: Well, Justice Powell, the understanding of prospective relief, if I understand the question correctly, prospective injunctive relief against future violations, there is no claim for that.

That is correct.

Unidentified Justice: And no claim for damages.

Mr. Burnham: And no claim for damages.

Unidentified Justice: And I understand you want notice relief, but what would that relief lead to?

Would it lead to a damage claim against the state for alleged violation of law prior to 1981?

Mr. Burnham: It may if the individual class member who received that notice decided that they wanted to take advantage of it and at that point to request an administrative hearing, and then to get judicial review of that administrative hearing decision.

Under Michigan law, administrative hearings are available in the circumstance.

They are, of course, compelled by federal law.

In other words, Michigan may not have an AFDC program unless it has a system of hearings.

Unidentified Justice: In Quern, my recollection is that the notice relief was ancillary to some prospective relief.

If that is correct, do you have an analogy here?

Mr. Burnham: I believe... Your Honor, I believe, is referring to the statement in Quern about the notice being ancillary to prospective relief already ordered.

Unidentified Justice: Yes.

Mr. Burnham: The defendant's and the Sixth Circuit's interpretation of that is that that referred to the permanent injunction, which of course had in the intervening time become moot because of the abolition of the program to which it related.

It is our view that that phrase simply refers to the way that the word "ancillary" is used in Eleventh Amendment jurisprudence.

In other words, a full statement distinguishes between the notice that was approved by the en banc Court of Appeals and the notice that was approved by the District Court.

And the court was in essence saying the notice approved by the District Court was not ancillary, but the notice of proof by the Court of Appeals was ancillary.

Well, if in fact the Sixth Circuit's reading of ancillary is correct, that would make no sense, because those notices, the only difference in the notices was the form of the notice, and the fact that it could be ordered was the same in both situations, both in the District Court and in the Court of Appeals.

Consequently, taking that data, it is quite clear that it could not have referred to ancillary power to enter that kind of relief.

It could only refer to the usual meaning of ancillary, which is that the effect of that relief was ancillary to a proper substantive federal question determination.

Unidentified Justice: Why was a declaratory judgment proper?

Mr. Burnham: Under the facts of Jordan?

Unidentified Justice: This case.

This case.

Mr. Burnham: In this case, the declaratory judgment is proper--

Unidentified Justice: The only purpose of it would be to effect... to declare whether the federal law had been violated in the past.

Mr. Burnham: --Yes, that would be the purpose of the declaratory judgment.

Unidentified Justice: And the only purpose of it would be to give somebody a basis for making a claim in state administrative proceedings.

Mr. Burnham: Well, the purpose would be to settle the rights of the parties.

Unidentified Justice: Certainly you wouldn't say that notice would have been properly ordered except for a declaratory judgment.

Mr. Burnham: Well, no.

I would say that the notice of relief may be ordered without any formal declaratory judgment.

Unidentified Justice: Why?

Why?

Mr. Burnham: Well, in the same--

Unidentified Justice: --that there is--

Mr. Burnham: --Well, in the sense that any injunction is ordered based upon a determination that the law was violated, there was no need for separate declaratory relief.

In other words, a federal court may enter an injunction, an affirmative injunction, without necessarily entering declaratory relief.

Unidentified Justice: --I know, but the injunction is moot, in this case.

I mean, wasn't the law changed?

Mr. Burnham: That's correct, and consequently one has to at that point separate the determinative federal... substantive federal question determination from the issue of the injunction.

Unidentified Justice: So you have to say you are entitled to a declaratory judgment about whether the state had been violating the federal law.

Mr. Burnham: At least in effect one would have to do that, yes.

But this is no different than any other--

Unidentified Justice: Why is that prospective?

That seems to me that is--

--Looking back.

--looking backward.

Mr. Burnham: --Well, it is prospective in the sense that... in the sense that the federal determination, the federal question of determination determines how it is that in the future the state will have to deal with past claims.

Unidentified Justice: Well, I know, on the basis... that would be the same if you ordered money be paid.

It is always pain in the future.

And the Eleventh Amendment wouldn't--

Mr. Burnham: Of course.

I am not saying that the money would necessarily be... in other words, I am not saying that just because actions are going to be taken in the future, that it is prospective.

Unidentified Justice: --What are you saying?

Mr. Burnham: What I am saying is that in order to be prospective, the relief must be based upon some ongoing federal duty, and if there is an ongoing federal duty to take action with respect to past claims, which there is in the federal statute and the federal regulations, then an order enforcing that ongoing duty can in fact be prospective.

Unidentified Justice: You could say the same thing about money.

Yes.

Mr. Burnham: That could be, but this case does not involve--

Unidentified Justice: It could be, but it would still--

--Edelman against Jordan rejected that as to money.

Mr. Burnham: --That's correct, and we are not dealing with monetary relief, and for that reason--

Unidentified Justice: But you are dealing with something that is just almost identical.

Why shouldn't it be rejected for the same reason?

Mr. Burnham: --Well, that was precisely the argument that was made to this Court in Quern, that in fact this, the Quern case, after it came back with notice relief, was no different than Edelman, and this Court made the distinction between an order which propels the state to pay money and an order which simply determines illegality and orders some nonmonetary relief.

Unidentified Justice: I know, but whether the Court was right or wrong in Quern, it said that it was ancillary to prospective relief, didn't it?

Mr. Burnham: Yes, it did.

I--

Unidentified Justice: Well, stop right there.

What is the prospective relief again in this case?

Mr. Burnham: --Okay.

The prospective relief, if in fact this comment means something beyond what the court had said in the previous paragraph, that in fact the prospective relief is a substantive federal question determination that in this case Michigan violated federal law before October 1st.

Unidentified Justice: It is hard to swallow that.

Really, it is cutting it awfully thin.

Just quite apart from mootness, is that, giving prudential consideration in some way, is that a sound use of declaratory judgments, to render a totally abstract decision on something where the federal court cannot give injunctive relief because it is not applicable?

It can't give damage because of the Eleventh Amendment, but nonetheless adjudicate the merits in a declaratory judgment, and then take that into state court where you are going to plead it is res judicata on liability?

Mr. Burnham: Well, this Court made clear in Quern that whatever the class members were going to do with the notice, and going to do with the substantive federal question determination necessary for it did not really affect the issue of whether or not the notice relief order should be entered.

It is our--

Unidentified Justice: Well, but that doesn't really answer my question.

I asked you if you thought it was a sound use of declaratory judgments to use it in that manner.

Mr. Burnham: --Yes, I believe it is, because otherwise what is going to happen in this case is that without that declaratory judgment, the state may treat any action that it took in the past as valid.

Unidentified Justice: But the state would have to defend the action in state courts.

You know, maybe the state courts would come to precisely the same conclusion.

Mr. Burnham: That is, of course, possible, but in this case we have in fact, we would have a delay between the time that a state court will render a decision, and we have in fact persons who received benefits under preliminary injunction.

If no final judgment is entered saying that they in essence directly receive those benefits under the preliminary injunction, then the state is open to... those benefits, because they may treat the actions that they had taken as having been legal during that time, despite the fact that there was a preliminary injunction.

This Court in Edgar versus White rejected the idea that in fact there is some immunity because of that, and the state is certainly open to do that.

Now, they have, to grant them, they have disclaimed any interest in doing that.

I would submit that that is solely for the purpose of saying, well, this matter is really completely moot.

Unidentified Justice: You want us to give you some relief that you might or might not use ancillary in the Michigan state court?

Mr. Burnham: I am asking the Court to give us relief, and that the relief is complete upon its being given, because the relief, the interest the class members have is an interest in the opportunity to apply for that hearing.

Unidentified Justice: It only can be used in the Michigan state court.

Mr. Burnham: It may be used in the Michigan state court.

Unidentified Justice: That is the only place.

That is the only place it can be used.

Mr. Burnham: No, it could be used in the Michigan administrative tribunal.

If they win there, they don't have to go to the Michigan state court, no.

Unidentified Justice: And they don't have to follow it.

Mr. Burnham: They would have to... I would think that the usual rules of collateral estoppel would apply to issues that are actually adjudicated.

That would not prevent the state from interposing some other defense, for example, its own sovereign immunity.

It could in fact say that the claim are time barred, as it has claimed in this case.

Any number of ways that in fact the plaintiff would be... would not be able to get a final judgment actually awarding them money.

But what is important in the case is that in fact they have an adjudication which settles the rights of the parties, and they get the opportunity.

If they want to avail themselves of that opportunity, they have the opportunity to have a readjudication of whether or not they were entitled to those benefits if they seek that readjudication.

Unidentified Justice: We are sort of pendent jurisdiction to Michigan.

Mr. Burnham: I don't believe it is pendent jurisdiction simply because that notice relief stands on its own... in other words, notice relief should be no different than any other kind of injunctive relief which is nonmonetary.

An example would be a state university student who is expelled for a period, or a public employee who is dismissed.

It could well be that that dismissal period is over, and in fact they are back on the job by the time that they start their... by the time that their lawsuit is filed.

In that case, it would be very injust to have the District Court say that it can't do anything.

The disciplinary record might be disseminated to other employers.

It may in fact follow the person throughout their tenure there.

Consequently, the District Court should have the power to enter nonmonetary relief--

Unidentified Justice: You know, there are some federal statutes that restrict the power of the federal courts to issue injunctions.

Mr. Burnham: --Yes.

Unidentified Justice: And although the statutes don't say so, the courts have said the same rule applies to declaratory judgments.

Mr. Burnham: If Your Honor is referring to the Younger versus Harris, Samuels versus McKell sort of--

Unidentified Justice: I am not talking about those.

There are statute, for example, that keep the federal courts from enjoining the collection of taxes.

Mr. Burnham: --Yes.

Unidentified Justice: Well, those have been interpreted to apply to declaratory judgments, too.

Mr. Burnham: Yes, in the McNary case.

Unidentified Justice: Yes, and that is the argument here.

When you enter a declaratory judgment, you have tied the state's hands.

Mr. Burnham: Well, I believe that there are distinctions between the anti-injunction statutes on the one hand and the Eleventh Amendment on the other.

It is petitioners' view that the Eleventh Amendment does not bar a determination of past misconduct, but in fact the Eleventh Amendment only bars certain kinds of relief based upon that, and in fact a violation of federalism or a violation of the statute that might occur occurs just because of the determination, and in the Eleventh Amendment case that is not the case.

There are numerous situations were the federal court adjudicates the legality of past misconduct, but so long as relief is entered that does not violate the Eleventh Amendment, that is okay.

Unidentified Justice: Suppose the statute hadn't been amended at all.

Then the Court could probably have said, determined what the federal statute required, and if the statute was being violated, it could have entered an injunction.

Mr. Burnham: Yes.

Unidentified Justice: The Eleventh Amendment would permit prospective relief.

Mr. Burnham: Prospective relief, even though it cost money.

Unidentified Justice: Then I suppose... I would suppose the same objection could be raised in those circumstances to giving them notice that they are being here.

Mr. Burnham: That is true.

Unidentified Justice: Because... on the grounds that it is really ancillary to retrospective relief.

Mr. Burnham: Something along that line could be argued.

In other words, it should make no difference whether or not the notice relief is sought by itself of sought in conjunction with a future looking injunction.

As a matter of fact, the facts of Quern versus Jordan illustrate that beautifully.

In fact, there were two separate groups of persons involved, the persons who were going to apply after the final judgment and the group of people of which Mr. Jordan was a member who had already applied before judgment, and as a member who had already applied before judgment, and as a matter of fact Mr. Jordan had litigated for some eight years, and had gotten no relief.

As a matter of fact, he was not covered by any of the relief in that case until notice relief was entered.

Unidentified Justice: But the determination of illegality in Quern was originally made in the context of the Edelman pleas, where the Court determined illegality and awarded damages, thinking that it could do that.

Mr. Burnham: That's correct.

That is one difference in that case.

It was in fact originally ordered--

Unidentified Justice: The determination of illegality served a purpose in the federal court.

That is, it was the basis for awarding damages, albeit later held to be improperly awarded, but your determination here by declaratory judgment doesn't serve any purpose other than to take it into another court system and say, look, it is res judicata.

Mr. Burnham: --Well, if that logic were applied, then there would be no situations that one could think of where notice relief would be appropriate.

For example, the appropriate substantive federal question determination to support notice relief would have to be that the defendants had violated the plaintiff's rights in the past.

Unidentified Justice: In the past.

Mr. Burnham: Now, that... if a prospective injunction is entered, that is not a necessary basis for that prospective injunction.

Consequently, one... award of it even where there is a prospective injunction, you can't order notice relief because there has been no relevant finding of past misconduct.

So, the only situation that notice relief would apply would be the peculiar facts of Edelman, where the District Court makes a mistake and enters the wrong kind of order first, gets reversed, and then says, okay, now I will enter a notice relief.

That would be the only situation.

Unidentified Justice: Perhaps it would apply if there were a finding of a continuing violation, which is not the case here.

Mr. Burnham: If there were a finding of a continuing violation, one could argue that that only determines that from that date of judgment forward the defendant is violating federal law.

Again, that doesn't give us any determination as to what the status of that conduct was in the past.

It is always necessary to--

Unidentified Justice: Well, the point being that perhaps there could be continuing violations and prospective relief as to those to which notice could properly be given.

Mr. Burnham: --That is correct, and this case presents a very unusual situation that way, because I just found out as of last Friday the state is in fact violating current federal law on stepparent asset assumption.

And--

Unidentified Justice: Well, we don't take it on that record, of course, I assume, do we?

Mr. Burnham: --No, we don't, but I would... I believe that that... that indicates just how illogical it is to somehow tie notice relief, if in fact, if in fact we were able to show that, if we tie notice relief to an injunction that is based upon a violation of a totally different federal law or a totally different class of people and somehow say that just because we can say that is ancillary to that it is okay, that is not a very firm basis on which to base a belief.

Unidentified Justice: Well, conceivably, that could explain or distinguish the Quern decision in any event.

Mr. Burnham: On the facts of this case?

Unidentified Justice: That the finding there was with relation to a continuing violation--

Mr. Burnham: Yes, the--

Unidentified Justice: --under the notice.

Mr. Burnham: --Yes, that would be one distinction.

We would argue that it should make no difference because in fact that injunction had been totally moot for some four years.

Unidentified Justice: This case does cause one to wonder whether the declaratory judgment isn't being sought in effect to determine liability, and just leave enforceability to state courts to determine statutory time bars or that sort of thing.

Mr. Burnham: Well, that is an important point.

I believe it is important to emphasize that a declaratory judgment does not establish any state liability for payment of anything.

It simply establishes that the state through its regulation violated federal law in the past, but the consequences are of that determination--

Unidentified Justice: Well, that is the point.

If the state has violated federal law and the declaratory judgment reveals that payment should have been made under federal law, then that in effect determines state liability, and what is left is really a determination in state court of enforceability, and that might turn on what the statute of limitations might provide or what remedial limitations there might be at the state level.

Mr. Burnham: --Yes, that's true, and that would be the situation on the Quern case as well.

Unidentified Justice: Well, if that is the case, then it does seem to be very close to Edelman, when you are really providing a form of financial relief, in effect retroactively.

Mr. Burnham: It would be petitioners' position that the same description of the effect of notice relief applied in Quern would apply in this case, and that would be that the chain of causation is clearly severed, and that it is in fact up to the state as to whether or not... what they do with this substantive federal question determination, that they may in fact not have to pay any benefits.

Unidentified Justice: Maybe this has already been covered, but did the Court of Appeals hold that both the notice relief and the request for a declaratory judgment were barred by the Eleventh Amendment?

Mr. Burnham: I am not entirely clear about the declaratory relief.

I believe what they said was, the notice of relief was barred.

Unidentified Justice: Right.

Mr. Burnham: And that to the extent that we sought declaratory relief, I think the clear implication of that is that declaratory relief is barred.

I don't think that they--

Unidentified Justice: In other words, their position was that I guess the declaratory judgment went to a question of federal law.

In effect they were saying the Eleventh Amendment requires that that question of federal law must be decided by a state court.

Mr. Burnham: --In essence that would be the only place that the plaintiffs could go.

That is correct.

Under the circumstances of this case, plaintiffs believe that the District Court, that the Sixth Circuit decision is completely contrary to the rule of Ex Parte Young and the rule of Edelman versus Jordan.

Ex Parte Young in essence held that a suit against a state officer is in fact not a suit against a state, but Ford Motor Company and Edelman, of course, make it clear that it in fact monetary relief is sought, then that pierces the fiction of Ex Parte Young, and it again may become a suit against the state.

Under the circumstances here, the Court in Quern has quite clearly held that notice relief, this kind of relief, is not a money judgment, and consequently the Ford Motor Company exception does not apply to that.

Consequently, it should be treated no differently than any other kind of injunctive relief, and after all, it is an injunction.

It is an order to the state that they in fact provide certain kinds of notices to the plaintiff class members.

And under the circumstances, it should not be deemed to violate the Eleventh Amendment.

Indeed, the Ex Parte Young Court mentions the situation of habeas corpus relief, which is a situation where obviously there is a determination that in the past the state officials violated the federal rights of the plaintiff.

However, the Court indicated that that was not a violation of the Eleventh Amendment.

That is a clear indication to petitioners that Ex Parte Young was not as narrow as the Sixth Circuit would say it was.

In other words, it did not just provide for prospective injunction against ongoing violations.

In fact, it contemplated explicitly a determination of past misconduct, and of course that in modern Eleventh Amendment parlance, the habeas corpus writ would not violate the Eleventh Amendment simply because there was no impact on the state treasury in that situation.

That is like the expunction case.

That is like the public employee record expunction situation.

It is non-monetary relief, albeit based upon a past determination of misconduct, and that is permitted by the Eleventh Amendment.

The final point I would like to mention is that the reading of the Sixth Circuit in this case of Ex Parte Young gives the state a virtually limitless power to control the jurisdiction of the District Court.

There was a great deal of delay in these cases, and of course the federal court dockets are very crowded.

The state can quite easily have an incentive to look to delay because they can simply avoid any determination of past misconduct by at the eleventh hour complying with future... with ongoing federal law.

If they do that, then they wipe out any past claim for the back benefits.

That sort of control over the court's jurisdiction quite clearly should not be allowed.

The facts of this case, in fact the stepparent violation that we believe is... the state is engaged in right now, quite clearly the state could render that issue quite moot by saying, okay, we know the stakes are high in this case because an order could be ancillary to that ongoing injunction.

Consequently, we will decide that we will comply.

That would then divest the District Court of jurisdiction, and under the ancillary theory of Quern there would be no basis for ordering a notice relief remedy.

That sort of power should not be allowed, and it doesn't make any sense, simply because the issue of future violations and the issue of past violations are two rather distinct things.

Thank you.

Chief Justice Burger: Mr. Caruso.

ORAL ARGUMENT OF LOUIS J. CARUSO, ESQ., ON BEHALF OF THE RESPONDENT

Mr. Caruso: Mr. Chief Justice, and may it please the Court, the Court of Appeals decision in this case that is on review was compelled by law principles that were previously established by decisions of this Court, and the purpose of the Eleventh Amendment requires adherence to those principles.

In this case, the petitioners could have availed themselves of a state forum.

Instead, they chose the federal forum to deal with two cases in which the judicial power was constitutionally limited, and now are strenuously attempting to override that limitations.

They contend that they are not after money relief by way of a judgment.

A declaratory ruling of past actions coupled with a notice as an invitation to class members to seek state administrative relief as to those past actions as requested here, I suggest, is designed to obtain retroactive payment of an accrued monetary liability through the force of a federal judicial power in contravention of the Eleventh Amendment.

And it certainly becomes quite evident that that would be the case when you consider the nature of a declaratory judgment.

A declaratory judgment under the Act is a final judgment, and it adjudicates the rights of the parties involved, and it is an actual case in controversy, and it would cover a period here when the respondent was not under a final court imposed obligation to comport her conduct with different standards.

Now, this becomes quite evident when you consider the ancillary notices that were considered in Quern and in Edelman and in Trainor v. Jordan.

The first notice was rejected by the court.

After rejecting the first notice, they approved a notice that merely advised the class that the court described as one that simply informed the class that the federal suit is at an and and the federal court can provide no further relief, and if they may wish to pursue state administrative remedies, they may do this.

But this kind of notice, the Court said, didn't impose any retroactive liability.

It was in no way handicapped by a federal court determination of state liability, and in that case, in the case, in the Quern case, there was an adjudication by the court of misconduct, and there was a prospective compliance order entered in that court, and we don't have that situation here.

The Court, however, found the first notice offered in Quern to be infirm.

It expressed a finding of past liability.

That notice stated, you are denied public assistance to which you were entitled.

Respondent submits that if the Court were to allow that kind of notice that was found acceptable by the Court in Quern to be coupled, predicated on a declaratory judgment of past actions as requested by petitioners, the Quern notice would be changed in its import because it would become indistinguishable from a substantive federal question determination by a federal court of past action.

It would import the same degree of finality that the first notice that was proposed in Quern that was found to be, that was found by the Court to be infirm.

It would permit, as the Court said in Colbeth, to do indirectly what is prohibited to be done directly.

Insofar as Ex Parte Young is concerned, Ex Parte Young was cast by the Court as an exception, as a necessary exception to vindicate federal rights.

And the relief in that case was a prospective compliance order against a state official to comport, to have that official comport his conduct with the constitution and not enforce a statute that was held to be unconstitutional.

At no time has Ex Parte Young or the subsequent cases applied by this Court dealing with the exception encompassed declaratory judgments of past actions in the notice relief requested here.

Unidentified Justice: May I ask a question, Mr. Caruso?

Mr. Caruso: Yes.

Unidentified Justice: This case is somewhat unusual because of the change in the law on October 1st, 1981, as I remember the facts.

Mr. Caruso: That's right.

Unidentified Justice: If there had been a judgment entered by the District Court, say, on September 15th, 1981, pursuant to a complaint which asked for injunctive relief and declaratory judgment, would you say that at that time the Court could have entered a declaratory judgment?

Mr. Caruso: No, the Court could not have entered a declaratory judgment unless a declaratory judgment was related to the prospective... the ongoing violation.

Unidentified Justice: Supposing the judge--

Mr. Caruso: I did not ask for past violations.

Unidentified Justice: --Supposing the judge... you don't think the finding as to past violations... say there was no change in the law at all.

Could he not then have entered a declaratory judgment saying you violated in the past, and I want the parties to argue about the kind of injunctive relief what was appropriate, and one of the things I will take into consideration is the nature of the past violations?

Mr. Caruso: It may take into consideration the nature of the past violations only for the purposes of stopping the ongoing violation insofar as the exception to the Eleventh Amendment is concerned, because the Eleventh Amendment is concerned, because the Eleventh Amendment prohibits equitable and legal relief in state courts against the state.

Unidentified Justice: My question is whether... if at the time the declaratory judgment is entered it is then legally permissible to enter an injunction, why isn't the declaratory judgment also legally permissible at that time, just as a predicate for the rest of the litigation?

Mr. Caruso: Because a declaratory judgment is not a prospective compliance order.

That is the only exception that is permitted.

Unidentified Justice: Wouldn't the District Court in an injunction action enter his conclusions of law?

Mr. Caruso: Yes.

Unidentified Justice: And the proper basis for an injunction is that there is a violation of law that has been going on.

Mr. Caruso: That is correct.

Unidentified Justice: And you conclude that there is... that this is what the statute means, this is what the state is not doing, and therefore you need an injunction.

Now, that is for all intents and purposes a declaratory judgment.

Mr. Caruso: It is not a declaratory judgment.

Unidentified Justice: Well, what is it?

What is it?

It is a declaration--

Mr. Caruso: Well, it requires... it requires--

Unidentified Justice: --that the state is violating the law, and therefore it is an injunction.

Mr. Caruso: --If that is a declaration of the violation of the law that is occurring at that time, it would not be prohibited by the Eleventh Amendment.

Based upon that declaration of violation an injunction could be entered under the Eleventh... and not violate the Eleventh Amendment as to prospective compliance.

Unidentified Justice: And in Justice Stevens' example, suppose six months before this law was changed--

Mr. Caruso: Yes.

Unidentified Justice: --There was an injunction, there was an injunction entered based on a declaration or a conclusion that the law was being violated.

Mr. Caruso: Then a proper Quern notice could be entered as predicated on that injunction--

Unidentified Justice: Exactly.

Exactly.

Mr. Caruso: --that is based upon the declaratory judgment that was entered.

Unidentified Justice: Yes.

Mr. Caruso: And that injunction that would be entered--

Unidentified Justice: Isn't that exactly true of the stepparent case in this case?

Mr. Caruso: --No.

Unidentified Justice: Well, there was a preliminary injunction entered.

Mr. Caruso: There was a preliminary injunction, but a preliminary injunction--

Unidentified Justice: And that injunction was on appeal.

Wasn't the state supposed to have made that injunction?

Mr. Caruso: --That preliminary injunction was against the state, but it was a preliminary injunction.

It was never filed--

Unidentified Justice: Wasn't it supposed to... wasn't it supposed to obey the preliminary injunction, or was it--

Mr. Caruso: --And it did obey the preliminary injunction.

It did comply in every respect, and it did make the payments.

Unidentified Justice: --I see, so they made the payments.

Mr. Caruso: That's right.

Unidentified Justice: So there wasn't any need for a notice for that period.

Mr. Caruso: There wasn't any need to have any notice.

There isn't any need at this time because not only did they pay with respect to the claim--

Unidentified Justice: Okay, that is all I wanted.

Mr. Caruso: --But... that's right.

Now, one of the things you may have as a prospective injunctive order could be based, Justice Stevens, upon a declaratory judgment of ongoing violation.

Perhaps I misunderstood, and orders ancillary to such injunctive relief have been permitted by the Court as necessary to accomplish termination of this conduct, because the essence of the Ex Parte Young exception is termination of unconstitutional conduct by state officers by a prospective injunctive order absent Congressional abrogation or a state waiver of that immunity.

Now, the orders ancillary to injunctive relief have been permitted by the Court, and an example of that is Milliken v. Bradley, which required the taking of affirmative steps that resulted in expenditures of money out of state treasury, but that relief, however, so far as the ancillary order is concerned, was prospective and primarily directed toward cessation of the violation of the federal law.

As a matter of fact, in Milliken v. Bradley, the Court made it very clear that that is all they could do, is to award prospective relief, prospective compliance order.

I wish to make it clear here--

Unidentified Justice: May I pursue my other question just--

Mr. Caruso: --Pardon me.

Unidentified Justice: --because I am not quite sure I follow everything you are saying.

Supposing again in my hypothetical example you have a declaratory judgment and an injunction entered, which you agree would not be barred by the Eleventh Amendment.

Mr. Caruso: Yes.

Unidentified Justice: Then 30 days later Congress passed the new statute that says you don't have to follow this procedure any more, and so the state goes in or its officials go in and say we want the injunction vacated because the law has been changed.

You vacate the injunction.

Mr. Caruso: Yes.

Unidentified Justice: Would the Eleventh Amendment require that the declaratory judgment also be vacated, in your view?

And if so, why?

Mr. Caruso: I don't believe it would require the declaratory judgment to be vacated if the law was changed because there was a determination at that time that the state was in violation of federal law by virtue of the declaratory judgment and an injunction put in place.

Unidentified Justice: And it had been violating federal law for the past two years.

Mr. Caruso: So then after that the law had changed.

I wouldn't say it would be necessary to vacate.

It would be ineffectual.

It wouldn't--

Unidentified Justice: Well, it wouldn't be ineffectual as it might happen here.

The members of the class thereafter go into Michigan administrative proceedings and say we would like to get out past benefits or whatever it is based on that finding of illegality, and the state would have to decide whether or not to pay.

Mr. Caruso: --If there was an ongoing violation and a determination of that ongoing violation by a declaratory judgment upon which there was based an injunction, and notice on that injunction to the class concerning the violation, I would say that they could do that in the state administrative procedure.

That would be all right.

But in the hypothetical that you pose there would have been a determination of liability of an ongoing violation.

In this case there is no such thing as an ongoing violation.

There is nothing to enjoin.

There is nothing to determine except--

Unidentified Justice: Well, is the ongoing violation--

Mr. Caruso: --Except by going in the past and making a declaratory judgment as to past actions.

Unidentified Justice: --Is the ongoing violation essential?

Sometimes we get cases where a governmental agency has voluntarily changed its policies pending adjudication, supposing before the time of the judgment they voluntarily changed their policies and then later on there was the statute.

Mr. Caruso: In that hypothet there would be no determination by a court as to ongoing violation, and that is necessary.

There must be an adjudication by a federal court.

Unidentified Justice: Not an adjudication of liability, adjudication of ongoing violation.

Mr. Caruso: An ongoing... an adjudication of liability concerning their present acts and the relief would be to stop that ongoing violation, in other words, to put a termination to that--

Unidentified Justice: Well, it can't be ongoing if they are going to evade the injunction, and as soon as the injunction entered, whatever the violation was--

Mr. Caruso: --That ends it.

Unidentified Justice: --it stops.

Mr. Caruso: That ends it.

That stops.

That's right.

Unidentified Justice: And so what would the possible purpose of a notice in that situation be except to be of an aid to past violations?

Mr. Caruso: I think that that is the way you have to read the Quern notice.

The Quern notice, I think, probably would have to be the past violation, but nevertheless insofar as we... as the courts have gone today, it has to be based upon a prospective compliance order and not a judgment as to past action, because an injunction, a determination by injunctive order doesn't adjudicate the actions that have taken place heretofore as a declaratory judgment to past actions would necessarily do.

At any rate, as I say, I wish to make it clear that the respondent does not seek any decision here that would permit the avoidance of the state's responsibility with respect to the state's federal aided programs, public welfare programs, because they do have the administrative procedures in place or mandated by Congress, and also there is available the judicial forum in the state and they could... that could review any decisions made at the administrative level, and they could take judicial action.

Unidentified Justice: But, Mr. Caruso, it is true that your position is that whatever federal question of law has to be decided ought to be decided by the state court.

Mr. Caruso: Not every federal question of law, but in this situation, the type of relief that they are seeking here should be decided in state court because the type of relief that is available to them because of the Eleventh Amendment immunity is only a prospective injunction, and a prospective injunction is not available here simply because there is no violation of federal law, and there has never been a determination made by a federal court that there was at any time a violation of federal law.

Chief Justice Burger: You have one-half minute left, if you can do anything with that.

ORAL ARGUMENT OF WILLIAM BURNHAM, ESQ., ON BEHALF OF THE PETITIONERS -- REBUTTAL

Mr. Burnham: I would like to just briefly respond to something that Mr. Caruso said about the availability of hearings.

In fact, as indicated in our reply brief in the stepparent case, for those persons who asked for hearings, they were denied hearings.

They were told that because it was an automatic change in grants and so on, they could not get an administrative hearing.

Now, later they changed that policy when they found that that was also a violation of federal law.

However, at the time that the suit was filed, it was quite clear that the plaintiffs were unable to get any relief by way of the state administrative tribunal, which is, of course, one of the reasons why they filed in federal court.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Unidentified Justice: The honorable Court is now in recess until 4 o'clock, this date.

Attribution:

The OYEZ Project

Featured:

Blum v. Bacon - Oral Argument

Fri, 09 Jan 2009 14:47:08 +0000

Case:

Blum v. Bacon

Related Transcript:

transcript.xml

Transcript:

ORAL ARGUMENT OF ROBERT S. HAMMER, ESQ.

Chief Justice Burger: Mr. Hammer, you may begin.

Mr. Hammer: Mr. Chief Justice, and may it please the Court, this case presents the question which the court left open in Quern v. Mandley back in 1978, namely whether a state emergency assistance law which does not cover all possible emergencies and, as the court below held, which conforms to the Federal Social Security Act, whether this statute also conforms to the Equal Protection Clause of the Fourteenth Amendment.

Specifically, we are dealing this morning with amendments to Section 350-J of the New York Social Services law, which were added by Chapter 77 of the laws of 1977, Section 10, effective May 1, 1977.

Specifically, these amendments denied cash emergency assistance to Aid to Families with Dependent Children recipients and eligibles.

It also denied the replacement of lost, stolen, or mismanaged cash.

It also forbad the duplication or replacement of any portion of a regularly recurring grant.

In the instant case, as I... the Second Circuit has upheld the statute under the Supremacy Clause.

However, and, we would submit, erroneously, the court held these same provisions unconstitutional as denials of equal protection of the law.

The known facts of this case are simple and essentially not in dispute.

Shortly after these new amendments took effect, the plaintiffs, who are all AFDC recipients, received their regular welfare checks.

They cashed them, in some cases made purchases or paid rent, and then, through some unexplained course of events, either the money was lost or stolen.

In all of these cases the thefts were reported to the local police and to the Westchester County welfare officials.

It is assumed by both sides, and the record reflects that, but for the amendments to the statute, all of these individuals would have been eligible for emergency assistance.

They were, in fact, denied cash emergency assistance on the basis of the new statute.

Of the main plaintiffs, Miss Bacon received a special food voucher from her case worker and was referred to voluntary agencies for further cash assistance.

The record is silent as to whether she pursued this referral.

Likewise, the record is silent as to whether any of the other plaintiffs were referred to voluntary agencies.

I mention this merely because that among the components of emergency assistance is referral and counseling.

However, as I indicate, the papers in this case as prepared by the plaintiffs do not indicate one way or another whether resort was made to voluntary assistance.

It's also apparent from a close reading of the plaintiffs' papers that although there is in each case an allegation of utter destitution and inability to get along without any cash assistance, the fact remains that from the time of the incident as reported to the police and then as reported to welfare officials and, in one case, reported to counsel even before the individual went to the welfare officials, there elapsed a period of an average of a week or so, in one case a little less, a couple of cases a little more, from the time of the incident until a temporary restraining order was obtained in court.

I mention it because although there is the allegation in the complaint and in the supporting affidavits that these people were utterly destitute and unable to get along without cash emergency assistance, there is no allegation that somehow they couldn't manage.

Somehow, it would appear, at least, I submit, from the silence in the plaintiffs' papers, that somehow they did manage.

There is no allegation that anyone missed a mean.

Unidentified Justice: Mr. Hammer, may I just understand the thrust here?

Are you challenging their standing?

Mr. Hammer: No, sir, I am not.

Unidentified Justice: Then what is the legal point you're making?

Mr. Hammer: The point that I'm trying to make, Mr. Justice Stevens, is that the claim of necessity for public cash emergency assistance which is being advanced by the papers is one which is certainly not totally established by the record, to say the least.

Unidentified Justice: Well, will that prevent us from--

Mr. Hammer: It is important because ever since Dandridge v. Williams, this Court has held that a state or, indeed, Congress, when it appropriates its portion, need not take care of each and every possible need that a welfare recipient conceivably may have.

The thrust of these decisions--

Unidentified Justice: --But still what you are saying, then, is these people are not being denied what they seek because of their membership in the class of AFDC recipients but rather for some other reason?

Mr. Hammer: --No, sir.

My point is that the decisions of this Court which permit the granting of less than the established needs of a welfare recipient, I submit, not only demonstrates as a matter of law but demonstrates as a matter of fact that it is possible in such a situation as was presented here for people to get by.

Apparently they did get by, and I think it's important because--

Unidentified Justice: Were they denied assistance because they "got by"?

Mr. Hammer: --No, sir.

They were denied assistance--

Unidentified Justice: Well, if they weren't, what are you arguing it for?

Is it in this case?

Is it?

Mr. Hammer: --I think it forms an important context, part of the context of the case, Your Honor.

Unidentified Justice: Did you just think of it?

Mr. Hammer: No, sir, I didn't.

The action as brought in the district court sought to declare this statute unconstitutional as a denial of the equal protection of the laws.

There was also a claim that it violated the Supremacy Clause of Article VI of the Federal Constitution.

An injunction against enforcement was sought.

In addition, there was a claim of bad faith enforcement so that damages was also claimed.

The basis of this was the Second Circuit's decision in Lynch against Philbrook, the Seventh Circuit's decision in Mandley against Trainer, which was reversed sub non, Quern against Mandley, and Williams against Wobemuth, a similar Third Circuit case.

This latter claim for damages was ultimately dropped.

Initially, since this Court had not yet decided Quern and there was room, certainly, for argument at the circuit level, the District Court, relying on the Second Circuit's Lynch case, held that the statutes violated the Supremacy Clause.

The Circuit affirmed upon the decision of the District Court.

At this point this Court had heard argument in Quern and we petitioned the Circuit for rehearing.

The Circuit held the petition until the decision in Quern came down and they sent the case back to the District Court for reconsideration in light of this Court's ruling.

Upon remand, the District Court held, first, that the Supremacy Clause was not violated, citing Quern, and that of the three subdivisions, that the no cash provision violated equal protection.

However, the denial of replacement for lost or stolen case was upheld as a reasonable means of avoiding fraudulent claims and, likewise, the prohibition against duplication was upheld as a reasonable means of determining what emergencies were to be handled.

The Circuit heard the case again, this time upon the appeal of plaintiffs.

The Circuit upheld us on Supremacy Clause grounds, but reversed the District Court on the issue of lost or stolen cash, claiming that there was no reasonable basis shown to treat AFDC people differently from others.

The Circuit affirmed on the issue of the no cash.

This time, however, with respect to the replacement provision the District Court's decision was not appealed, so that the District Court decision on replacement of a grant stands as the law in the case.

What I should like to discuss during the time allotted to me is basically three points... that under the authority of decisions such as Dandridge the non-duplication provisions being as they are a reasonable exercise of the state's discretion as to how its money should be allotted covers essentially the entire issue raised by the plaintiffs.

To a certain extent, the statute is redundant because if you say in our submission that you need not duplicate a regular grant, by the same token, you need not duplicate the grant because part of it was lost or stolen.

Likewise, you need not duplicate part of a cash grant which was given to AFDC people.

Additionally, we view that the loss or theft provisions is an appropriate prophylactic measure to assure that fraudulent claims are not received or paid.

And, finally, we would submit from the record that the lower courts simply missed the point and erred in holding the AFDC people were treated substantively in any different way than non-AFDC people.

The only evidence in the record was an affidavit submitted by the state and it was never controverted by the plaintiffs in any respect.

Unidentified Justice: Well, I take it the Court of Appeals disagreed with you.

Mr. Hammer: They disagreed, Your Honor, but--

Unidentified Justice: And it's... on purely a matter of state law, isn't it a matter... it's a construction of the state statute.

Mr. Hammer: --I submit, Your Honor, that there's no real accurate construction on what state--

Unidentified Justice: Well, you might say they made a mistake, but don't we usually take the Court of Appeals' word on the construction of state law?

Mr. Hammer: --That may be true, Your Honor, but the problem here is that on the face of the cases relied upon both by the plaintiffs and by the Court of Appeals, it is far from clear that state law is what they say it is.

Unidentified Justice: Well, they thought it was plain on the face of the statute.

Mr. Hammer: Under the circumstances, Your Honor--

Unidentified Justice: And your answer is well, we haven't construed it that way and the Court of Appeals should be bound by your construction.

Mr. Hammer: --They should, Your Honor, have given more deference to the administrative construction.

Certainly if they had any doubts, they should not have relied either on my say-so or my learned friend's, but should have remanded for a hearing.

Chief Justice Burger: We will resume there at 1:00, counsel.

Mr. Hammer: Thank you, Your Honor.

Chief Justice Burger: You may resume, counsel.

ORAL ARGUMENT OF ROBERT S. HAMMER, ESQ. -- Resumed

Mr. Hammer: Thank you, Mr. Chief Justice.

If the Court please, I should like to follow up on the question that Mr. Justice White posed Just before we recessed.

If I may, I would like to invite the Court's attention to pages 16-A and 17-A of the jurisdictional statement, which contains the opinion of the Court of Appeals.

And one will see that what the Court did and, I submit, erroneously, they have claimed... the Court held that Mr. Hickey's affidavit was not supported by the record.

Indeed, Mr. Hickey's affidavit is the record.

There's nothing else.

As to its interpretation of state law, the cases relied upon by the Court of Appeals include cases which interpreted the old regulation that was replaced by the statute as well as regulations... I'm sorry, as well as other cases which followed it.

And these cases confirmed our position that the statute has been interpreted generously by... certainly by the lower courts in New York.

There has been no definitive Court of Appeals ruling since Jones against Berman.

Unidentified Justice: Well, the... as I understand the Court of Appeals, it says that your position is contrary to the plain language of the statute.

That's what it says.

Mr. Hammer: Well, Jones against Berman... the Court of Appeals... you're speaking now of the Second Circuit.

Unidentified Justice: I'm just asking you, don't you understand it to have held that your position is contrary to to the plain language of the statute?

That's what it says.

Mr. Hammer: That's what they say, Your Honor.

Unidentified Justice: Then we should--

--Why should that bother you?

Mr. Hammer: Your Honor, it doesn't bother because I do press the point.

I submit that the Court of Appeals was wrong.

That's why we're here.

The Court of Appeals was wrong because it ignored Rule 56(e).

They were wrong because they misread state decisional law.

Unidentified Justice: Well, you're saying our scope of review is broader if they make an error of law than they make an error of fact.

Mr. Hammer: Obviously, Your Honor, and this is certainly, I would submit, is an error of law, both error of misinterpretation of state law and an error of misapplication of Rule 56(e).

Unidentified Justice: Well, how can you account for three New York Judges making that mistake?

All three of them had considerable experience with New York law, didn't they?

Mr. Hammer: You're speaking of the Circuit Judges, Your Honor.

Unidentified Justice: Yes, sir... all three of them.

All three of them practice right in New York City.

Mr. Hammer: That may be so, Your Honor, but even so they are not infallible.

Unidentified Justice: It may be so.

That's the record.

Mr. Hammer: It does not mean that they are infallible upon issues of interpretation of state law.

Unidentified Justice: They are less fallible than you.

I suppose they were not specialists in welfare law.

Mr. Hammer: No, sir.

As of the members of the Court, Judge Kerse practiced on Wall Street, Judge Feinberg, the Chief Judge, has been on... while he's had a number of welfare cases upon which he has sat, and Judge Adelstein.

They've all had these cases, but insofar as the particular point of law is concerned, I think their decision has to be looked upon upon its own merits, not because they may be--

Unidentified Justice: I don't know of... who on this bench has practiced welfare law?

I don't know either.

You need welfare lawyers as judges?

Mr. Hammer: --Not necessarily, Your Honor, but it is a specialty.

All I am saying is not that it's necessary to have a patent lawyer to decide a patent case or a securities lawyer to decide a securities case.

All I am saying is that simply because they are experienced New York judges does not make their decision sacrosanct, with all due respect to them... and I have the utmost personal respect for the three individuals concerned.

I submit they were wrong simply because they misapplied a Federal rule and they misinterpreted the governing... such state decisional law as is available.

Unidentified Justice: Meaning what case, counsel?

Mr. Hammer: They misinterpreted... they first misrelied upon Jones against Berman because it predated the statute and the cases of Nazaro, of Orr v. Shang.

All these indicated that in administrative practice the state was interpreting the language much more generously than the face of the statute might suggest.

Maybe the welfare officials were wrong.

Maybe they were being too generous with the public purse, but the fact remains that there seemed to be an indication, at least in the lower courts, Justice O'Connor that these people and members of the class who are represented here today under certain circumstances would be getting emergency cash assistance.

Unidentified Justice: But not if they lost the check, is that right?

Mr. Hammer: On that I would say there is no question, Your Honor, they would not get it.

Unidentified Justice: And all of these plaintiffs involve that situation, is that right?

Mr. Hammer: That's correct.

Unidentified Justice: So every one of the people in the class before us alleged they had lost the check or cash.

Mr. Hammer: They had lost the proceeds.

If it were simply a lost check, the piece of paper would be replaced without any difficulty, but we're talking now about the cash.

Unidentified Justice: The proceeds, the cash.

And under an uncontested rule of New York law, they were ineligible, then, for relief?

Mr. Hammer: That's correct.

Unidentified Justice: And none of them ever got any further than challenging that first rule about the replacement of the proceeds of a check, as I understand it.

They didn't actually get to the point of applying for cash relief?

Mr. Hammer: Well, they did apply for cash.

They applied for cash and the welfare officials turned them down on the ground that the new amendment said you may not replace... you may not get cash because you're an AFDC recipient and you may not get cash because you are replacing part of your regular recurring grant.

Unidentified Justice: So they were turned down on both grounds.

Mr. Hammer: Plus the additional ground that... a somewhat redundant ground of subdivision (f) that they could not replace a grant in general or duplicate a grant.

Unidentified Justice: Mr. Hammer, let me see if I understand your argument.

As I read the Court of Appeals opinion, they said that you didn't content there was a rational basis for the discrimination but, rather, you said there was no discrimination.

Mr. Hammer: That's correct.

Unidentified Justice: And you do now agree that because they are AFDC beneficiaries they can't get cash.

Mr. Hammer: That's right.

Unidentified Justice: Are you arguing that no other citizen of New York gets cash?

Mr. Hammer: Our contention is... and this is the Hickey affidavit... someone, because the cash that is sought to be replaced is part of the regular recurring grant they are treated no differently than other categorical recipients or non-recipients of public assistance who get... who get cash because whatever class you fall into you get it only once.

You cannot get it twice.

This is the whole point.

Unidentified Justice: But am I correct in believing that some non-AFDC recipients can get cash pursuant to this statute?

Mr. Hammer: They get cash pursuant to the statute as emergency assistance because it is for an emergency rather than for the replacement of the regular recurring grant.

This is the nub of the argument against allowing AFDC recipients to get cash.

The AFDC recipient gets cash as part of the regular grant.

If the AFDC recipient were to get the cash as emergency assistance on top of it, the emergency assistance program would then, contrary to the intent of the legislature, become a supplement to AFDC rather than emergencies and this is what, as I understand the Court recognize in the Quern case, that the states were free to tailor the emergency assistance programs to their own desires, to decide what emergencies were to be covered and, indeed, the Court in its opinion alluded to the New York program.

Unidentified Justice: I have to confess I don't thoroughly follow your argument.

May I just try again in a way?

Are they, these people, denied cash because of this statutory provision?

Mr. Hammer: AFDC recipients?

Unidentified Justice: Yes.

Mr. Hammer: Yes.

Unidentified Justice: And other people who are not AFDC recipients may get cash.

Mr. Hammer: That's correct.

Unidentified Justice: Now why is that not a difference in treatment?

Mr. Hammer: It's not an invidious discrimination.

Unidentified Justice: Well, then, forget invidious.

Is there any difference at all in the treatment?

Now it seems to me you've said one gets cash and the other does not.

Mr. Hammer: The--

Unidentified Justice: Because if there's a difference, the Court of Appeals said, if I read the opinion correctly, you haven't even offered any rational explanation for the difference.

Your argument, rather, is there is no difference, but you just admitted there was a difference.

Mr. Hammer: --What we're saying is that when you compare the various categories of assistance... and this is, again, I am referring to the affidavit of Mr. Hickey and I think it's at 161-A of the joint appendix... he points out that whatever the class of recipient, one may get cash, the other may get services in kind.

To the extent that the AFDC recipient does not get cash it is because the AFDC recipient has already gotten cash as part of a recurring grant.

Unidentified Justice: But if he was some other kind of public beneficiary, he would have already gotten cash pursuant to some other grant.

How does that differentiate it?

I don't understand it.

Mr. Hammer: Well, in this case the statute would preclude any beneficiary of public assistance, whether it be home relief or aid to dependent children.

Unidentified Justice: Well, now are you saying no one can get cash?

Mr. Hammer: In essence--

Unidentified Justice: A minute ago you said others could.

I just really don't understand your argument.

Mr. Hammer: --The non--

Unidentified Justice: You're saying, are you not, that people other than welfare recipients can get cash.

Mr. Hammer: --That's correct, because--

Unidentified Justice: But no welfare recipient under any categorical program can get additional emergency cash?

Mr. Hammer: --That is correct, Your Honor.

And that is in keeping with the philosophy that this is for emergencies and not to act as the insurance policy for lost cash or a supplement to the regular recurring grant.

Unidentified Justice: Can a welfare recipient not also have an emergency?

Mr. Hammer: That's correct, of course.

But the emergencies that are covered are emergency services.

They are covered as, in some cases they are covered under the AFDC program itself as advance grants, in the case of special grants to avoid utility turnoffs or evictions, so that what is the net result--

Unidentified Justice: Are you saying basically that a welfare recipient faced with an emergency, while they might not get cash, can be given other forms of relief to get them out of the emergency?

Mr. Hammer: --That's quite so.

They can be given certain services in kind.

I must say, however, there are some situations where the emergency simply will not be covered, just as under... and we submit that this is lawful since just as under the Dandridge and the cases that followed it a state need not take care of every certified need that a welfare recipient may have.

With the Court's permission, I should like to reserve the remainder of my time.

Unidentified Justice: Just one question.

You can answer it yes or no.

Is is your position that where the interests of children, minor children, are involved, the state is more generous than it is where minor children are not involved?

Is that it?

That's yes or no.

Mr. Hammer: I wish I could answer it yes or no, Your Honor.

The program... the emergency assistance program is one which deals with minor children by definition--

Unidentified Justice: And the state... are you arguing the state is more generous with respect to them than with respect to cases where minor children are not involved?

Mr. Hammer: --I think the state is equally generous and equally penurious in both, with respect to both classes.

Chief Justice Burger: Mr. Schwartz?

ORAL ARGUMENT OF MARTIN A. SCHWARTZ, ESQ. ON BEHALF OF APPELLEES

Mr. Schwartz: Mr. Chief Justice, and may it please the Court, at the outset I think it's important to clarify what I think may be two misconceptions.

One of the state statutes in this case specifically singles out AFDC families that are... those are the families where there is an absent or a disabled parent with children... the automatic denial of cash emergency assistance in any circumstances.

The restriction that is placed in the statute to emergency services means that these families cannot get emergency assistance in the form of cash.

They cannot get payments in kind.

They cannot get voucher payments.

Now, a home relief family who is also in receipt of public assistance and, I might add, same exact level of benefits as an AFDC family, are eligible for emergency assistance in the form of cash or services... indeed, cash and services.

These families, Mr. Chief Justice, to respond to your question, typically in New York consist of intact families with children.

So in terms of whether we are talking about different treatment of families with or without children, I don't see that as being a factor here.

I think what Mr. Hammer's argument is is that AFDC families, while not eligible for cash emergency assistance, are eligible for a special grant under New York's public assistance program.

Unidentified Justice: Are home relief families ineligible for AFDC assistance?

Mr. Schwartz: They are ineligible for AFDC assistance, Your Honor, but they are equally eligible for the special grant under section 131 of the New York Social Services law.

Unidentified Justice: That's the cash grant.

Mr. Schwartz: It is a cash grant, Your Honor.

If one looks to the statute authorizing the cash grant--

Unidentified Justice: Is that because there are minor children involved?

Mr. Schwartz: --The statute that authorizes the special grants is not limited to families with or without minor children.

It includes potentially al welfare recipients in the State of New York.

Unidentified Justice: Well, where is the disparate treatment on which the equal protection rests?

Mr. Schwartz: This disparate treatment comes about because this special grant statute is much more limited than the emergency assistance statute.

The language of the special grant statute that pertains to emergency situations is quite clear in section 131-A, subdivision 6.

Unidentified Justice: Where is it?

Where is it in these papers?

Mr. Schwartz: The state has set it forth in their brief, Your Honor.

Unidentified Justice: In the jurisdictional statement?

In the jurisdictional statement or the brief?

Page five of the jurisdictional--

--No, of the brief.

Mr. Schwartz: It's page--

Unidentified Justice: Five.

Mr. Schwartz: --Five, towards the bottom of the page.

The statute refers to special grants for the replacement of necessary furniture and clothing and then goes on, in cases of fire, flood or other like catastrophe.

Well, the question arose in the New Yor State courts, what is meant by this phrase "other like catastrophe".

The New York Court of Appeals ha construed that provision as including only natura events and, therefore, excluding a man-made catastrophe such as a burglary.

The lower New York State courts have also construed this provision in a similar vein as excluding the intentional destruction of property.

Now these are events, emergency events, for which home relief and non-recipient families in New York--

Unidentified Justice: You mean non-AFDC recipients--

Mr. Schwartz: --Non-AFDC recipient families, as well as non-recipient families may receive emergency assistance in New York in any form.

Now there's another important difference.

Unidentified Justice: --Under what statute is that?

Mr. Schwartz: Under 350(j), the statute that authorizes emergency assistance.

Unidentified Justice: Now wait a minute.

350(j) is at page three of the State's brief, is that right?

Mr. Schwartz: It starts on the bottom of page three, Your Honor.

Unidentified Justice: All right.

Mr. Schwartz: There is no restriction in this case that would make a family that was a victim of a man-made catastrophe ineligible for emergency assistance.

Now there is a second important difference between the special grant statute and the emergency assistance statute.

The special grant statute is limited to losses of furniture and clothing.

Again, there is no such limitation in the state's emergency assistance statute.

The emergency assistance statute, for example, would cover such needs as shelter, food and medicine, all of which are excluded from the special grant provision.

So all that the Circuit Court of Appeals did is to look at these two provisions, look if you don't have to go much further than the plain language of them and say that they are simply not co-terminate with each other.

Now the fact that the state submits an affidavit from an official that seeks to conflict with the plain language of the statute I don't think calls for a different result.

Unidentified Justice: Well, the interpretation put on it by the official was different then the Court of Appeals.

Mr. Schwartz: It was different your Honor, but--

Unidentified Justice: And if you accepted him... if you accepted his construction, would you say there was no difference between the two classes?

Mr. Schwartz: --If you accepted the construction that AFDC families get special grants for the very same things that every other family gets emergency assistance for--

Unidentified Justice: There is no difference there.

Mr. Schwartz: --I would say there is no difference, with one important exception that was pointed out by the Secretary of the Department of Health and Human Services in his amicus brief in the Court of Appeals.

That is, the emergency assistance program was enacted originally primarily to meet prompt needs.

In fact, the Federal regulations contain a requirement that emergency assistance be provided forthwith.

There is no similar time requirement with respect to special grants.

Other than that timing difference, I would say yes.

If the timing was the same, I would have no problem, I don't think.

Unidentified Justice: Was the administrative construction offered in this affidavit supported by any New York cases in the--

Mr. Schwartz: Absolutely not.

Unidentified Justice: --In the lower courts or anyplace else?

Mr. Schwartz: Absolutely not.

In fact, it's quite inconsistent with the decision of the New York Court of Appeals in the Matter of Howard v. Wyman.

Unidentified Justice: And you have cited that.

Mr. Schwartz: Which we have cited, and which in a footnote in that decision specifically indicated that there may well be a distinction between emergency assistance on the one hand and special grants on the other hand.

Unidentified Justice: The Court of Appeals didn't rely on that, I think.

They just said it was a plain language.

Mr. Schwartz: The Court of Appeals did cite the Matter of Howard v. Wyman because the term "catastrophe" in the special grant statute did require construction by New York's highest court and did get that construction.

Unidentified Justice: Mr. Schwartz, if one were to read the Court of Appeals opinion as simply saying that it disregarded the Hickey affidavit because the affidavit was contrary to the plain language of the statute, would you regard that as a holding on New York state law of the kind that we ordinarily defer to a Court of Appeals?

Mr. Schwartz: Yes, I would, absolutely, Your Honor.

The situation as I see it comes Plaintiffs are denied emergency assistance under a statute which on its face singles out AFDC families for the automatic denial of emergency assistance.

The plaintiffs here didn't get emergency assistance.

They also did not get a special grant, which is significant.

They weren't offered a special grant.

They went away with nothing.

Now the plaintiffs come into court and say that statute discriminates against AFDC families in violation of the Social Security Act and the Equal Protection Clause, and the state comes back as a defense and says no, in fact there is no discrimination because if one were to look to the state law you have this other provision that covers AFDC families.

And all the District Court did, and the Circuit Court did, was say well, your reading of that state special grant provision is incorrect.

It obviously doesn't cover everything that's within the emergency assistance statute.

Unidentified Justice: You are familiar, as most judges are, I suppose, any number of state statutes or federal statutes that haven't been ultimately administratively construed just in accordance with the way they are written, and I'm somewhat troubled.

If that's Court of Appeals meant is to say how can you construe the statute this way, it's contrary to its language, whether or not this Court of Appeals shouldn't have given more deference to the affidavit in the absence of any counter-affidavit that you submitted.

Mr. Schwartz: First of all, the affidavit, as I read it, is nothing more than a self-serving, argumentative point of law.

Unidentified Justice: Any good affidavit is self-serving.

Mr. Schwartz: But it doesn't contain any factual statements.

It's a question of what the State Commissioner thinks the law of the State of New York is.

More importantly, these--

Unidentified Justice: Well, don't you ordinarily give some deference to the Commissioner's view of what the law is if he is charged with interpreting it?

Mr. Schwartz: --You ordinarily would, Your Honor, but not in a situation like this, were (a) the statute is clear on its face and (b) where it has already been construed by the highest court in the state.

And if we have a situation where we have a clear state statute and the New York Court of Appeals has construed it, it seems to me that the State welfare commissioner can't come before the court and say well, this statute simply means, in our minds, something else.

That would work havoc in terms of what state law means and what would happen when state laws like this are challenged in Federal court.

Unidentified Justice: Well, you could argue, I suppose, if the law were ambiguous on its face you should give some deference.

Mr. Schwartz: That's exactly my point.

Unidentified Justice: But the Court of Appeals said it i clear as a bell.

Mr. Schwartz: Not only has the Court of Appeals said it, but the District Court has reached the same conclusion and for that matter, Your Honors, the Secretary of Health and Human Services in their amicus brief says this is an obviously discriminatory provision, and they have expertise in this matter.

Unidentified Justice: But if... do you think we have to defer to a Court of Apeals statement that a law is clear on its face if we don't think it is... if we don't happen to agree that it is clear on its face?

Mr. Schwartz: I'm not arguing--

Unidentified Justice: I don't know of any examples like that.

Mr. Schwartz: --I'm not arguing that the analysis of the Court of Appeals is binding on this Court.

But--

Unidentified Justice: No, no.

Even if it were ambiguous or anything else, it wouldn't be binding, we could reverse them on that, but we normally don't.

Mr. Schwartz: --I agree.

We have cited Bishop v. Wood and a consistent line of cases that preceeded it.

In fact, the decision that post-dated it, Runyon v. McCrary, which stand for the proposition what where the constitutional question depends for its resolution, as it does here, upon the analysis of state law, and the lowe Federal court judges are in agreement as to what the state law and, moreover, where their analysis is supported by the decision of the highest court in the state, the rule has been that this Court normally gives deference to the construction of the state law of the lower Federal court judges.

Now that's not an ironclad rule, but I submit that it reflects a strong policy and is based on the common sense proposition that lower Federal court judges just simply deal with a particular state's law more often and are somewhat closer to it than this Court is.

Unidentified Justice: What was the concrete dispute between the claimant here and the state?

Mr. Schwartz: Well, there were four plaintiffs in this case.

Unidentified Justice: Well, what did they want that they didn't get?

Mr. Schwartz: They requested in three of the cases emergency assistance to replace public assistance funds which had either been lost or stolen.

In the fourth case... now there's a fourth case which is significant here.

In the case of Plaintiff Parrish, she came back from spending her day to find the family's apartment ransacked and the family's public assistance cash and food stolen, and she requested emergency assistance to replace the stolen cash and food.

Unidentified Justice: Let me pursue this.

Suppose that one class under the state law is given A and B and another class is given A.

And so there's a difference in treatment and the state doesn't offer any explanation and so the Court declares that there is a denial of equal protection of the law.

Now you wouldn't say the statute is unconstitutional on its face, would you?

You'd just say that failure to extend B to both classes is unconstitutional.

You certainly wouldn't strike it down on its face.

Mr. Schwartz: This gets to the problem of the remedy.

Unidentified Justice: No, no, no, it does not.

I would think that it gets to the problem of the remedy if you said that you can't give either class B or you give both class B, but here to the extent that the AFDC people ge A just like the other class does, I don't understand why you strike it down on its face.

Mr. Schwartz: The reason I disagree is that I think the state has different options here of curing the discrimination.

For example, the state could say no emergency assistance to anybody and that would cure the discrimination.

Or, the state could say emergency services only to everybody.

Unidentified Justice: Yes, but I would think you would strike down a statute... a state statute... only to the extent of the discrimination.

Mr. Schwartz: Well, but the statute that was struck down here, Your Honors, on its face reflects that discrimination.

The statute in two specific subsections state that AFDC families are ineligible for cash emergency assistance and are eligible only for emergency services.

Now that on the face of the statute creates clear discriminatory classification and the problem, if there is a problem, only arises here because the state commissioner comes back and says well, we know we have these two subsections and they are very clear on their face, but nevertheless we're going to point you to some other statute which in effect operates as a defense, as I see it, to the claimed unconstitutionality of this statute.

Unidentified Justice: Well, counsel, you would agree, wouldn't you, that a state can consider the entire state scheme in determining whether welfare recipients are being given appropriate forms of relief.

They don't have to provide for everything in the same section of the statute, certainly.

Mr. Schwartz: I agree, Your Honor.

I agree.

Unidentified Justice: So that's a fair defense, assuming they are correct as to what is meant by the other sections.

Mr. Schwartz: Well, I don't think in this case it's a fair defense.

I think it's potentially a fair defense in a given case.

I don't think it's a fair defense in this case for two reasons.

One, the scope is not the same.

Unidentified Justice: Well, you have been talking about that.

Mr. Schwartz: Right.

Unidentified Justice: Now for you to win, for your clients to win, don't you have to strike down subsections (c), (e) and (f) of section 350?

Don't you have to strike down all three because it... subsection (c) refers to the AFDC people, but subsection (f), for example, refers to all people who are on public assistance grants.

Mr. Schwartz: Okay.

Now I agree with Your Honor with respect to subsections (c) and (e), but I disagree with respect to subsection (f), and the reason for my disagreement is this: the district court in its opinion which is annexed to the jurisdictional statement, and the relevant page of the opinion that I'm concerned with is 44-A of the appendix of the jurisdictional statement, the District Court construed this provision as having as its purpose preventing recipients of public assistance from simply claiming that we have used up our public assistance and we need added assistance now to augment the ongoing assistance grant.

The District Court said this was the purpose of the duplication provision.

However, the District Court went further and said but it's clear that the duplication provision should not be read as precluding emergency assistance to public assistance families who are indeed faced with a crisis event or emergency situation.

I submit that that analysis by the District Court is correct.

It reflects the argument that the state has been making between the supplementation of a grant, which the state says it's its interest in not making under the emergency assistance program.

Unidentified Justice: And the state hasn't challenged that interpretation.

Mr. Schwartz: The state has not challenged that interpretation and not only have they not challenged it, but indeed they acknowledged that the purpose of the restrictions is to limit emergency assistance to crisis situations.

And that's reflected in this analysis.

More importantly, if you gave the duplication provision a literal reading and read it to its fullest extent, it would make unnecessary the loss-theft provision and the cash-services provision.

Unidentified Justice: As a matter of collateral interest, how does the state go about determining whether the alleged lost or stolen cash was used to buy lottery tickets or to bet on the horses or to use in the local crap game down the alley?

Mr. Schwartz: If the question is how do they determine a loss or theft, whether the loss or theft occurred, the state, of course, has the power to investigate an application for emergency assistance.

Unidentified Justice: How many such applications are there a year?

Mr. Schwartz: There's nothing in the record, Your Honor.

Unidentified Justice: According to Mr. Califano's report of some years ago, there are hundreds of thousands o them.

Is that right?

Mr. Schwartz: I can't say, and it's not i the record.

But with respect--

Unidentified Justice: Realistically is there any way the state can check on it?

Mr. Schwartz: --Yes, Your Honor.

The state for example, could insist that the recipient report a claim theft to the police department as a prerequisite for getting emergency assistance.

The state commissioner can check.

Unidentified Justice: How much of a check is that?

Mr. Schwartz: The state can check the police report, can interview the recipient, can make a home visit, for that matter.

But, Your Honor, that really misses the essential argument that we make with respect to the loss-theft provision, because the State of New York does provide emergency assistance in cases of loss or theft of every other type of income other than public assistance, and that includes a wide array of public benefits, including Social Security, unemployment compensation, workers' compensation, public retirement benefits, as well as the loss or theft of private income, such as wages and support payments.

Now I submit to this court that the state--

Unidentified Justice: Does that include the loss of a private pension?

Mr. Schwartz: --Yes, it does, Your Honor.

Now I submit, and I think it's significant, that the state's ability to detect a fraudulent claim is in fact greater in the case of the non-recipient who claims that a loss or theft has created destitution than in the case of the recipient.

And it's for this reason.

In the case of the recipient of public assistance, the Department of Social Services in the ordinary process of determining ongoing eligibility for public assistance and free of the crisis pressure that surrounds an application for emergency assistance, has already determined a large number of the indicia of eligibility for public assistance, including the applicant's identity, the applicant's residence, available income and resources, shelter needs, alternative sources of support.

In the case of the non-recipient that claims a loss or theft has rendered me destitute, the Department of Social Services must first make all these determinations in the first instance.

So we recognize that the state does indeed have a legitimate interest in preventing fraudulent claims.

We could not take any other position.

But our claim is that this disparity in treatment between public assistance recipients who claim a loss or theft on the one hand and non-recipients who are a group of families who claim destitution and who are given different treatment in that their applications for emergency assistance are given individual treatment is not supported by any difference in detecting fraud.

Unidentified Justice: Mr. Schwartz, the District Court disagreed with you about the checks.

Mr. Schwartz: The District Court disagreed on this.

Unidentified Justice: And they had a reason for disagreeing.

In the Court of Appeal, the only thing the Court of Appeals really said is that we do not agree with the District Court that considerations of administrative efficiency are sufficiently compelling to sustain the lines drawn by the statute.

Well, since when is the rational basis equal protection test... since when does it require something that is sufficiently compelling rather than rational?

Mr. Schwartz: That... I agree with Your Honor, but I think that that was not the basis of the Court of Appeals decision, that the basis of the Court of Appeals decision is found on page 18-A of the appendix to the jurisdictional statement, whether the Court said that there is nothing in the record to establish that public assistance recipients have a greater propensity than others for asserting fraudulent claims.

And, indeed, the Court of Appeals cited Weinberger v. Salfi, cited Dandridge v.--

Unidentified Justice: Well, isn't that a sort be... isn't that a rather factual determination by the District Court as to this propensity or whatever it is?

The District Court found that there were considerations of administrative convenience and efficiency and for rational basis purposes I don't know what case around here says that if the rational basis test applies administrative efficiency is not enough.

Mr. Schwartz: --The District Court did not make any finding of fact that there would be a greater administrative burden.

Unidentified Justice: Well, what was the Court of Appeals referring to?

They read the District Court as holding that.

Mr. Schwartz: The problem with the District Court's decision is that it, in my opinion, is that it did not focus on the two classes.

The District Court's opinion simply said that the... it is a legitimate state interest to seek to prevent fraudulent claims of loss or theft, and we find that this is sufficient to justify the automatic denial.

The Court of Appeals said, well, we agree.

The state does have a legitimate interest in seeking to prevent fraudulent claims of loss or theft.

It would be administratively burdensome and difficult to make these claims, but the same administrative burden and expense lies with respect to the favored class.

Unidentified Justice: Well, I think perhaps the Court of Appeals really just went on to say the District Court thought there was administrative efficiency considerations, but we just disagree.

There aren't any.

Mr. Schwartz: That's not how I read it, Your Honor.

I think what the Court of Appeals is saying is that there are problems with respect to--

Unidentified Justice: I know, but there's no more administrative convenience in the one case than in the other.

Mr. Schwartz: --That's my point.

Unidentified Justice: That's what the Court of Appeals held.

Mr. Schwartz: Yes.

That's my point.

And the District Court did not say anything to the contrary.

The District Court simply made a general statement that the state does have an interest in avoiding administrative burdens and expenses in situations like this.

We don't quarrel with that.

If I might just take the very few minutes I have remaining, we have raised, in addition to the constitutional claim, a federal statutory claim, and we have raised it throughout this litigation.

My adversary has chosen not to address it, but I submit that it's a significant claim and it provides a basis upon which this Court can affirm the judgment of the Court of Appeals without reaching the equal protection claim.

Unidentified Justice: But it's still a constitutional claim.

Mr. Schwartz: Well, it's a Supremacy Clause claim.

Unidentified Justice: Well, that's still a constitutional claim.

Mr. Schwartz: I agree.

In the old three-judge court days it used to be referred to as--

Unidentified Justice: Well, I know, but those... that was a strange doctrine anyway.

Mr. Schwartz: --Well, the only point I'd like to stress is that six months after this Court's decision in Quern the Secretary did indeed issue an action transmittal and in that action transmittal acknowledged the holding in Quern, said that the states do have broad discretion in shaping their emergency assistance programs, but that the states must include AFDC families in their emergency assistance program.

Unidentified Justice: So you are saying we should... that was issued after this case was decided below?

Mr. Schwartz: No, it was issued during the litigation of this case.

It's been in the record all along.

It was submitted to the District Court.

Th Circuit Court had the benefit of it.

Unidentified Justice: The Court of Appeals found it was inconsistent with Quern against Mandley.

Mr. Schwartz: Yes.

The Court of Appeals did come to that conclusion.

We disagree with that.

We've argued it, I believe, fully in our brief.

In addition to the action transmittal, the Secretary did submit a full amicus curiae brief to the Court of Appeals in which the Secretary came to the conclusion that under his equitable treatment regulation state discrimination in the EAF program against the neediest families, AFDC families, is inconsistent with Federal policy and, therefore, is unlawful.

And it's our position that this is a legitimate exercise of rulemaking by the Secretary and that the judgment should be affirmed on that basis.

Unidentified Justice: Mr. Schwartz, isn't it true that the analysis of that issue is really pretty much the same as the analysis of the constitutional issue, because the bottom line is whether it's arbitrary or not?

Mr. Schwartz: That... I disagree, with all due respect, Mr. Justice Stevens, because there is no reason why the equitable treatment regulation has got to be interpreted in the same manner as the rational basis standard under the equal protection clause.

Unidentified Justice: In other words, the content of arbitrariness could be somewhat broader as construed by the Secretary than it would be as construed under the Constitution.

Mr. Schwartz: It can be, and we have lodged documents with the Clerk of the Court which we also submitted to the Court of Appeals, in which the Commissioner of Social Security of HHS has taken the position that classifications in the emergency assistance program must be tailored to the purpose of the particular program and specifically rejected rational basis review.

Our position, very briefly, is that while states do indeed have broad discretion in shaping their emergency assistance programs, that discretion is not unlimited discretion and in many categorical programs where states do have broad discretion there is still room for reasonable rulemaking by the Secretary to ensure that state plans do not conflict with the purposes of the Federal Act.

Chief Justice Burger: Very well.

Mr. Schwartz: Thank you.

Chief Justice Burger: Do you have anything further, Mr. Hammer?

REBUTTAL ORAL ARGUMENT OF ROBERT S. HAMMER, ESQ. ON BEHALF OF APPELLANT

Mr. Hammer: Yes, with the Court's permission, I think, Mr. Chief Justice, you have touched upon a very sensitive and important point, that there is no practical way of verifying an actual loss or theft, whether it's with a--

Unidentified Justice: Well, then why doesn't the State of New York decline to do anything about any of those situations?

Mr. Hammer: --They--

Unidentified Justice: Then you wouldn't have an equal protection problem.

Mr. Hammer: --That's correct.

I think, however, it's not unreasonable to do it in the case of the public assistance recipient.

Indeed, counsel--

Unidentified Justice: On the theory that they are worse off than other people?

Mr. Hammer: --No, but just as the rich person is going to defraud the Internal Revenue, if there is going to be any larceny in the case of a poor person, it's going to be directed towards the welfare system and we have counsel's own admissions, which he cited in his motion--

Unidentified Justice: There isn't anybody else th welfare recipient can defraud, really, if that's the source of all his income.

Mr. Hammer: --That's right.

So that if there is the potential for fraud there, it's not unreasonable for the state to say let's try to prevent it, and--

Unidentified Justice: Well, why do you select one group of welfare recipients and not another?

I mean, isn't the problem the same for two different groups of welfare recipients?

Mr. Hammer: --In this case, Your Honor, no distinction is made between AFDC or Home Relief.

Unidentified Justice: Well, I guess that's the issue on the first--

Mr. Hammer: In part.

As for the Supremacy Clause, as counsel indicated, I have not addressed it specifically in my main brief.

We referred to it in the small reply brief to his motion to reaffirm.

For the reasons stated therein, we think (a) it is not properly before the Court and (b) it is not a meritorious claim, but in any event, I am more than happy and prepared to answer any questions on that point that the Court may have.

Chief Justice Burger: I think that's all.

Your time has expired.

Thank you, gentlemen.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Blum v. Yaretsky - Oral Argument

Fri, 09 Jan 2009 14:47:12 +0000

Case:

Blum v. Yaretsky

Media File:

80-1952_19820324-argument.mp3

Related Transcript:

transcript.xml

Transcript:

ORAL ARGUMENT OF JUDITH A. GORDON, ESQ. ON BEHALF OF THE PETITIONERS

Chief Justice Burger: We will hear arguments first in Barbara Plum, Commissioner of New York State Department of Social Services, v. Yaretsky.

Mrs. Gordon?

Mr. Gordon: Mr. Chief Justice, and may it please the Court.

New York's alleged involvement in medical decisions about nursing home care for Medicaid patients was found below to constitute state action in two kinds of circumstances.

A brief review of the kinds of circumstances in which state action was found to be present is necessary because that inquiry determines the additional question petitioners raise in this case; that is, the district court's jurisdiction under Article III to decide the claims that are now before you, and also, it aids the inquiry, the state action inquiry, in the event the court reaches that inquiry.

The first circumstance in which state action was found to be present occurs when a patient's outside physician, or a physician on the staff of a nursing home, decides to decrease or increase the level of the patient's care because his condition has become worse or because it has become better.

In our brief, we refer to the decision of the nursing home staff physician as a nursing home decision or transfer, and we refer to the decision of the outside physician as the decision of a private physician, albeit both of those decisions are private action within the constraints of the court of appeals' decision below.

The second circumstance in which state action was found to be present occurs when a utilization review committee or a physician member of that committee decides to increase a patient's level of care because his condition has become worse.

Parenthetically, it should be noted that utilization review is a federally-required peer review system, that a utilization review decision about a change in care for a patient who is already in a nursing home is made during a portion of that process called continued stay review, and the continued stay review is addressed to whether or not the patient needs nursing home care at all, and if he does, what kind of care he needs.

Two further points with respect to utilization review, and that is the utilization review physician's decision to change a level of care is final once made if it is not opposed by the patient's own physician, and that requirement is specific to the federal regulations which are found at 42 CFR 556.336, and 442 CFR 556.

436, and the state regulations track the federal regulations in that regard.

In addition, if the utilization review physician decides that the patient needs this upward change in level of care and his decision is opposed by the patient's private physician, if two utilization review physicians agree, then the decision of the utilization review committee becomes final, again, under the regulations that I just called to your attention.

Unidentified Justice: How much time do these physicians spend in this process as compared with the time they spend taking care of the patients?

Mr. Gordon: Well, Your Honor, if you look at 42 CFR 456.330 following which describes these various utilization review procedures in quite tedious detail, I think you would have to conclude that he spends a great deal of time.

However, I can't, in fact, give you an exact estimate, but certainly we have no indication that the physicians who serve on these committees are not attending to the care of their patients, at least in this record.

Petitioners contend that the district court should never have reached the transfers that are at issue and that I just described with respect... in the circumstances I just described.

And that is because there was no plaintiff and no class representative before the district court who could have raised the issues.

Not only was there no one who had such a transfer or was threatened with such a transfer, there certainly was no one who had the reality or the prospect of the kind of distinct and palpable injury that Article III requires.

Unidentified Justice: But there was a case or controversy of some kind at the time the case began?

Mr. Gordon: Absolutely, Your Honor.

There was a case or controversy with respect--

Unidentified Justice: About some other kinds of movements.

Mr. Gordon: --Exactly.

There was a case or controversy with respect to the claims of the name respondents and the named intervenors, and that case or controversy rested on their claims that you URC's had improperly transferred them to lower levels of care.

Not URC's--

Unidentified Justice: And that dispute was settled?

Mr. Gordon: --That dispute was the initial predicate in this case, it was initially decided by a preliminary injunction back in January of 1978, it went up to the court of appeals in the first court of appeals in this case and it was ultimately resolved as you indicate on October 17, 1979 by the first partial final judgment in this case, which was entered--

Unidentified Justice: In the district court?

Mr. Gordon: --Yes, it was resolved in the district court.

Unidentified Justice: Then why didn't the case end there?

Mr. Gordon: That is exactly my question, Your Honor.

Unidentified Justice: Did you ask the court to end it then?

Mr. Gordon: Pardon me?

Unidentified Justice: Did you ask the court to end the case then?

Mr. Gordon: No, Your Honor, the assistants then--

Unidentified Justice: And you went right ahead and litigated these other issues?

Mr. Gordon: --That is correct, Your Honor.

The assistants handling the case at that point did indeed go ahead and litigate these other issues through the court of appeals and to this court on the petition here today.

Unidentified Justice: And you are raising a case or controversy here for the first time?

Mr. Gordon: That is correct, Your Honor.

Unidentified Justice: But you submitted these issues in the court of appeals.

I mean, you litigated those issues without objection in the court of appeals.

Mr. Gordon: The issues, the merits of the issues were indeed litigated without objection in the court of appeals, and I would add one point to that, Your Honor.

When it came time to consider the preparation of the petition for certiorari in this case, and Mrs. Siegel was then solicitor general of the state of New York... she is no longer... and we, myself and the assistants who aided me, reviewed the record in this case which was quite lengthy, we came to the conclusion that the Article III question was fairly presented by the record.

We also observed that it had not been raised before and we had detailed conversations with Mrs. Siegel as to whether or not we should call it to your attention.

The conclusion of those conversations was that we could not, consistent with the standards of our practice, fail to call them to your attention, lest this Court reach the merits of the case involving constitutional rulings, which was not adequately presented in terms of Article III.

Unidentified Justice: Counsel, if the question were properly before the lower courts, dealing with the transfer to a higher level of care, would New York have stipulated eventually to the procedures for handling them as was done on transfers to lower level of care?

Mr. Gordon: That is a very interesting point, Your Honor.

At page 14 of our main brief we describe briefly what the state policies were before the judgment on review came up.

One of the state policies with respect to URC transfers to higher levels of care, which you just called to my attention, was that those transfers would be, in effect, advisory.

In other words, the state of New York, the Medicaid authorities, would not change the level of benefits based on a URC decision, it would simply await what the doctor did, what the URC did.

If the patiently ultimately got transferred by virtue of that URC decision, then it would adjust the benefits.

If it did not, if the patient did not get transferred, they would leave the benefits intact.

Now, aside from substantial equity problems that were involved in that policy which was, of course, superseded by this judgment; namely, there were people in nursing homes who in fact needed a much more intensive level of care and were not receiving it, that being one of the equities on a change of policy side.

The federal government came along and advised us that although they had required hearings on URC transfers to lower levels of care, that our FFP, our federal financial participation, was in serious jeopardy if we avoided hearings on higher levels of care.

And the letters with respect to that appear in the second supplement to the Joint Appendix, which includes some letters referred to in petitioner's brief... pardon me, respondents' brief... at page 4, note 4.

In other words, respondents refer to a letter by Commissioner Blum to the federal authorities saying can't we please give hearings on URC transfers to higher levels of care now, since you already told us there is a program requirement... not as a constitutional requirement... that we have to give them on transfers to lower levels of care.

That is the first letter in the second supplement to the Joint Appendix.

Unidentified Justice: All right, so your answer is no from advice of the federal government.

Mr. Gordon: Right.

The answer from the federal government was that they did not perceive that to be an effective way of utilization review, at least for transfers to higher levels of care.

Unidentified Justice: You have, I think, taken the position in your brief that private transfer decisions for patients in nursing homes are medical decisions unaffected by the state.

Now, what about a decision by the nursing home itself to transfer, when made by someone other than a physician?

Is that a medical decision?

Mr. Gordon: Well, it can be or it cannot be depending on how... what the facts are.

And as I indicated, we do not have any plaintiffs who present the facts that would support those kinds of conclusions.

However, when we viewed this judgment, we thought of it as pertaining really only to medical decisions; decisions by a nursing home's medical director and therefore medically predicated.

There is a possible other reading which plaintiff... which respondents point out essentially at page 22 of their brief and throughout their brief, that a nursing home, not through its medical director but through its administrator, might want to discharge somebody because he is a bad patient, or for some other non-medical reason.

Now, those discharges, in fact, present this case in microcosm, because those kinds of discharges are covered by something called the patient's bill of rights, which is codified in federal regulations and codified in state regulations.

And what that bill of rights says is, if you were transferred by your nursing home,... presumably a human being who has made a decision who is affiliated with the nursing home.

If you were transferred for non-medical reasons, for non-payment, for your own welfare, you have a right to challenge that nursing home decision.

You do not have a right to bring a Medicaid reimbursement claim against the state in a fair hearing to get money; that does not do you any good.

You have a right to bring a private action against the nursing home.

And we suggest to you that the kinds of medical decisions that are at issue in this case, made as they are by these private URC's, the facility medical director, the staff physician, your outside physician, present exactly the same kind of private transactions as the purely... as respondents call them... the purely non-medical needs decisions, and that the remedy for these, if there is to be a remedy, is against the people who made the decisions.

Not in a request to the state to pay you money for a service that an individual in the private sector has already refused to provide you.

Unidentified Justice: Let me ask you one more question while you are interrupted.

Do transfer decisions, even those made by private physicians, have to be made by applying state-defined criteria?

Mr. Gordon: The state prescribes the use of what respondents have called and what are, in fact, a DMS-1 form and a DMS-9 form.

Those forms can be found... they are not referenced in respondents' briefs, but they can be found in Appendix C1 to Volume C of Title x of the New York Code Rules and Regulations.

Their are displayed there in full.

Now, the state has prescribed those forms, and what those forms consist of are, one, a standard sheet which assigns... in fact, the sheet is called New York State Numerical Standards Master Sheet.

That is the DMS-9 form.

And the DMS-1 form is called the New York State Long-Term Care Placement form.

And what those forms do is describe certain kinds of medical conditions, certain kinds of patient conditions... in other words, self-care in dressing, needs help, needs total help... and certain other kinds of conditions such as needs restraints, requires... is assaultive.

And the numerical standards assign certain weights to these depending on when the condition occurs.

Now, those two forms used in combination... and they are used throughout this proceed including with respect to these medical decision... create what are called predictor scores.

If you get a score of 60, you are arguably appropriate for an intermediate care facility; if you get a score of 180 you are arguably appropriate for an SNF or skilled nursing facility.

Unidentified Justice: Can a patient be transferred who does not meet the state's criteria?

Mr. Gordon: Now, respondents say that those forms determine the choice.

In other words, the fact that the doctor has to use this form means that the state has made up his mind for him.

The answer to that is absolutely no.

The specific regulations which control the use of these forms; namely, 10 New York Code Rules and Regulations, Section 415.1A(2) and Section 420.1B, state in terms that all the physician who gets this form has to do to say that his patient needs another kind of care that is not consistent with the predictor score, is say so.

In other words, the physician has an override; the form does not foreclose the patient's access to the kind of care that the doctor wants to see him have.

And it does not determine what the doctor is supposed to do.

One other fact--

Unidentified Justice: Mrs. Gordon, we have granted certiorari on just two questions here, relatively narrow, and about half of your time is gone.

Mr. Gordon: --Very well, Your Honor.

I would--

Unidentified Justice: If you would focus on those two questions.

Mr. Gordon: --I would just like to point out one other factor with respect to the DMS-1 forms because in the entire array of federal and state laws which the respondents bring to bear on their argument... which is not the court of appeals' argument... that state action is somehow found in these transfers because the state forces them, the only point that needs clarification is, in fact, the use of these DMS-1 forms.

Justice O'Connor, if I just might finish, the respondents also say that somehow, even if we use these forms and they are not specifically controlled by the state, their results are not specifically controlled by the state, that we at some point review them, and we determine whether they are correctly drawn or incorrectly drawn, and disapprove or approve the physician choices that appear on those forms.

That is an absolutely incorrect statement.

The portion of the record that the respondents cite for that point is an affidavit by Donald Davidoff, which is document 18 of the record on appeal, and the affidavit simply does not say that, and that is not in fact what we do.

We leave the forms as we find them.

We do collect them, we use them for statistical purposes, and it is possible that in the course of receiving those forms or in the course of another procedure that the respondents called to your attention which are called periodic medical reviews and independent professional reviews which are audits essentially of the quality of care offered in nursing homes, it is possible that in the course of any of this regulatory complex that the state might, indeed, find a nursing home patient who is inappropriately placed.

That did not happen in this case, certainly not on these facts.

But if the state were to find that patient and it were to direct that patient's removal from a nursing home, well then, certainly, we would not be here today arguing this case.

That would be a state initiated transfer, and New York at least would not come before this Court and claim that state action was not present.

But the kinds of transfers that were decided below are all medically initiated for reasons determined by private parties, and have nothing whatsoever to do with the state's control, intervention or forcing of any of the decisions at issue.

Returning just briefly to the standing point, Your Honor, respondents make essentially two arguments against the petition... the petitioner's claim that they lack standing.

The first is... depends on their acknowledge that indeed, in January of 1978, the district court did enjoin the URC transfers to lower levels of care.

But they turn around and they say that notwithstanding that injunction, the same individuals... presumably the respondents and the intervenors... were subject to the same kind of risk, albeit the injunction was enforced, because the nursing home was going to adopt that URC decision as its own.

It was going to simply say oh, well, URC, you are enjoined; now we are going to enforce that... we are going to make the same choice and disregard the order.

Well, the argument omits to point out that in the very order that enjoined the URC's... to wit: the January 5, 1978 injunction... the nursing homes themselves were also enjoined.

And therefore, the argument assumes that the nursing homes would have entered into some kind of subterfuge or circumvention of the order to make the same choice and say it was their own and not a URC order.

The record is completely barren of any evidence which even suggests that the nursing home sought to circumvent the order in this regard, and indeed, it is barren of any evidence that the nursing home ever threatened or transferred any of the named respondents in any way whatsoever once the order was issued.

Moreover, even if you accept the logic of the argument, it still fails because the injunction upon which it relies; namely, URC transfers to lower levels of care, is not at all coextensive with the claims that the respondents sought to put before the court; namely, including those claims to higher levels of care and to... and physician transfers to lower levels of care.

A second argument that respondents make with respect to our claim that they lack standing relies on the speculation that there must be some other member of this class, even if it is not the named respondents and intervenors, who in fact had a physician transfer to a higher level of care, or a URC transfer to a higher level of care.

I suggest to the Court that that argument is impossible because the laws established that the claims of class members can never be broader than the claims of class representatives, and the only class representatives before the court below were indeed the named respondents and the intervenors who only had the URC transfers to lower levels of care.

Respondents also called to your attention two letters... actually, three letters; two are identical and one is slightly different... in support of their claim that some member of the class had these transfers.

The letters are dated a year and a year and a half after the district court entered the last partial final judgment in this case, and they are appended to their brief in opposition to certiorari.

And obviously, a transfer, even assuming the person who was receiving it was aggrieved, and these letters do not suggest that they were, a transfer happening to somebody a year or a year and a half after the district court determined the claims that are at issue, cannot serve to place those claims before the district court.

Unidentified Justice: Well, do they purport to be transfers of named parties to the action?

Mr. Gordon: Two of the letters, Your Honor, dated December 18th, 1980, are to nursing homes and do identify two individuals.

As Your Honor reviews those letters I think you will find, as I have found, that what they describe are the enforcement procedures under the partial final judgment that is in issue in this case.

In other words, they were telling the nursing home liaison how to comply.

And the patient is identified in that context.

It is not suggested for a moment that any of the identified patients... or either of the identified patients... thought that they should have a hearing right on any of the transfers that are in issue, or even that they had any opinion at all.

In other words, they do not show that these individuals were aggrieved by the... on the same basis as aggrieved by the claims that were adjudicated below.

As I indicated before on the state action point, or as I perhaps should have indicated before, we think the stay action analysis is controlled by Jackson versus Metropolitan Edison Co. We think that the close nexus between state and private action that that decision requires must be shown with respect to the state's imprimatur or weight or affirmative conduct with respect to one of the kinds of choices--

Unidentified Justice: Before you get too deeply in the state action argument because it is hard for me to keep these proceedings clearly in mind, in the prior proceeding that is not now before us which involved, as I understand, downward decisions by a URC and which might result I guess in the discharge of a patient from a nursing home, was it decided that there was state action involved there?

Mr. Gordon: --No, Your Honor.

The issue never arose because in 1976, while a district case was in progress before the Southern District, the federal government advised us that hearings had to he held on URC transfers to lower levels of care.

In other words, there was a Medicaid program requirement--

Unidentified Justice: In other words, the hearing requirement was imposed by federal regulation.

Mr. Gordon: --Exactly.

Right.

And indeed, when they so advised us... and their exchange of letters on this point is referred to in our brief at page 6 in the footnote there... they characterized our antagonism, if you will, to providing hearings in that context as not the most reasoned approach to fair hearings... to utilization review decisions.

But they did, indeed, impose that requirement.

Unidentified Justice: Now may I ask just one more question.

The last section of your opponent's brief, as I remember it, and I have not glanced at it right now, suggests that federal regulations or state regulations require hearings on everything that is before us now.

Are those the same regulations that govern your decision in the downward URC transfers?

Or do they apply to both of them?

Mr. Gordon: Those are the same regulations which the federal government told us to apply in the downward URC transfers.

Which, as I just noted to you, characterizing themselves as not the most reasoned application of the regulations.

And the reason that it is not the most reasoned application is what makes... is what makes those regulations inapplicable here and, in fact, Your Honor, I will close with that.

The regulations require fair hearings for agency action reducing or terminating assistance or denying a service, essentially.

And they are much like the fair hearing regulations in Goldberg vs. Kelly or available in other assistance programs.

The decision to transfer a patient, at least in the context of this case, is not an agency decision, and so much is revealed by the exhibit letter from the federal government which is attached to our brief, wherein the letter acknowledges that if a physician made this choice, not the URC, then there would be no fair hearing requirement obligations.

In other words--

Unidentified Justice: Let me just get this one question out and then I will... why, if there is a URC decision to increase the level of care which would require moving patient from one place to another and which might give rise to this phenomenon of transfer trauma, why wouldn't the regulation apply to that?

Because it would be, in effect, a denial of the existing care.

Mr. Gordon: --As the federal government used the regulations, a transfer to a higher level of care normally results in an increase in assistance, all right, not a reduction or termination of assistance.

So in that sense, it is inapposite, although there are some exceptions in New York because we have a varying rate system.

But certainly, our rate system is not coextensive with all transfers, so it out on that basis.

Second, it is not agency action, and it is out on that basis.

No matter how one characterizes it, albeit the federal government did and would withhold our FFP if we disagreed with them on URC down-transfers, under the decision in this case, the court of appeals decision, the URC is a private body, not the state agency, and therefore, it could not make a relevant decision.

But perhaps more importantly, if we want to put aside all the technical deficiencies in the terms of the regulations, I think we come back to what I indicated to Justice O'Connor before, and that is that the fair hearing does not address the issues.

The dispute here is between the URC and the patient, the physician and the patient.

If I take a fair hearing and the state therefore then says to me, well, all right, we will continue to reimburse Mrs. X's SNF care.

That does not mean that her doctor is going to give her that care.

That does not mean that the facility medical director is going to give her that care.

That decision to provide the facility with money does not change the doctor's mind.

Thank you.

Chief Justice Burger: Mr. Kirklin?

ORAL ARGUMENT OF JOHNE. KIRKLIN, ESQ. ON BEHALF OF THE RESPONDENTS

Mr. Kirklin: Mr. Chief Justice, and may it please the Court:

The respondents contend that the record in this case clearly discloses the existence of a justiciable controversy between the parties.

The justiciability inquiry focuses properly on three main areas of concerns: the circumstances of the named plaintiffs at the time of the consent judgment, the joint pretrial order in this case, and the standing allegations of the organizational plaintiff, the Grey Panthers.

With the entry of the consent judgment, which ended the implementation of adverse utilization review committee determinations, the named plaintiffs and class members came under the immediate threat of being transferred out of their facilities by the facilities themselves.

It is the unequivocal command of applicable state law that a nursing facility must promptly transfer, without a hearing, any Medicaid patient who is thought not to need that level of care.

Thus, Section 505.20 of the state department of social services regulations state simply and clearly that patients who no longer need skilled nursing or health-related facility care shall be discharged promptly.

Unidentified Justice: What are the sanctions which the state attaches to a violation of what you describe as its command?

Mr. Kirklin: Your Honor, the penalties that can ensue if a facility fails to promptly discharge a Medicaid patient are retroactive denial of reimbursement for services rendered, fines and suspension from the Medicaid program itself.

Unidentified Justice: But it is not a question of a public health type of regulation where they would shut down the facility if they failed to comply, I take it.

It is more like a regulation governing a contractor with the state.

Mr. Kirklin: I imagine that might be the case.

What is significant is that the state commands the result; it backs it up with certain kinds of sanctions.

Unidentified Justice: But I take it the nursing home is perfectly free to say we will go without the money and operate as we choose.

Mr. Kirklin: Well, Your Honor, we assume that nursing homes, like everybody else, will comply with the law.

Unidentified Justice: So supposing that the state of New York is contracted for the production of 20,000 envelopes or something like that with a contract, and it has certain sanctions attaching to the contractor's failing to comply with certain production regulations.

Now, if the contractor does not comply, he will not get paid by the state of New York, but you would not say that the contractor is commanded to comply with those regulations.

Mr. Kirklin: Let me distinguish two situations, it might be helpful.

If a private doctor, for example, were providing services to a Medicaid patient and the state, as in your hypothetical, declined retroactively to pay the physician, it is true that the physician might, in the future, decline to provide services.

Now, that is in sharp contrast to what happens here.

The state here does not just say that if you do not do something, we... it does not simply say we are retroactively possibly going to deny compensation for services rendered.

It directly requires... it specifically says to the facility if that patient do not need that level of care, you shall promptly discharge that patient without a hearing.

It has behind it obviously certain sanctions like any affirmative command of the state, but it is the nature of that command which does not just impose an indirect harm on the patient, but it interferes directly with that patient's right to be in that facility.

The conduct of the government, directly commands that the facility must move the patient.

Unidentified Justice: And the sanction is not that the facility becomes unlicensed or goes to jail, but simply that money is cut off which it otherwise would have received.

Mr. Kirklin: More than that, Your Honor.

The facility stands not just to lose compensation for services rendered; it stands to be fined, it stands to lose its right to participate in the Medicaid program.

And that is pretty serious in the state of New York because more than 90 % of the patients in nursing facilities in New York state are Medicaid patients.

Literally, the facility depends for its very survival being part of the Medicaid program.

Unidentified Justice: What is the fine?

Mr. Kirklin: The fines I believe, Your Honor, can be up to $1000 a day for violations.

Unidentified Justice: So it does have some aspects of a public health regulation, then?

Mr. Kirklin: To that extent I guess it does.

But in addition there are these other serious sanctions.

And sanctions which, if applied with--

Unidentified Justice: Do those sanctions apply, counsel, to a failure to move the patient up to a higher, more expensive level of care?

Mr. Kirklin: --That is right, Your Honor.

The state regulation that I cited at 505.20 specifically requires a facility to move a patient who does not need that level of care.

The regulations of the state department of health additionally say that a facility must promptly transfer a patient whose care is inadequate; that is, who should be moved to a higher level of care.

Further, those same regulations require that a patient must be promptly moved, again without a hearing, if the patient is otherwise inappropriately placed because of a behavior problem, emotional disorder, some other problem that jeopardizes the welfare of that patient or of other patients in the facility.

Unidentified Justice: Well, you still have the problem of the fact that the decision to transfer is not the state's, at least in the first instance.

Mr. Kirklin: In some sense, it is the state's, Your Honor, for this reason.

The regulation that I cited of the state department of social services also states that the facility's judgment about whether a patient needs a level of care as provided there must be based on the assessment of that patient as against the state's long-term care assessment form, called the DMS-1.

Unidentified Justice: Right, so that the standard is applied by the state.

Mr. Kirklin: That is right.

Unidentified Justice: But the decision is made not by a state official but by a private party, and you have to, nevertheless, say that that private action is state action.

Mr. Kirklin: That is right, Your Honor, and we--

Unidentified Justice: And what is your bridge?

How do you get to that?

Mr. Kirklin: --The bridge, Your Honor, is the argument that when the state puts its weight on the side of private conduct, even if that initiative comes from a private party, by ordering it, by compelling it, by directing it--

Unidentified Justice: Compelling what?

Mr. Kirklin: --Compelling the facility--

Unidentified Justice: They compel the decision to be made.

Mr. Kirklin: --More than that.

Unidentified Justice: Then they provide the standards.

Mr. Kirklin: More than that.

The state requires that the facility kick the patient out.

Unidentified Justice: Not until the decision is made.

By a private party.

Not until the decision is made.

You still have to decide that the decision is a state decision.

Mr. Kirklin: Respondents contend that where... even if the initiative came from a private party--

Unidentified Justice: Initiative?

This is the decision... the decision that someone needs less or more care.

Mr. Kirklin: --The decision, the standard is whether the person needs that level of care.

That is correct.

That is no different than--

Unidentified Justice: That is the decision I am talking about.

Is that... and you must claim that that is a state decision.

Mr. Kirklin: --We submit that when the state enforces that result by requiring the facility to kick the patient out, the state is involved.

And that eviction of the patient from the facility is sufficient to require the state... when a state requires it, the state should hold a hearing to decide whether there is a violation of applicable federal and state law which prohibits a facility from kicking out an--

Unidentified Justice: So you say the enforcement mechanism is the... involves the state sufficiently to be blamed for the decision to transfer or to... to some other facility.

Mr. Kirklin: --That is our primary argument; that when the state directs--

Unidentified Justice: May I just inquire, is this argument limited to nursing homes?

Say you had a hospital and the state... say there is a shortage of hospital beds and rooms so the state passes a law and says that when a patient reaches a certain level of recuperation that the hospital must discharge him if the doctor thinks it is okay to do so.

Would those be state decisions to discharge?

Say a mother delivers a child... must be discharged in 48 hours--

Mr. Kirklin: --I think it is true that there are similar requirements for Medicaid patients.

Unidentified Justice: --Would those decisions then by the doctor to say well, you are well enough to go home be a state decision, under your analysis?

Mr. Kirklin: Yes.

We maintain that if the state, again,--

Unidentified Justice: Or say they had a state law that said don't prescribe a certain drug unless certain symptoms are present... don't give him too much aspirin.

And everytime a doctor prescribes aspirin, is that state action?

Mr. Kirklin: --Again, Your Honor, the difference there is that the state does not tell a doctor, you cannot provide care that you think is required.

It would merely say in the case of a Medicaid patient that perhaps retroactively, you will not be paid for that.

The state does more here, and that is the point that--

Unidentified Justice: Well, in my hypothetical I was assuming it was a firm requirement of law.

You just do not over-prescribe medicine, don't keep people in the hospital too long; otherwise, you will be sanctioned by fines and all the rest.

That would make it a state action everytime the doctor--

Mr. Kirklin: --No, it would not, because we maintain there is a difference--

Unidentified Justice: --And what is the difference?

Mr. Kirklin: --The difference is this: that if the state merely said in this case to a nursing facility, you ought not to provide inappropriate care, with the consequences that might follow, that if they did so they might not be paid, we do not insist that that is state action.

It is state action, though, when the state goes beyond that and says to the facility, if that patient is improperly there, kick him out immediately without a hearing, indeed the whole incentive... the incentive of the state to do this is self-evident.

It is a cost-containment concern.

It is not a concern that the facility--

Unidentified Justice: Well, Mr. Kirklin, that is the point.

I thought we were dealing here only with transfers to higher levels of care.

I thought that was what was left and what we were concerned with.

Is that right?

Mr. Kirklin: --It is not just that issue, Your Honor.

Unidentified Justice: As I read the briefs, the questions that we have here involved only the questions of transfers to higher levels of care, and secondly, whether there was an Article III standing problem.

I thought those were the two questions.

Now, the court resolved below the question of simply terminating the care altogether or assigning the patient to a lower level of care.

And in fact, the parties stipulated that in those situations, a fair hearing would be required.

And I understood that the litigation below and your argument below was based on the reduction of benefits that would ensue, and that gave the state its financial interest.

Now, when you are talking about a higher level of care, the state does not have the same interest; it is going to cost the state a lot more money, and they are not eager to send some patient to a higher level of care and pay more money.

So now you are making a totally new argument that I understand was not made in the courts below at all; that because of state regulation on the standards, that that makes the physician's decision state action.

Have I summarized it correctly?

Mr. Kirklin: Your Honor, let me explain what happened below.

There was a consent judgment; that consent judgment resolved the controversy between plaintiffs and defendants about implementation of utilization review committee determinations.

Ms. Gordon has explained utilization review committees.

Those determinations were to discharge a patient, transfer him to a lower level of care.

We settled that.

The state said we are not going to enforce those determinations; they are too traumatic, they are too harmful to the patient.

Now, what that left was the following: it left the facilities themselves capable... not only capable but required, as I have explained... to move those patients if they do not need that level of care.

The state never maintained these people did not need that level of care, the state never retreated from its support of the so called DMS-1 instrument as a way of assessing that level of care.

When the utilization review committee route to moving patients was closed, then these plaintiffs came under the threat of the state law that I described, that facilities must promptly move them.

Before that time, the facilities could rely upon the utilization review process as a way of moving in appropriately placed patients.

Now, both parties in the lower court understood full well that the threat that the facilities themselves would move these patients crystallized with the entry of the consent judgment.

With the entry of the consent judgment, which the state resisted up to the last minute, the utilization review route was suddenly closed shut as a way to move these plaintiffs.

Each one of these plaintiffs, though, had been assessed against the state's DMS-1 instrument and had been found by that evaluation which the plaintiffs challenged, not to need that level of care.

Now, with a consent judgment entered, the only way that the facilities could comply with the requirement of state law that they must promptly without a hearing move inappropriately-placed patients was to move them themselves.

The utilization review route was closed.

The plaintiffs moved quickly when that threat existed to have the issue adjudicated simply because any delay in the resolution of that question obviously carried with it the serious risk that these transfers would be accomplished--

Unidentified Justice: But Mrs. Gordon informed us... and maybe I misunderstood her... that the injunction prohibited the nursing homes from doing Just that.

Was I wrong in understanding that?

Mr. Kirklin: --That is not a correct statement of the situation.

By the consent judgment, the state agreed that for its part, it would not approve or enforce adverse utilization review committee determinations.

The consent judgment left facilities free to move patients, and indeed, the state--

Unidentified Justice: But they were no longer required to because they were freed of the compulsion, as I understood it, of the URC determination.

Isn't that right?

Mr. Kirklin: --They were free of the obligation... when the state adopts the URC's--

Unidentified Justice: In other words, to put it differently, weren't they free to say we are going to keep this patient here and there is nothing the state can do to us if we do.

Mr. Kirklin: --No.

Unidentified Justice: They were not?

Mr. Kirklin: They were not.

The state no longer was going to make the facility move the patient out because of a review committee determination.

However, the facilities were left free to move patients if they thought they were not properly placed.

And indeed, state law requires facilities on their own, wholly apart from the review committee functions, to move out patients not properly there.

That is the distinction.

The state for its own part... the state said we tie our hands; we are not going to be responsible anymore for making facilities move patients because there has been an adverse review committee determination.

The state thought that too harmful, too traumatic.

The parties both recognized... and that is why the state has fought this issue... that the facilities themselves not only were free but should be free to move patients on their own.

And respondents contend that the state law is clear that they have to.

Indeed, that is the only way that the facilities now could discharge their obligation under law to move any inappropriately placed patients.

Indeed, it is precisely--

Unidentified Justice: What is the prohibitant from doing it right now?

Mr. Kirklin: --What prohibits them now, Your Honor, is the deterrent effect of a hearing at which these plaintiffs would test the validity of--

Unidentified Justice: What kind of a hearing?

A state hearing?

Mr. Kirklin: --What the district court required after finding that there was state action and due process protection was that the state had to provide a hearing forum in which the plaintiffs, the named plaintiffs--

Unidentified Justice: The state had to provide a hearing forum to decide as to whether a private hospital could change its status of a patient?

Mr. Kirklin: --To decide whether the decision upon which the facility based its transfer was, under federal and state law, correct.

Federal an state law says a facility cannot move a patient unless it is for good medical reasons--

Unidentified Justice: What federal law says that in this case, in this posture, with this injunction, cannot do it?

What federal law says that hospital A privately-owned, privately-financed, cannot change the status of a patient?

Mr. Kirklin: --Well, Your Honor, that is the traditional barrier that is imposed by the law in the context of a review committee determination.

Unidentified Justice: I am talking about federal law now.

Mr. Kirklin: Federal law requires it there, for example, if doctors--

Unidentified Justice: What federal law requires a private hospital to give a hearing?

Mr. Kirklin: --The regulations... the federal regulations that Ms. Gordon discussed that state when a review committee determines a patient should be moved and that there is a Medicaid adjustment at issue, the state has to provide a so-called fair hearing.

Unidentified Justice: Well, this was not the court of appeals' decision.

The court of appeals went on the constitutional basis, and I thought your submission was constitutional, too.

I thought your answer might be to Justice Marshall, it is the Fourteenth Amendment that requires a hearing.

Mr. Kirklin: Well, we maintain that it does, of course.

Unidentified Justice: But you say, you now say it is the federal regulation.

Mr. Kirklin: We say both.

I was trying to respond Justice Marshall's--

Unidentified Justice: You were trying to get a private hospital, under the Fourteenth Amendment.

That is what I understood you to be trying to do.

Mr. Kirklin: --Well, we are trying to do that because this case is unique.

Unidentified Justice: It sure is.

If you are right about the regulations, we really should not reach any constitutional questions here.

Mr. Kirklin: That is correct.

Unidentified Justice: Did you talk about the regulations before the court of appeals?

Mr. Kirklin: Yes, we did.

Unidentified Justice: And they... did they reject your view of the regulations?

Mr. Kirklin: They did not reach that issue.

Unidentified Justice: How do you know they didn't?

They just did not write about it.

Mr. Kirklin: That is true, they did not write about it.

Unidentified Justice: V-11, if they were construing... deciding the case in an orthodox manner, if they reached the constitutional question they must have rejected your claim under the regulations because presumably, they do not reach a constitutional question if there is a statutory or a regulation way of disposing of the case.

Mr. Kirklin: I guess that is true.

We--

Unidentified Justice: So they rejected your regulatory submission?

Mr. Kirklin: --Impliedly, as Justice Rehnquist characterized it--

Unidentified Justice: Was it briefed in the court of appeals?

Mr. Kirklin: --Yes, Your Honor, it was.

Unidentified Justice: On both sides?

Mr. Kirklin: Yes.

Unidentified Justice: Was the department... did the federal people take any position on the matter as amicus?

Mr. Kirklin: Not officially before the court, no.

Unidentified Justice: How did they construe their own regulations?

Or do you know?

Or is it in the record?

Mr. Kirklin: There is nothing officially in the record about AHS's position, but--

Unidentified Justice: Well, insofar as transfers to higher levels of care are concerned... and I still think that is one of the issues before us, as I understand it.

Mr. Kirklin: --Yes, it is.

Unidentified Justice: Is not the federal position that no hearing is required for the transfers to higher levels of care?

Mr. Kirklin: That is right, Your Honor.

Unidentified Justice: You concede that, so you are not here making that argument to us, that it is required by federal regulation.

Mr. Kirklin: I am not here making the argument that federal and state fair hearing regulations apply to transfers up.

Unidentified Justice: Okay.

But you are saying that the Fourteenth Amendment requires it.

Mr. Kirklin: That is right.

And as well, we are saying that these fair hearing regulations apply to transfer to a lower level of care or out of a facility into an adult home or the community, because there is a reduction--

Unidentified Justice: And you and the petitioners differ on whether the consent decree covers those transfers to a lower level or out--

Mr. Kirklin: --We do not disagree about that at all.

We both understand that discharges because of utilization review committee determinations are forbidden.

We are in full agreement that the consent judgment does not apply to facility initiated transfers or discharges.

Unidentified Justice: --And you did argue below only on the basis of the reduction in financial benefits as the basis for holding that there was state action, is that right?

Mr. Kirklin: No, we did not, Your Honor.

We argued with respect to transfers to a higher level of care and to a lower level of care.

The Fourteenth Amendment requires prior hearings with respect--

Unidentified Justice: You do not... I take it your submission here on the state action is not... certainly is not in defense of the court of appeals' rationale, is it?

Mr. Kirklin: --We do not retreat from the court of appeals' rationale, but we believe that there is a simpler method of disposing of the state action question which is that--

Unidentified Justice: The state enforces a decision.

Mr. Kirklin: --Requires it, orders it, that is right.

Unidentified Justice: So wouldn't you say the same thing then if there was a general state law about trespass or something, and the home decides to move a patient and the patient refuses to go, so the court... so the home goes to court and gets an order, just for self-protection gets an order to move the person out.

That is state enforcement of the private decision.

Would you say that is automatically state action?

Mr. Kirklin: Well, no.

I would say that when the state provides a forum for deciding whether there is state... there is a violation, that the mere provision of a judicial forum by itself--

Unidentified Justice: Well, but the trespass action would not give any hearing on the validity of the private decision; it would just say are you here without consent.

Mr. Kirklin: --Well, the question, Your Honor, in this context is that again, if the federal and state regulations themselves say that a facility cannot move a person unless for valid medical reasons--

Unidentified Justice: Well, the general law says a person cannot stay on somebody else's property without consent.

And a court will enforce it.

Mr. Kirklin: --Here it is a question of... Your Honor, we think that, for example, in the Moose Lodge case where this Court had not trouble saying that if the state liquor control board has a regulation that says we are going to enforce a bylaw of a private club, even though it is neutral in its terms, that is state action.

We submit that this is no different where the state says that regulation that says we are going to enforce or direct a nursing home to kick out a patient if the patient is not thought to be appropriately there, we think that is a state action as well.

Unidentified Justice: Or to raise the standards, you said before.

If you enhance the care, given them higher care, more benefits, you also have to have a due process hearing.

Mr. Kirklin: We maintain that we do, that it is required because there are due process protected interests there as well because the reg is again saying even if--

Unidentified Justice: On that theory you would be saying that under Goldberg against Kelly, if some welfare director wants to increase the welfare payments to a recipient they would have to have a hearing, a Goldberg v. Kelly hearing.

Mr. Kirklin: --No, we would not because there is no property interest under law that protects someone against getting more benefits.

Here the regulations say you cannot transfer a patient up or down or out unless for good cause.

And that is the difference.

Unidentified Justice: What is the property interest if the transfer is to a higher level of care?

Mr. Kirklin: Your Honor, the federal and state regulations state that a nursing facility may not transfer or discharge... that is the language--

Unidentified Justice: Well, I am asking you what the property interest is.

Do you have a property interest if somebody wants to give you more money?

A property interest, to decline it?

Mr. Kirklin: --The property interest is the interest which is embedded in positive state and federal law that says that you should be free of having to move to a higher level of care unless there is good reason to do it.

And the reason why that is done is not surprising because as indicated in a deposition in this case, when people are asked to go to a higher level of care, they think they are dying.

And the trauma which--

Unidentified Justice: How do we know that that makes them think they are dying?

Is there something in the record, a medical opinion to that effect?

Mr. Kirklin: --Not to that precise effect.

What is in the record, Your Honor, is the whole underpinning of the consent judgment... and it is in the record that the defendants made it very clear, affidavit statements and the commissioner's letters to the federal government, that the reason why it refused to enforce review committee determinations was because the move itself is so devastating and so harmful to patients that it should not be done.

Unidentified Justice: Do you think there is no trauma involved in an adversary hearing?

Mr. Kirklin: There is, of course, trauma involved, but we do not maintain that a finding of transfer trauma is necessary for the... on the narrow issues that, as Your Honor pointed out, are before the Court, which is whether there is state action, and on the standing issue as well, that this Court did not take the questions of whether there are protected property or liberty interests involved.

We do not think that they are critical.

Unidentified Justice: Well, how can the hearing... the Chief Justice's question makes me wonder, her could the pre-transfer hearing provide protection against this concern you expressed about the consequences of a transfer to a higher level?

If the reason is that there is greater danger of mortality, does that... how does it help to make them spell it out in a hearing for the man or woman?

Mr. Kirklin: Because that is not the only issue, Your Honor.

Unidentified Justice: But that would be in part.

I mean, if that is one of the reasons you are saying the patient must be given the bad news in detail, is what you are saying.

Mr. Kirklin: That would be part of the issue.

The other part, again, in the regulations which talks about that a transfer cannot be accomplished unless it is in the interest of the patient or his welfare, is that if that patient could show that he or she had lived in a nursing home for 20 years and they propose to send that patient out of New York City to upstate New York on some erroneous medical judgment--

Unidentified Justice: Well, is there a case at all like that in this record before us?

Mr. Kirklin: --There are--

Unidentified Justice: I can imagine some cases with extreme facts might present a problem, but do we have to decide... is there anything in this record that requires us to decide a case of that kind?

Mr. Kirklin: --Of the transfers to a higher level of care?

Unidentified Justice: Yes.

Where it is harmful to the patient to give him the added protection.

Mr. Kirklin: The evidence that we have here as part of the joint pretrial order is that during the period in which this case was in litigation, and when the state did provide hearings... at one point it did... there were, the defendants state, at least 10 cases of transfers to a higher level of care; five were reversed at hearing.

Unidentified Justice: Yes, but are any of those litigants that are involved in this case?

Mr. Kirklin: Those litigants, those persons, were members of the class; none of them are named plaintiffs in this case.

Your Honor, I want to briefly point out some significant aspects of the joint pretrial order in this case.

In that case, in that joint pretrial order, there were the allegations made that a substantial proportion of facility transfers of Medicaid patients are improper under federal and state law.

Defendants did not controvert that particular allegation.

That is, at the stage of the case where in affidavit form and in statement under local court rules the defendants identified what allegations of the plaintiffs they disagreed with, they did not controvert that.

And we submit that it is significant here when the class was defined without objection, without appeal by the defendants to include all Medicaid patients in nursing facilities in New York state, and given this allegation that class members were transferred improperly, not controverted by the defendants, standing was never interposed as a basis for objection below, that that class certification can bridge the gap between the allegations of the named plaintiffs and the allegations, unrefuted, unobjected to by the defendants concerning class members, when there was no objection taken to the certification of the class, no appeal taken in the statement of controverted issues that the proposition, that allegation about class members was not contested.

Unidentified Justice: Well, your time has expired, Mr. Kirklin.

Do you have anything further, Mrs. Gordon?

ORAL ARGUMENT OF JUDITH A. GORDON, ESQ. ON BEHALF OF THE PETITIONER -- Rebuttal

Mr. Gordon: Yes, Your Honor, I have just a few points.

Unidentified Justice: May I ask before you start, are the Grey Panthers parties to this case?

Mr. Gordon: Not so far as I am concerned, Your Honor, because--

Unidentified Justice: They are not listed as parties?

Mr. Gordon: --They are listed as parties, they were apparently parties in the first half of this case which ended with the consent judgment back in 1979, the October one.

But if Your Honor turns to the pretrial order which starts at, I believe, page 250 of the Appendix... pardon me, 150 of the Appendix,... you will find that in the description of the nature of the action in proceedings and in the nature of the parties, which is on page 151--

Unidentified Justice: Mrs. Gordon, if you will stay on the microphone we will hear you better.

Mr. Gordon: --I am sorry.

That in the description of the nature of the action in proceedings at page 150 and following at page 151, the nature of the parties, the Grey Panthers are not described, and we have considered, as we indicated in our brief, that their claims were abandoned.

If they were not abandoned, we also believe that their standing was not made out.

Unidentified Justice: Now, rules require that the parties be identified.

Are they identified in the petition for certiorari?

Mr. Gordon: I beg your pardon, Your Honor, I could not hear you.

Unidentified Justice: Our rules require that parties be identified.

I did not find that they were included in the list of parties in the Petition for Certiorari.

Were they or not?

Maybe counsel on the other side could tell us.

Mr. Kirklin: Yes, Your Honor, they are listed among the parties before this Court.

Yes.

Unidentified Justice: Where, what page?

Mr. Kirklin: The petition itself,--

Unidentified Justice: That is all right, I do not want to detain you.

Mr. Kirklin: --They are definitely listed among the parties.

Unidentified Justice: They are, thank you.

Mr. Gordon: Justice O'Connor, just a point of clarification, it is not only URC transfers to higher levels of care that are in issue in this case; it is also the medical decisions of the outside physician and the nursing home physician that are in issue.

With respect to whether or not there was anything in the record which spoke to the federal... whether or not HHS was requiring hearings in the circumstances before the court, I call your attention to the exhibit that concludes our brief, wherein HHS, then HEW, states at page 2(a),

"A change in medical care ordered by a patient's physician does not represent an agency proposal to terminate, suspend or reduce assistance payment."

"If a patient disagrees with his physician's determination of medical necessity for a specific service, his recourse is to the practitioner or his professional association, not to the medical assistance agency."

And again, I call your attention to the second supplement to the Joint Appendix, where in the letters that follow, Commissioner Blum's letter, show that the federal government not only did not consider URC transfers upward subject to fair hearing rights, but they threatened to withdraw FFP if we provided fair hearing rights with respect to them.

Unidentified Justice: Mrs. Gordon, on this matter of the Grey Panthers, this petition is yours, isn't it, the state's?

Mr. Gordon: Yes, it is, Your Honor.

Unidentified Justice: And it says Barabara Blum, et cetera, against... and it names a number of people... and the Grey Panthers, New York Chapter.

Mr. Gordon: Yes.

It is not--

Unidentified Justice: You thought... when this was filed you thought they were respondents, didn't you?

Mr. Gordon: --Yes.

It was not that they are not technical parties.

They were listed in the caption, Your Honor.

It is just that they, one, had no standing in the original case, and to the extent that one has to rely on the post-consent judgment claims which are now before you, the Grey Panthers--

Unidentified Justice: Well, the judgment of the court of appeals mentions them.

Mr. Gordon: --Yes, they are listed--

Unidentified Justice: And that is the judgment that is here.

Mr. Gordon: --That is correct, Your Honor.

Unidentified Justice: Well, aren't they here?

Mr. Gordon: Yes, Your Honor, they are parties here in terms of their technical inclusion in the caption.

However, they made no sufficient claims at the outset--

Unidentified Justice: They are here also as technically in the judgment.

Mr. Gordon: --Yes, Your Honor.

Unidentified Justice: And that is not quite technical; that is the judgment.

Mr. Gordon: Yes, Your Honor.

Unidentified Justice: You haven't made any objection to that, have you?

Mr. Gordon: I do not have an objection to their appearing in the caption.

I have an objection to finding by reason thereof or any other predicate that they had standing in the first instance in this case, or that they had any claim specifically--

Unidentified Justice: And where did you raise that objection?

Right now?

Mr. Gordon: --As I indicated earlier,--

Unidentified Justice: You raised it now.

Mr. Gordon: --That is correct, Your Honor.

Unidentified Justice: You did not raise it before.

Mr. Gordon: That is correct, Your Honor.

Unidentified Justice: Isn't it a little late?

Mr. Gordon: That is correct, Your Honor, but for the fact that it is a jurisdictional objection and cannot be waived, and as I indicated earlier, would not have been presented to this Court were it not for serious conversations on that point with the Solicitor General.

Unidentified Justice: I am not bound by your serious conversations with your solicitor general.

Mr. Gordon: That is certainly true, Your Honor.

I would call the Court's attention to one portion of the legislative history with respect to utilization review, which I think makes it abundantly clear that utilization--

Chief Justice Burger: Your time has expired, Mrs. Gordon.

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

Attribution:

The OYEZ Project

Featured:

Schweiker v. Hogan - Oral Argument

Fri, 09 Jan 2009 14:47:29 +0000

Case:

Schweiker v. Hogan

Media File:

81-213_19820324-argument.mp3

Related Transcript:

transcript.xml

Transcript:

ORAL ARGUMENT OF GEORGE W. JONES, ESQ. ON BEHALF OF THE APPELLANT

Chief Justice Burger: We will hear arguments next in Schweiker against Hogan.

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

Mr. Jones: Mr. Chief Justice, and may it please the Court:

The issue in this case is whether differences in the financial eligibility requirements prescribed in Section 1903(f) of the Social Security Act for the two major groups of potential Medicaid beneficiaries violate the equal protection component of the Fifth Amendment.

The first group is the categorically needy.

Aged, blind and disabled individuals whose income is less than the income limits established in the cash assistance programs.

The second group is referred to as the medically needy, and includes aged, blind and disabled individuals whose income is greater than the cash assistance limits.

All of the appellees are in the second group.

The decision in this case, however, will not only determine the constitutional validity of the differences in the income requirements, but also, the validity of Congress's decision to require participating states to provide Medicaid coverage to the categorically needy but not to the medically needy.

The Medicaid program was established in Title 19 of the Social Security Act and provides federal financial assistance to states that choose to pay for medical treatment for certain groups of poor people.

States that choose to participate in the program must provide Medicaid coverage to all individuals who are receiving benefits under one of two cash assistance programs.

Either the federally-financed supplement security income for the aged, blind and disabled program, or the jointly-financed program for providing aid to families with dependent children, the AFDC program.

Participating states are not required as a general matter to provide Medicaid benefits to any other group of individuals.

Therefore, a person who is not eligible for benefits under one of the cash assistance programs is also ineligible for benefits under the Medicaid program unless his state chooses to provide benefits to one of the optional categories.

The major optional coverage group is the medically needy; people who are ineligible for cash assistance only because of the amount of their income.

Section 1903, however, provides that states are only entitled to federal financial assistance for providing Medicaid benefits to a medically needy individual if he incurs medical expenses in excess of the difference between his income and the state's spend down level.

The spend down level for a person with a family of a given size must not exceed 133 1/3 percent of the state AFDC payment amount for a family of the same size.

The SSI program guarantees a federal minimum benefit, but the states may supplement that amount.

If the state chooses to make supplemental payments to individuals who are receiving SSI benefits or who would be eligible for SSI benefits except for the amount of their income, the state may also provide Medicaid benefits to those individuals without regard to the 133 1/2 percent limitation prescribed in Section 1903.

Massachusetts participates in the Medicaid program, provides Medicaid benefits to the medically needy, makes supplemental benefits to SSI benefit recipients or people who would be eligible for SSI except for the amount of their income, and provides Medicaid benefits to people who are eligible for supplemental payments.

All of those choices are voluntary choices on the part of the state of Massachusetts.

Appellees filed this lawsuit in the United States District Court for the District of Massachusetts challenging the maximum medically needy spend down level prescribed in Section 1903(f) as inconsistent with the equal protection component of the Fifth Amendment.

Appellees also challenge the corresponding provisions of the Massachusetts Medicaid plan as inconsistent with the equal protection clause of the Fourteenth Amendment.

Unidentified Justice: Was there a statutory argument eventually presented?

Mr. Jones: No.

Appellees represent a class of all present and future Social Security benefit recipients who live in Massachusetts, are disabled or older than 65 years old, are ineligible for cash assistance because of the amount of their income, and have medical expenses not subject to payment by third parties that are greater than the difference between their countable income and the cash assistance income limits.

The district court in this case held that to the extent that Section 1903(f) requires the state of Massachusetts to establish a spend down level that is less than the state supplemental payment income limits, the statute discriminated against appellees, in violation of the equal protection component of the Fifth Amendment.

The district court concluded that the time for comparing the circumstances of the medically needy including the appellees, the group to whom Section 1903(f) applies, and the circumstances of the categorically needy, to whom Section 1903(f) is not applicable, was after the medically needy had incurred medical expenses.

According to the district court, at that point there is no difference between the medically needy and the categorically needy, and consequently, no basis for distinguishing between the two groups, as Section 1903(f) does.

Unidentified Justice: Mr. Jones, is this... your footnote 9, is that an example of the difference?

Is that in your brief, page 6, footnote 9.

Mr. Jones: This is an example of--

Unidentified Justice: How this thing works?

Mr. Jones: --Yes, that is right.

Unidentified Justice: And the disadvantage in dollars between the two classes runs out to what?

About $200 a month?

Mr. Jones: Well, the difference in the spend down level and the income limits is about $100.

It depends on the particular category the applicants fall in.

Massachusetts has different income limits for an aged couple where both individuals are over--

Unidentified Justice: Yes, but it is this difference.

Mr. Jones: --Right, it is that kind--

Unidentified Justice: Between the two classes that is the basis of the constitutional argument that that is a denial of equal protection, isn't it?

Mr. Jones: --That is right.

And the district court... and the argument of the appellees assumes that the medically needy will pay the medical expenses as soon as they are incurred, or at least--

Unidentified Justice: So that if I am getting $600 a month and they pay medical expenses of $250, then they are down below the level, aren't they?

Mr. Jones: --That is right.

But they ignore the fact that the medically needy might very well pay the expenses over a ten-month period rather than a one-month period, so that they would never end up with less money for non-medical expenses than the categorically needy.

As I mentioned, the appellees failed to raise their statutory argument in the district court.

We have set out at some length the reasons we think that argument is insubstantial in our reply brief, and unless the Court has some questions, I will turn to the constitutional argument.

Unidentified Justice: You don't suggest that the appellees are not entitled to be present it here as a ground for affirmance?

Mr. Jones: We don't make that argument, although--

Unidentified Justice: It never was raised below.

Mr. Jones: --That is right.

In fact, the appellees argue that it was required by the statute, and the district court proceed on that assumption, that Section 1903(f) required the spend down level in Massachusetts to be equal to 133 1/3 percent of the AFDC payment amount, whether or not--

Unidentified Justice: Well, are you suggesting we should ignore the statutory argument or meet it?

Mr. Jones: --Well, I am suggesting that you should reject it.

Unidentified Justice: All right.

So we should decide it on the merits.

Mr. Jones: Sure.

Unidentified Justice: And reject it and then reach the constitutional issue.

Mr. Jones: And reject that as well.

Unidentified Justice: Yes.

If we were to find, for some reason, that the comparability requirement applied to the case, how could we reconcile it with the spend down provision?

Mr. Jones: Which comparability requirement?

Unidentified Justice: The statutory argument made by the appellees.

Mr. Jones: The problem is that Section 1903(f) was the... was enacted in 1967.

To the extent that the 65 legislation imposed any limits on the extent to which the state could set a medically needy spend down level, Section 1903(f) clearly modified that requirement, because it states without exception... except for the categorically needy... that the state spend down level shall not exceed 133 1/3 percent of the amount that would be paid under the state AFDC program to a family of the same size.

Congress clearly did not believe that there was any necessary relationship between the spend down level and the cash assistance levels.

Section 1903(f) is clear on its face and it makes an exception, an express exception, for the categorically needy.

Unidentified Justice: Mr. Jones, do you know whether there is any legislation pending in Congress to overcome these fiscal anomalies that the appellees complain of?

Mr. Jones: Well, last year, Representative Frank of Massachusetts... and according to appellees, in response to this litigation... introduced a bill that would adopt exactly the statutory argument that appellees press on this Court.

Congress did not act on it last term and I am not even sure that it has been referred to a committee.

There has been no action on it, a far as we know.

Contrary to appellees' submission and contrary to the premise of the submission of amicus Massachusetts Association of Older Americans, this case does not involve any post hoc rationalization of Congress's action.

When Congress enacted Section 1903(f) in 1967, its stated purpose was to reduce federal expenditures.

In its view, in Congress's view, the states had been much too generous in defining who constitute the medically needy.

As the House committee clearly indicated its concern that some of the plans operated to greatly reduce the incentives for participating in the optional Medicare program, and the committee further emphasized its view that Medicaid was never intended to supplant private health insurance.

As the Senate committee observed, a tendency of some states to identify as eligibles for medical assistance under Title 19 large numbers of persons who could reasonably be expected to pay some or all of their own medical expenses, has not only significantly increased the amount of federal funds flowing into this program, but has developed future cost projections at a level totally inconsistent with the expectations of Congress when it enacted this program in 1965.

Congress's explicit purpose was to limit federal expenditures, and to do so by limiting the state's coverage of the medically needy.

By definition, the medically needy have more income than the categorically needy.

As a matter of fact, that is the only difference between the two groups.

Furthermore, since the medically needy group includes anyone who would be eligible for SSI except for the amount of his income, an individual can qualify for Medicaid benefits as medically needy, no matter how much greater than the cash assistance limits his income might be.

As a class, therefore, the medically needy are plainly better able than the categorically needy to pay their own medical expenses or to take steps to assure that future medical expenses can be paid by, for example, purchasing private insurance.

With few exceptions, it was plain to the members of the 90th Congress that the medically needy were less needy that the categorically needy.

All the proposals introduced in 1967 to limit federal expenditures were directed at limiting expenditures on behalf of the medically needy.

As Senator Long put it, we are talking here about, the people who are not on the cash public assistance rolls.

That is the area in which we think savings should be made.

On this point, Senator Long spoke for an overwhelming majority of Congress.

Section 1903(f) distinguishes between the medically needy and the categorically need because the medically needy are financially better able to provide for their own medical expenses.

Precisely the same reasoning underlies Congress's decision to require the states or participating states to cover the categorically needy but not the medically needy.

Therefore, the reason for the distinction in Section 1903(f) between the categorically needy and the medically needy is implicit in the structure of the Medicaid program itself.

Now, to the extent that... to the extent relevant in this case, section 1903(f) distinguishes between two groups: aged, blind and disabled individuals whose income is less than the cash assistance levels, and aged, blind and disabled individuals whose income is greater than the cash assistance levels.

Accordingly, the appropriate groups, or the appropriate classifications for equal protection analysis are those two.

Appellees' status as social security benefit recipients is completely immaterial.

There are social security benefit recipients on both sides and appellees don't even suggest that there are any disproportionate number of social security benefit recipients in the medically needy category.

In addition, it is inappropriate for equal protection analysis to compare aged, blind and disabled individuals whose income is greater than the cash assistance levels, but whose income net of medical expenses is less than the cash assistance levels, with the group of aged, blind and disabled individuals whose gross income is less than the cash assistance levels because Congress simply did not create that classification.

The consequences of adopting the district court's analysis and appellees' contentions in this case are quite far reaching.

If, as the district court held, for purposes of equal protection analysis the income of the medically need net of medical expenses must be compared with the gross income of the categorically needy, there is no constitutional distinction between the two groups.

In fact, there is no difference at all.

Unidentified Justice: How was the district court able to compare the two incomes?

Did he have statistics before him that would have related to all of the... the income of all of the medically needy?

Mr. Jones: No.

As far as I know, he did not have such data.

He had the named plaintiffs--

Unidentified Justice: Well, doesn't he recognize the fact that Congress is entitled to make general classifications in this field, and that you don't just single out a few basket cases, so to speak, to prove a point?

Mr. Jones: --I would have thought so, but apparently not because the district court explicitly rejected our contention that the time for comparing the two groups is before medical expenses are incurred.

And if that is true, Fullington v. Shea was wrongly decided and must be overruled; two, Section 1902(a)(10) of the Act, which distinguishes between the categorically needy and the medically needy by requiring the states to cover one but not the other... or, requiring the states to cover the categorically needy but not the medically needy, is unconstitutional.

And finally and perhaps most importantly, the 20 jurisdictions that now provide Medicaid benefits for the categorically needy but do not provide any benefits at all for the medically needy must either extend coverage to the medically needy or simply drop out of the program altogether.

The district court seemed to be completely oblivious to those consequences, and we think they are... they simply underscore the error in his decision and the error in his analysis.

Contrary to the premise of the district court's opinion also, there is no basis at all in the legislative history of this provision for concluding that the difference in treatment of the categorically needy and the medically needy was the result of some sort of legislative accident.

On its face, the statute distinguishes between those people who are eligible for cash assistance and those people who are not.

The statute only applies to the medically needy.

The distinction drawn between the medically needy and the categorically needy was described on the floor of the Senate and described in the conference report, it is the 67 amendments.

The information before Congress plainly indicated that in many states, the 133 1/3 percent of the AFDC amount was going to be less than the old age assistance income limits.

Indeed, the Under Secretary of Health, Education and Welfare, now Health and Human Services, specifically pointed out that 133 1/3 percent of the AFDC payment amount, in some states, was even lower than the AFDC standard of need.

Although no one disputed the goal of saving money, the provision that was ultimately adopted as Section 1903(f) of the Act was repeatedly criticized on the basis that it was too low.

Congressmen claimed that the provision would destroy the concept of medical indigence in the Medicaid statute.

It is unlikely in these circumstances that the congressmen... that the entire Congress, as appellees contend, ignored or overlooked the significance of the data indicating the effect of adopting this 133 1/3 percent limitation.

In our view, it is far more likely that the few people in Congress regarded the difference in treatment as... difference in treatment of the medically needy and the categorically needy... to be as offensive as appellees seem to think they should have.

Indeed, Senator Javits expressly argued or made several policy arguments against discriminating against the medically needy.

The Senate... Senator Javits's arguments were made in support of the Kuchel Amendment.

The Senate, by a vote of more than... by a margin of more than two to one, rejected those policy arguments and enacted the Senate Bill as the committee had proposed, with the expression provision that discriminated against the medically needy.

That is a different provision than the one that is at issue here, but it was replaced by the provision here, and it seems to us that the vote in the Senate on the Kuchel Amendment plainly indicates that at least those members of the Senate who voted on that bill did not regard discrimination against the medically needy, or a difference in treatment of the medically needy and the categorically needy as something so offensive that it could never be tolerated.

If there are no questions, I would like to reserve the balance of my time.

Chief Justice Burger: Mr. Simon?

ORAL ARGUMENT OF WILLIAM H. SIMON, ESQ. ON BEHALF OF THE APPELLEES

Mr. Simon: Mr. Chief Justice, and may it please the Court:

The issue before the Court is whether Congress has required a state Medicaid program to apply a lower subsistence standard to a group of indigent, aged and disabled people who do not depend on public assistance, lower than it applies to public assistance recipients.

And if so, whether it is constitutional for Congress to do so.

Now let me begin by responding to the question which Justice Rehnquist raised.

We do not challenge the ability of a state to determine eligibility on the basis of gross income.

We do not challenge the ability of Congress or a state to draw eligibility conditions on the basis of broad, general characteristics.

But that is not the way this program worked.

The classification involved in this program is not a broad, general, overbroad characteristic.

Massachusetts makes a precise determination of the impact of medical expenses on financial need.

It does identify those members of the appellee class who are identically situation to SSI recipients by considering the additional factor of medical expenses.

This case is thus radically unlike the cases such as Fullington, for instance, or Weinberger vs. Salfi where the cases upheld over-broad classifications on the grounds of administrative convenience of administrative simplicity on the theory that a state need not consider every factor bearing on need.

A program has no obligation to identify all the people who are identically situated in terms of the program's purposes.

Unidentified Justice: Mr. Simon, is it necessary, in your constitutional argument, as I took it to be from the district court's opinion, that the federal level be compared with the Massachusetts level?

Mr. Simon: It is necessary... both levels that apply here, Your Honor, are Massachusetts levels.

Massachusetts sets the SSI level and it sets the medically needy level, although the medically level is at the 4/3 cap.

Unidentified Justice: Yes.

Because of the federal statute.

Mr. Simon: That is correct, Your Honor.

Unidentified Justice: Then would the district court's holding mean that the federal statute could not be constitutionally applied in Massachusetts, but that it could be in other states?

Mr. Simon: It could be applied in any state which had a medically needy program in which the 4/3 maximum was above the SSI level.

That is true in the majority of medically needy states.

Unidentified Justice: So that a law of Congress is held unconstitutional in some states and constitutional in others, under his ruling.

Mr. Simon: Well, that is correct, Your Honor.

But it is important to focus on the reason.

The reason is, of course, that Congress cannot authorize, through the use of its fiscal power, a state to do something which Congress could not do itself.

I do not think there is the same rule... if Congress itself had applied two separate, radically different standards of needs to two identically situated classes, there would be no doubt that that would be a violation of equal protection.

Here Congress is using its fiscal power to force some states to set its... to treat one class differently in a way that Congress could not, itself.

Now, I would like to return to the statutory argument.

As it turns out, the statutory argument and the constitutional arguments are closely entwined.

And I think it is important to emphasize to the Court the nature of the classification that is at stake here.

As Mr. Jones concedes, Massachusetts covers two groups of indigent, aged and disabled people who are identically situated in terms of the same categorical criteria of age and disability.

Unidentified Justice: But I did not understand him to say that one group was all indigents.

Mr. Simon: That is the case, Your Honor, if indigents is measured as that program measures indigents and--

Unidentified Justice: Yes, but the statutory classification is much broader than indigents.

Mr. Simon: --I am not sure which statutory classification Your Honor is referring to.

Unidentified Justice: Those, the medically needy.

Mr. Simon: No, that is not correct, Your Honor.

If the medically needy... the distinctive feature of the medically needy program is that income must be determined on the basis of income... gross income after medical expenses.

That is, the way it works is this: to the extent that the individual has income in excess of the eligibility standards, the state then considers the individual's medical expenses.

To the extent that the individual's medical expenses reduce his income below the public assistance standard or the medically needy standard, the individual is then entitled to Medicaid for medical expenses, for which any remaining excess income is insufficient.

The individual spends the excess income for his or her own medical expenses, receives Medicaid for only those remaining expenses.

Now, the effect of that, if the medically needy standards were set at the same level as the SSI standard, would be to precisely equalize the treatment of these two groups of aged and disabled people.

Unidentified Justice: I suppose your class actually is one that fluctuates in membership.

At any given point in time a person may be rather wealthy, but if he suddenly has a lot of medical expenses, then he becomes a member of the class.

Mr. Simon: That is unlikely to be the case, Your Honor.

All members of the class are aged and disabled, and certainly, the two named plaintiffs have permanent continuing medical need, and in view of the types of expenditures for which Medicaid tends to pay, makes it also seem unlikely.

For instance, 70 % of Medicaid expenditures are for nursing home care, which tends to be a very long-term affair.

In any event, it is also the case that the class of SSI recipients fluctuates, too, and there is no reason to believe that this class fluctuates anymore radically than the class of SSI recipients.

I should also point out that in order to qualify as medically needy, the applicant must satisfy an asset requirement which in this case would be $2000.

So there are no millionaires getting--

Unidentified Justice: One other question.

Would your position be the same if Congress provided for Medicaid just for the categorically needy and had no provision for the medically needy?

Mr. Simon: --No, we do not challenge that at all, Your Honor.

We think Congress--

Unidentified Justice: That is one thing that always troubled me about your position.

Mr. Simon: --Well, Your Honor, I think that the position in fact is quite typical of the situation in most of the welfare cases this Court has considered in the equal protection context.

It is always the case that welfare benefits are optional.

On the other hand, all of this Court's cases stand for the proposition that once a court undertakes to provide benefits, it assumes minimal obligations of rationality in distributing them.

Unidentified Justice: Well, you mean once Congress does, or a legislature.

My assumption is that Congress decides to give Medicaid benefits to the categorically needy, period.

Now, does he have an obligation to give medical benefits to people who, because of their medical expenses, are equally needy?

Mr. Simon: No, but it is important to focus on why.

The reason why is that Congress and the states have a right to determine eligibility on the basis of general criteria.

They do not have to consider every factor bearing on need.

When the state chooses to determine eligibility on the basis of gross income alone, there is a state interest in simplicity and convenience; there is also at least a formal equality in the way people are measured.

In this instance, however, Congress has given Massachusetts its option and Massachusetts has accepted it, to consider an additional factor to make it a more precise determination.

And when Massachusetts does that, we submit, it cannot apply a different standard of non-medical need to an identically-situated group of aged and disabled people.

Now, the relevance of the legislative history to both the statutory and the equal protection arguments is that the entire purpose of Congress in creating the medically needy option was precisely to enable the states to avoid the unfairness which results when aged and disabled people who cannot receive welfare are left with less income for their non-medical needs than they would receive if they could qualify for welfare.

Virtually identical language in both the House and the Senate reports on the original 1965 legislation indicates that Congress' entire purpose in doing this was precisely to avoid the unfairness that is involved in this situation.

Congress proposed to do this through the two distinctive features of medically needy coverage.

The first is the net income principle; the second is the comparability principle, which now appears in the statute in Section 1902(a)(17), and which was enacted in 1965 for the precise purpose of prohibiting a state from setting its medically needy standards below its categorically needy standards.

Unidentified Justice: When was Section 1903(f) enacted?

Mr. Simon: In 1967, Your Honor.

Unidentified Justice: Why are you focus... isn't that the one that the district court declared unconstitutional?

Mr. Simon: That is correct, Your Honor.

Unidentified Justice: Why are you focusing, then, on 1965?

Mr. Simon: Because 1902(a)(17) is still in the statute, Your Honor, and the question is whether the 1967 amendment amended that requirement.

Unidentified Justice: Oh, it is a question of statutory construction.

Mr. Simon: Yes, Your Honor.

Let me just draw the Court's attention to two sentences from the much longer statement in the 1965 legislative gloss on the comparability provision.

They are quoted on page 13 of our brief, the last two sentence are:

"In no event, however, may a state require the use of income or resources which would bring the individual's income below the test of eligibility under the state plan."

"Such action would reduce the individual below the level determined by the state as necessary for his maintenance."

I do not believe there can be any reasonable dispute that the 1965 legislation was intended to prohibit what has happened in this case.

The question then arises whether Congress intended when it enacted the 4/3 cap in 1967 to alter that commitment to comparability.

Unidentified Justice: This is the statutory construction argument.

Mr. Simon: Yes, Your Honor.

Unidentified Justice: You did not present it below?

Mr. Simon: No, we did not, Your Honor.

Unidentified Justice: And did you take a position contrary to this?

Mr. Simon: No, we did not.

The district judge at the outset of the case indicated that he was inclined to rule on the constitutional issue, and the parties focused on that issue.

Unidentified Justice: Well, you didn't suggest there was even a statutory issue.

Mr. Simon: That is correct, Your Honor.

Unidentified Justice: Do you think... if you win on this, do you think it changes the relief you get?

Mr. Simon: Not at all, Your Honor, it is the identical relief.

Congress, in fact, mandated precisely what the district court ordered in 1965.

Unidentified Justice: Was there a reason it was not raised below or did you just not find the statute--

Mr. Simon: Well, there was really no reason, Your Honor, beside the fact that the district court indicated at the outset that it was going to focus on the constitutional issue.

Unidentified Justice: --Well, your... do you think we are obligated to entertain your statutory issue?

Mr. Simon: No, I do not think the Court is obligated to.

I think the Court clearly has discretion to.

I think Rule 10(5) specifically gives it discretion, and we would urge the Court to do so in deference to the principle that plausible statutory construction should be adopted, which obviate reaching constitutional issues.

Unidentified Justice: I suppose you are going to reach the positions of the United States and... in their answer to your statutory argument.

Mr. Simon: Indeed, I am, Your Honor.

The legislative history of the 1967 amendment... that is, the 4/3 cap... which the Secretary asserts to require the discrimination alleged here, shows that Congress did not intend that the 4/3 cap required the medically need standards to be lowered below the categorically needy standards.

Congress did intend to lower the medically needy standards; it did not contemplate that they would be lowered below the categorically needy standards, and thus abrogate the specific commitment to equity between public assistance recipients and the retired working corps which Congress made in the comparability provision.

The legislative history of the 4/3 rule in 1967 shows that Congress was reacting to the New York program.

That program had set its medically standard so high that nearly 40 to 45 percent of the entire state had been made eligible, even before consideration of medical expenses.

Congress thought that New York had abused the program to make its benefits available to people whom Congress had never thought would benefit from the program, and imposed the 4/3 rule as a cap.

The sponsors of the 4/3 rule repeatedly characterized its purpose as simply to bring the New York program into line with Congress' original expectations.

As one of the sponsors put it, none of the basic purposes of Title 19 have been harmed or injured in any way.

The 1967 legislation made no amendment to the comparability requirement which was specifically enacted to prevent medically needy income standards from being set below the corresponding categorical standards.

And the legislation shows that if Congress had intended to alter that comparability standard, it would have done so.

In fact, in 1967, Congress did enact a provision which was intended to make a minor codification in the related comparability provision, also known as a comparability provision.

And in that instance, Congress made a separate and specific amendment to that comparability provision which appeared in the 1967 legislation under the heading "Modification of Comparability Provisions".

Not a word was said under that heading about any modification intended in the comparability provision requiring medically needy standards at least as high as categorically needy standards.

Nor was anything said in the debates or hearings that suggested any understanding that this result would occur.

And again, had there been any such understanding, the record indicates that there would have been such discussion.

The one statutory amendment Congress did consider in 1967 which was identified as discriminating against the medically needy was severely criticized for doing so and was eliminated from the legislation as enacted.

The statement from Senator Long, which Mr. Jones quoted does not refer at all to the 4/3 rule, but refers to a separate provision that was considered in the Senate that had nothing to do with income eligibility limitations and did discriminate against the medically needy and was eliminated from the statute.

Now, Mr. Jones emphasizes there were states in 1967 in which the 4/3 maximum was below the old age standards.

To be specific, there were six states with medically needy programs, six out of 22, although in only three of them was the difference at all substantial.

The important fact is that this conclusion is derived from a very elaborate and, we concede, ingenious analysis Mr. Jones has performed.

It was not an analysis that was performed by an legislator in 1967.

The only medically needy program Congress discussed in anymore than a passing fashion in 1967 was the New York program, and in New York, the 4/3 maximum was well above the old age assistance levels, there was no danger that the result in this case would occur in New York.

Unidentified Justice: It would have been so easy for Congress to say 4/3 except when it goes below the categorically needy... it did not say that.

Mr. Simon: It did not say that, Your Honor.

On the other hand, unless the comparability rule is still in place, it is possible that Congress assumed the comparability rule would control in this case, it is possible that the legislature simply never contemplated that there would be as large a gap between the AFDC and old age standards as to permit this to be possible.

It is worth recalling that the 4/3 rule was part of an omnibus Social Security Act with massive changes in all the social security programs.

The legislative record is replete with complaints by legislators that there had not been time enough to analyze the bill.

Unidentified Justice: Well, presumably they would have voted it against it, then, but it nonetheless passed.

Mr. Simon: It did pass, Your Honor.

On the other hand... and it is the law.

On the other hand, the comparability rule is also the law, so the question is which of the two inconsistent provisions will govern here.

Unidentified Justice: Ordinarily, it is the most recently-enacted--

Mr. Simon: Well, I would dispute, Your Honor, that the Court has followed that rule in cases that involve very similar situations.

In cases such as Cass versus United States, for instance, and the cases that we cite on page 30 and 31 of our brief, the court, as here, has been faced with a situation in which the literal application of a later statute would require the abrogation of a basic policy commitment reflected in that earlier statute or earlier legislative history.

In those situations, the Court has looked to the legislative history of both statutes, and where it has found in the legislative history of the later statute no intention to alter the prior policy, it has held the earlier statute governing.

That analysis applies here.

Comparability was a fundamental commitment of the 1965 legislation.

Unidentified Justice: --If we sustain the statutory argument, it would only cure these cases where the level falls below?

Mr. Simon: That is the only program that we are seeking to have the Court cure, Your Honor.

We do not dispute at all that Congress has a right to set a cap on medically needy income levels, and in the majority of states in which the cap would set the levels above the old age assistance standards or the SSI standards, we don't see any objection--

Unidentified Justice: What is the impact of the district court's decision?

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

Unidentified Justice: What is the impact of the district court's decision?

The same?

Mr. Simon: The impact of the district court's decision will be, all parties agree, to require that the medically needy standards be set at no lower than the SSI standards; it would be exactly identical to what the comparability rule requires.

The effect of the Secretary's interpretation of the income maximum is, first of all, it would abridge the fundamental commitment Congress made to comparability in 1965.

It is also to violate the basic equities that are expressed throughout the statute, particularly in Title II, by penalizing work and social security contributions in savings, for that is the only difference, the only significant difference between the two classes in this situation... is that the members of the disfavored class have worked more, saved more, or made more social security contributions and now find themselves in a situation where the income they have worked for is turning into a liability that forces them to live nearly $200 below the subsistence income that Massachusetts provides SSI recipients.

We submit that the Court should not impute an intention to accomplish this result to Congress without more evidence that Congress intended it than can be found in this record.

Now, Mr. Jones,... let me turn now to the constitutional argument.

We submit that if the Court does decide that the Secretary's interpretation of the statute is right, then the district court's analysis is entirely sound.

That analysis... that issue turns on the question of whether there is any distinction in the situation of the two classes which is rationally related to a legitimate legislative purpose.

We submit that there is no such distinction.

Now, Mr. Jones refers... Mr. Jones mentions the purpose of saving money.

That, of course, as this Court has held, is not a sufficient basis for a distinction which irrationally burdens... puts the burden of public savings disproportionately on one class and not on another identically-situated class.

The issue was specifically held in Rinaldi vs. Yeager, is whether the specific classifying feature rationally determines who is to bear the burden of public savings.

Now, Mr. Jones suggests that it is possible that the medically needy have greater access to private insurance than the categorically needy.

Congress never made any such determination.

The references to private insurance in the 1967 legislative history are explicitly linked to working families in the middle income range, and explicitly linked to the New York program--

Unidentified Justice: Maybe Congress did not make any express reference to it, but is it a rational argument?

Mr. Simon: --No, it is not, Your Honor.

There was certainly no reason to conclude that Congress could rationally have made that decision, for two reasons.

Unidentified Justice: I don't know whether they could, but could anybody draw that inference?

Mr. Simon: I understand your question, Your Honor, and let me try to answer it.

First of all, there is no reason to think that the medically needy have any better ability to purchase private insurance.

They do have more gross income but whatever advantage gross income gives them in getting insurance is precisely offset by the fact that they have medical expenses.

Medical expenses are equally relevant as income to the ability to purchase insurance.

Unidentified Justice: Well, I don't know... an awful lot of people spend an awful lot less for medical insurance than the elderly end up paying for doctors' bills, which are paid by their insurance company.

Mr. Simon: Your Honor, it is not at all clear that an awful lot of the aged and disabled do so, and the thrust of Congress' consideration--

Unidentified Justice: That may not be clear, but is it possible?

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

Unidentified Justice: Is it possible?

Is it rationale to think that a medically needy person with a higher gross income has greater access to medical insurance that might pay his very large medical bills?

Mr. Simon: Well, we would submit that it is not rational, Your Honor.

There is no basis, either in a priori logic or in any data.

Indeed, the data suggest to the contrary.

In 1965, Congress considered data on the availability of insurance to the aged and disabled... to the aged, and concluded that such insurance that was so available was so ineffective that it displaced the principal coverage that was then available with Part A of Medicare.

Since that time there has been no federal policy in favor of... encouraging the purchase of private insurance by the aged and disabled.

Nor would that be rational--

Chief Justice Burger: We will resume there at 1:00 o'clock, Mr. Simon.

Mr. Simon, you may continue.

ORAL ARGUMENT OF WILLIAM H. SIMON, ESQ. ON BEHALF OF THE APPELLEES -- Resumed

Mr. Simon: Mr. Chief Justice, and may it please the Court:

I would like to return to the issue of assuming that a hypothetical rational basis is sufficient to sustain the classification of whether the private insurance argument is a sufficient rational basis, of course.

Of course, amicus have argued in their brief that a hypothetical rational basis is not sufficient, at least under minimum rationality, but for the purposes of Justice White's question and the Chief Justice's question, I want to assume that it is sufficient.

Unidentified Justice: Well, what is your position on that?

May we consider some rational basis that you do not see in the legislative history, or anything else?

Can't we imagine one?

Mr. Simon: Well, we would submit, Your Honor, that in the case of a classification which results from legislative inadvertence that is not supported by an actual legislative judgment, that a higher standard than minimum rationale be applied.

Unidentified Justice: Yes, well, you have not any authority for that.

Mr. Simon: Well, four members of this Court at least have subscribed--

Unidentified Justice: Well, you haven't any authority in this Court for that, I don't think.

Mr. Simon: --That is correct, Your Honor--

Unidentified Justice: As a matter of fact, you have got authority from this Court directly to the contrary.

Mr. Simon: --No, I understand that, Your Honor, and for that reason I want to raise the question of whether, in fact, there is a sufficient hypothetical basis--

Unidentified Justice: How can you say this classification results from legislative inadvertence when Congress enacted the law?

I mean, they... it is an enrolled bill.

Mr. Simon: --Well again, Justice Rehnquist, Congress enacted two laws.

They are in inconsistent.

There is no... the legislative history indicates that Congress did not intend that the second statute abridge the fundamental policy.

Unidentified Justice: Then that is really a statutory construction, isn't it, as to... the one you were making before lunch as to which should be applied.

Mr. Simon: That is correct, Your Honor.

There is a statutory construction argument.

On the other hand, the legislative history does have bearing under the analysis in, for instance, Schweiker versus Wilson, because the first place one looks when one cannot infer a rational basis from the language of the statute, is to the legislative history to see if Congress, in fact, made an explicit judgment that some purpose would be rationally served by the classification.

We submit in this case that Congress made no such judgment in this judgment here.

The next question, of course, is whether the government can hypothesize a rational basis.

We would submit that a hypothetical rational basis of the sort that the government hypothesized would have to meet at least two conditions to be sufficient.

First, it would have to have some consistency with the statutory framework.

So much is implied in the requirement of rationality.

Second, it would have to be supported either by some judicially-noticeable data, or at least by some a priori common sense plausibility.

We submit that on reflection, the private insurance argument satisfies neither of these criteria.

First, with respect to statutory framework, the private insurance argument is not only unsupported by any actual legislative judgment that the appellees have better access to insurance, or that encouraging to purchase insurance would reduce Medicaid costs; it is, in fact, contrary to the premises which Congress acted on when it created the medically needy program, which are precisely that people who have less income after medical expenses than welfare recipients are identically situated to welfare recipients and should be treated as identically situated to welfare recipients.

Now, with respect to judicially noticeable data, the only such data about private insurance that has been cited to the Court is the data we cite on pages 44 through 46 of our brief.

that data consists of the data which Congress considered in 1965 with respect to the availability of private insurance to the aged when it enacted the Medicare program, and some more recent data, published data, which is entirely consistent with that data which we have cited to the court.

That data indicates two things.

First, it indicates that there is no private insurance available to the aged which covers the majority of services for which Medicaid expenditure are made.

70 % of Medicaid expenditures are made for private insurance... excuse me, are made for nursing home care.

Virtually no private insurance covers the type of nursing home care for which Medicaid expenditures on behalf of the aged are made.

Second, the data indicates that where private insurance does cover expenses that Medicaid does cover, it does so at greater cost than Medicaid does because of the expenses of sales effort, advertising and profit which often exceed 80 % of the total cost of the insurance.

Now, I would submit that there are two rational conclusions that one can draw from this data, and that there are no rational conclusions that one can draw from it which sustain the classification.

First, the first conclusion that the data suggests is that the principal incentive effect of the discrimination in this case on people who fear ending up in the situation of the appellees, is not to encourage the purchase of private insurance but to encourage them to make efforts to reduce post-retirement income so that they can qualify for SSI, by working less, saving less or by investing their income in exempt assets such as their home or burial plots, which are exempt under Medicaid and SSI.

Secondly, I would submit that the most plausible conclusion from this data is that even if the discrimination does encourage people who fear ending up in the situation of Mr. Hunter and Mr. Hogan to purchase private insurance, that their purchase of private insurance would increase, rather than reduce, the cost of the Medicaid program.

That is true for this reason: explicitly under the statute under Section 1902(a)(17), and under all the regulations, the Medicaid program must credit the cost of the premiums against surplus income in determining eligibility of the applicant.

The effect of that is that the Medicaid program, in effect, pays for the insurance because by crediting the premiums, it in effect reduces the amount of expenses which the applicant would otherwise have to make for his own medical expenses and increases the amount that the state must pay.

If the insurance is a bad buy for the applicant, it is a bad buy for the Medicaid program and it will increase Medicaid costs.

Now, of course, if Congress had made a contrary determination, we would expect this Court to defer to it.

But Congress has not considered the issue.

We submit that the only rational course when all of the data before the court completely contradicts the hypothetical premise of the government, is that this is not a rational basis.

Now, if I may I would like to just briefly return to the issue that I think Justice Stevens originally raised, which is the question of is there a difference in the extent to which the income of the two classes fluctuates.

When I answered that question I should have pointed out that the accounting period for Medicaid eligibility is six months.

That is, in order to qualify for medically needy coverage, an applicant must demonstrate that his or her medical expenses will exceed the amount of his or her surplus income for at least six successive months.

Now, both of the named appellees have, in fact, permanent conditions and indeed, it is probable that the vast majority of the class have conditions that go on for much longer than six months, and of course, they must re-establish eligibility every six months.

By contrast, the accounting period for SSI is from one to three months, so that one can establish eligibility for SSI if one has income, under those standards, for a single month; at most three months, depending on when in the quarter one applies.

So that insofar as one can determine from the statute, the income of SSI recipients is more likely to fluctuate than the income of the medically needy.

Now I must say something to respond to an argument which Mr. Jones makes in the reply brief which he has not yet made here today, but since he may yet make it, I want to anticipate it.

If I understand Mr. Jones' reply brief correctly, he denies that there is any such thing as an income comparability requirement in the statute which requires comparability between medically needy and categorically needy classes.

If that is his position... and I may misunderstand him... it is an astonishing position, and it is contrary to Congress' clear understanding and the clear understanding of the federal courts.

I just wanted to draw the Court's attention to a sentence from the conferees' report on the 1981 Medicaid amendments which appears at three places in the Congressional Record and cited on page 14 of our brief.

"Moreover, it is not the intent of the Conferees to alter the requirements under Section 1902(a)(17) of the Social Security Act relating to comparable treatment of income and resources between categorically needy and medically needy programs."

Unidentified Justice: How long after the event did Congress say what you have just read?

Mr. Simon: This was made--

Unidentified Justice: You said 1981?

Mr. Simon: --This is 1981, Your Honor, that is correct.

On the other hand, the federal courts in the numerous cases we cite on page 13 of our brief,... and before today I would have said the Secretary himself... have always interpreted the comparability... well, my time is up.

Thank you, Your Honor.

Unidentified Justice: Well, let me ask you, do you think this subsequent legislative history is pretty good evidence as to what the prior law meant?

Mr. Simon: I think it is pretty good evidence that the comparability requirement requires comparability of income standards--

Unidentified Justice: Well, at the same time, Congress did change the impact of this difference to some extent, didn't they?

Mr. Simon: --No, Your Honor, it did not.

There was... and the legislation is somewhat confusing because there were numerous requirements known as comparability requirements.

There was a set of requirements which required that the aged and disabled be treated the same as families.

That is the so-called horizontal comparability requirement which was eliminated in 1981.

Unidentified Justice: Do you think... they were legislating in this area at the time, in the comparability area.

Mr. Simon: Well, Your Honor, I would say that the purport of the sentence I read--

Unidentified Justice: Well, they must have been... do you think Congress by that time was aware of this distinction that you are now attacking?

Mr. Simon: --No, Your Honor, it appears, at least the most recent evidence that bears directly on that indicates the contrary.

In 1980, Congress did address an importantly related problem and left the record indicating that either it is not aware of the problem or it understands comparability to preclude medically needy levels below the 4/3 rule.

Unidentified Justice: So you get flatly contrary indications from this later legislative history on the question before us now than does the Solicitor General.

Mr. Simon: The legis... we acknowledge the subsequent legislative history is contradictory and inconclusive.

On the other hand, it is clear that since 1965 not a single legislator has expressed any intention to abrogate the comparability requirement.

Unidentified Justice: Well, the other... your opposition says that this later legislative history indicates congressional awareness and the determination to leave this discrimination in place.

Mr. Simon: Well, the only legislative history that remotely... first of all, I should say that the 1980 legislation clearly indicates Congress is not aware of it, or that it understands that comparability controls here.

That was the 1980 amendment to the Veterans Benefit Act, which explicitly was made not applicable in medically needy states on the explicitly premise that in medically needy states a person, after losing categorically needy eligibility, could be treated no worse as a medically needy person.

Unidentified Justice: Okay, thanks.

Chief Justice Burger: Mr. Jones?

ORAL ARGUMENT OF GEORGE W. JONES, ESQ. ON BEHALF OF THE APPELLANTS -- Rebuttal

Mr. Jones: Appellees state that the district court indicated that it was inclined to rule on the constitutional argument as an explanation for their failure to raise the statutory argument in the district court.

The complaint filed in this case does not raise the statutory argument, and focuses solely on the constitutional argument.

In fact, count one of the complaint states, the statutory 4/3 limit on reimbursement requires this.

The statutory 4/3 limit on reimbursement and the regulations of the Secretary--

Unidentified Justice: Well, Mr. Jones, what if the district court had said to the plaintiff, well, I see you don't raise any statutory construction argument, but I have read the statute and I think there is a very good one.

Now, you can't make me reach a constitutional issue just by your desire not to raise the statutory issue.

You would not have thought the judge was making an error, would you?

Mr. Jones: --If the judge had done that, I would probably agree.

Unidentified Justice: Well, there are some other judges involved now.

Mr. Jones: But this is an appellate court and not a trial court, and--

Unidentified Justice: You mean you can make us reach us the constitutional issue if we don't... if there is a perfectly legitimate statutory issue to be disposed of you say we must ignore it?

Mr. Jones: --Well, I don't think you can decide it without giving us an opportunity to respond to it.

Our only opportunity to--

Unidentified Justice: Well, you have filed a whole reply brief on it.

Mr. Jones: --A whole reply brief... but we have not had an opportunity to litigate this issue in the lower courts, and we have not had an opportunity to expand on the argument.

We think our reply brief is perfectly adequate to demonstrate the insubstantiality of the statutory argument.

But I suggest that this Court should not reach that issue, or should ignore that issue, and if it does it should reject it.

Unidentified Justice: Or if we reach it, you would say at least we ought to vacate the judgment of the district court and remand it so that you can litigate the statutory issue?

Mr. Jones: Or remand it and give the appellees an opportunity to amend their complaint to raise it.

Unidentified Justice: Well, it is raised now.

Mr. Jones: Well, the complaint frames the issues in litigation as a general matter, and the complaint in this case excludes the statutory issue.

And furthermore, the arguments in the district court presumed or assumed that a statutory issue was a non-issue.

The statutory argument that appellees raise now is simply an attempt to win in this court a battle that they have already lost in Congress.

Appellees now rely on a statement in the 1981 legislative history, but in our brief we quote from the 1972 provision that the Senate adopted, that would have dealt exactly with this problem and it was eliminated in conference.

There is no statutory... cannon of statutory construction that requires Congress to state the obvious.

So we don't think there is any basis at all for the statutory argument.

Now, the second point, the difference between the categorically needy and the appellees is not, is not that the appellees have worked.

There are people in the categorically needy group who have worked and whose social security benefits are simply less than the cash assistance level.

The difference between these two groups, the categorically needy and the medically needy, including appellees,--

Unidentified Justice: Mr. Jones, isn't it probably true that the people in the appellees' group have worked a little harder or a little longer?

Mr. Jones: --No, it suggests only that they were--

Unidentified Justice: They have higher social security benefits, quite obviously.

Mr. Jones: --They were paid a little more.

Unidentified Justice: Right.

Mr. Jones: And so they may not... they may very well not be anymore hardworking than--

Unidentified Justice: Or is it fair to assume that if they were paid more they might have earned a... well, never mind.

Mr. Jones: --Okay.

Furthermore, Mr. Justice Stevens, contrary to Professor Simon's answer to your question, if the time for comparing the medically needy and the categorically needy is after the medically needy have incurred medical expenses, and what you compare is the income net of medical expenses to the gross income of the categorically needy, there is no difference between the two groups, and all states would be required to adopt medically needy programs if they participate in the Medicaid program.

I mean, there is simply no difference between the two groups other than that.

Moreover, in response to another of your questions, Professor Simon indicated that somehow the individuals in this class do not include people with average income, but it clearly does.

The medically needy group includes anybody whose income... or any aged, blind or disabled individual whose income is greater than the gross... the cash assistance income limits.

So if an individual's income--

Unidentified Justice: Any such person whose income is at that level after he has paid his medical bills.

Mr. Jones: --Well, his income is the same.

If you deduct the medical expenses--

Unidentified Justice: Well, if you treat net income as income available after medical bills.

Mr. Jones: --I am sorry?

Unidentified Justice: If you treat income as income available after paying your doctor bills, then is there a difference?

Mr. Jones: No.

And that is exactly the point.

If a state adopts a Medicaid program for the categorically needy, there is no basis for saying that there is any legitimate reason for them not to cover people whose income, net of medical expenses, is less than the income of the categorically needy.

The appellees make an argument about private insurance.

They say that Congress could not have intended this.

Congress clearly said the reason it was distinguishing between the categorically needy and the medically needy is because the operation of some state plans operated to discourage both the participation in the optional Medicare program, as well as to supplant private insurance.

The House committee indicated that it clearly did not intend that.

And the Senate committee agreed.

Now, appellees argue that the benefits provided by private insurance just would not be sufficient, or would be worth less than the premiums that the medically needy would have to pay.

That, it seems to me, is something that should be submitted to Congress, but Congress clearly believed that people with gross income in excess of the cash assistance level were better able than the categorically needy to take care of their own medical expenses, either by buying private insurance or some other means.

Throughout this case it has been assumed that the spend down level somehow indicates the amount of income that will, in fact, be left for non-medical expenses.

As we tried to point out in our reply brief, the statute simply requires that an individual incur medical expenses of a particular amount.

It does not require that he pay medical expenses in the particular period that the state uses.

Massachusetts uses a six-month period.

But if the individual pays the expenses over a ten-month period, for example, he may never end up with less money for non-medical expenses than any categorically needy person.

Appellees' entire argument depends on the proposition that incurring medical expenses somehow makes them the same as the categorically needy whose gross income is less than the cash assistance income limitations.

Our submission, however, is that gross income is a perfectly reasonable basis for distinguishing between groups of individuals in a program intended to provide medical assistance for the poor.

Chief Justice Burger: Thank you, gentlemen, the case is submitted.

Attribution:

The OYEZ Project

Featured:

Schweiker v. Wilson - Oral Argument

Wed, 18 Feb 2009 06:13:17 +0000

Case:

Schweiker v. Wilson

Media File:

79-1380_19801202-argument.mp3

Related Transcript:

79-1380_19801202-argument_transcript.xml

Transcript:

ORAL ARGUMENT OF ELLIOTT SCHULDER, ESQ., ON BEHALF OF THE APPELLANT

Chief Justice Burger: We will hear arguments next in Harris against Wilson.

Mr. Schulder, you may proceed when you are ready.

Mr. Schulder: Mr. Chief Justice, and may it please the Court:

This case is before the Court on direct appeal from the United States District Court for the Northern District of Illinois.

The question presented is whether Section 1611(e)(1) of the Social Security Act violates the equal protection component of the Fifth Amendment's due process clause by excluding from certain public assistance benefits under the Supplemental Security Income program otherwise eligible individuals who are residents of public institutions and whose care and treatment are not funded under the Medicaid program.

In order to gain a proper understanding of this question, it is necessary to explore the interaction of Medicaid and SSI statutes that give rise to the equal protection issue here.

Under Medicaid, the federal government provides financial assistance to those states that choose to reimburse certain costs of medical treatment for needy persons.

The Medicaid program generally covers in-patient and out-patient care for physical and mental illnesses, but it excludes coverage for treatment of persons aged 21 through 64, in an institution for treatment of tuberculosis or mental diseases.

Since Appellees are between 21 and 64 years of age and are patients in mental institutions, their treatment is not funded under Medicaid.

The validity of the Medicaid mental institution exclusion was upheld in this Court's summary affirmance in Legion v. Richardson, and Appellees do not challenge their exclusion from Medicaid coverage in this litigation.

Under the SSI program, which was in effect on January 1st, 1974, the federal government provides monthly cash assistance to indigent, aged, blind and disabled persons.

A person is considered disabled within the meaning of the statute if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

Currently a standard SSI benefit amounts to $238 per month.

In Section--

Unidentified Justice: In total dollars, how much are we talking about, any idea?

Mr. Schulder: --In terms of the particular benefit at issue here, while we've stated--

Unidentified Justice: Overall, overall to the government; how much annually?

Mr. Schulder: --We've stated the figure would be in the vicinity of 30 million dollars, although it's difficult to compute it with--

Unidentified Justice: Annually.

Mr. Schulder: --precision.

Unidentified Justice: Incidentally, Appellee Wilson is no longer in the case, is he?

Mr. Schulder: That's correct.

The only two Appellees... the only two named Appellees who are still in the case are Appellee Simmons and Turney.

But the case was certified by the District Court as a class action.

Section 1611(e)(1) of the statute at issue here provides that an otherwise eligible person who resides in a public institution is ineligible for full SSI benefits.

Unidentified Justice: Mr. Schulder, could I just ask one question--

Mr. Schulder: Surely.

Unidentified Justice: --following up on what Justice Blackmun said, in computing the 30 million dollars, do you just take the number of persons in mental institutions who, and multiply that by the $25 figure, is that how you do it?

It's an awful lot of people if you are up to 30 million dollars.

Or is there any other cost, other than the $25, in arriving--

Mr. Schulder: No, that's the only cost that was considered here, but it was done on a, I believe, a nationwide basis.

The class that was certified in this case is limited to one of the regions that's covered by the Social Security Administration.

Unidentified Justice: --Can you translate the 30 million to the number of persons?

Do you know how many people are... have an interest in the outcome of the case?

Well, don't try to... if you don't have it, then okay.

Mr. Schulder: As I was saying, Section 1611(e)(1), the statute at issue here provides for an exclusion from SSI benefits generally, of all persons who are residents in public institutions.

However, the statute provides that a small, $25 a month benefit for "comfort items" to those individuals who reside in a medical facility which is receiving a payment under the Medicaid program to pay for the costs of their care and treatment.

The purpose of this reduced monthly benefit, as expressed in the legislative history, is to allow the recipient to purchase small comfort items, such as magazines, stationery or clothing, not supplied by the institution.

The statute, the statutory exclusion and exemption at issue here has the effect of denying SSI payments to all residents of public institutions whose treatment, for whatever reason, is not funded under Medicaid.

Because of their exclusion from Medicaid, persons between 21 and 64 years of age who reside in public mental institutions are not eligible for the reduced SSI benefit.

Appellees are indigent individuals between 21 and 64 years of age, who are disabled by reason of mental impairment.

They thus satisfy the general eligibility requirements for SSI.

However, because Appellees are hospitalized in public mental institutions, under the operation of Section 1611(e)(1) they are ineligible for SSI benefits.

They are ineligible for the full SSI benefit, because they are housed in a public institution.

And they also do not receive the reduced benefit for comfort items because their treatment in a mental institution is not funded under the Medicaid program.

Appellees brought this lawsuit for declaratory relief on April... challenging the constitutionality of Section 1611(e)(1) on equal protection grounds.

District Court, as I mentioned earlier, certified the case as a class action and granted summary judgment for Appellees.

The District Court first concluded that the statute invidiously discriminates against the mentally ill, it then determined that classifications based on mental illness are sufficiently similar to suspect classifications, such as race or natural origin to require a stricter standard of review than is normally applicable in reviewing social welfare legislation.

Unidentified Justice: This Court has never held that mental illness is a suspect classification, has it?

Mr. Schulder: That's correct.

Actually what the District Court held in this case was that mental illness was a quasi-suspect classification and thus entitled to an intermediate or heightened level of scrutiny.

The only two federal courts of which I am aware, that have specifically addressed the question, have held that mentally ill individuals... or classifications, are not entitled to any kind of heightened or strict scrutiny.

We have cited those in our brief.

The District Court ruled in this case that mental health classifications must serve important governmental interests and must be substantially related to achievement of those objectives.

Unidentified Justice: Well that's pretty much the Boren test, I guess, isn't it?

Mr. Schulder: That's correct.

The Court held that the statute in this case failed to pass muster under this heightened standard.

In addition, the Court expressed the view that the statute appeared to be an accidental by-product of the legislature rather than a deliberate means of serving a legislative end.

The case here presents a problem of line-drawing in enactment of social welfare legislation.

In enacting the statutory provision at issue here, Congress drew the line at providing SSI benefits to public institution residents whose treatment was partially funded by the federal government under the Medicaid program, while leaving it to the states and local governments to provide for the comfort needs of public institution residents whose care was wholly funded by state and local government sources.

We submit that the statute is rationally based on considerations of conserving economic resources and of respect for the responsibilities of state and local governments for caring for those who are within... caring for the comfort needs of those within public institutions that are wholly funded by those local governments.

The District Court, however, held that the classification at issue here is based on mental health.

We submit that the Court's conclusion that this statute discriminates on the basis of mental health, is incorrect, and in fact the Court's conclusion that the statute discriminates on the basis of mental health ignores the fact that individuals such as Appellees, who are disabled by reason of mental impairment are included within the SSI program in the first place, precisely because their mental condition is severe enough to warrant... to constitute a disability, and to warrant benefits under the SSI program.

Appellees arguments and the conclusions of the District Court, therefore, rest and fall on this tortology.

Moreover, it is important in this case to focus on precisely what kind of--

Unidentified Justice: I have some difficulty following that argument.

Supposing that they said you are eligible for SSI, one ground would be mental illness, but then they said, however, mentally ill people get half the benefits everybody else gets.

They would get in because they are mentally ill, but then they only get a lesser benefit.

Couldn't they then still claim the classification was based on mental illness?

Mr. Schulder: --But that's not the classification at issue here.

Unidentified Justice: But I'm just, I'm just directing my question at your point that because they get initial eligibility by reason of mental illness, therefore nothing else done by reason of mental illness can be based on mental illness.

Mr. Schulder: That may be true, that merely because a class of people are included within the statute initially and then not given equal treatment with other beneficiaries, that would not necessarily mean that the statute did not discriminate against them.

But one of the points that we are trying to make here is that the District Court's conclusion that the statute invidiously discriminates against them and the Court's ascribing some kind of antipathetic attitude on the part of Congress toward the mentally ill, simply is unfounded in the context of a statute that singles out people who are mentally impaired for special treatment and inclusion in the program in the first instance.

And in fact, the statutory exclusion at issue here does not exclude the mentally ill across the board; in fact, there are large numbers of mentally ill individuals who do qualify for the reduced SSI benefit.

Unidentified Justice: There are a large number of non-mentally ill people who do not.

Mr. Schulder: That's correct.

Unidentified Justice: Well, Mr. Schulder, if you admit people to schools you can't discriminate, can you?

So if you let them in this program, how can you discriminate against them after you admit them, and say that we're not discriminating, because we did admit them.

Mr. Schulder: Well, we're not--

Unidentified Justice: Aren't you saying we didn't discriminate as much?

Mr. Schulder: --No.

Because the specific statutory exclusion that we're dealing with here does not single out any one group of individuals.

It draws a bright line between those public institution residents who are receiving Medicaid funding for their care and treatment and those who are not.

It's not based in terms of mental illness or even residence in a mental institution.

The line that was drawn here is based on a neutral factor of Medicaid eligibility versus non-Medicaid eligibility.

We submit that that distinction only has to serve a rational basis and that the rational basis is present to uphold the statutory distinction here.

Unidentified Justice: I thought you said that the reason that was not discriminatory was because they did recognize them in one instance?

Mr. Schulder: Well, but as I explained in answering Mr. Justice Stevens' question, we're not saying that--

Unidentified Justice: I don't see the difference between that and the school.

You say okay, we're not discriminating, we'll let you in the school, but we will educate you in the basement.

Mr. Schulder: --Well, what we're saying is, that the District Court's finding--

Unidentified Justice: To put it more precisely we'll let you in the school, but you can't get the $25 that everybody else gets.

Would that be all right?

Mr. Schulder: --Well, what we're saying here is that this legislative scheme does not manifest or reflect any kind of antipathetic attitude on the part of Congress toward the mentally ill.

It draws the line at which some mentally ill are excluded and some people who are not mentally ill are excluded.

And these people are excluded for reasons wholly unrelated to their mental health status.

And it includes people who happen to be mentally ill, and it includes other individuals.

Also in that regard--

Unidentified Justice: Who are not mentally ill?

Mr. Schulder: --That's correct.

But who may be disabled for other reasons and who reside in public institutions, and whose treatment is covered under Medicaid.

Unidentified Justice: Mr. Schulder, let me go at it another committed to public mental hospitals.

Suppose you're wrong about the type of classifcation this is.

And if it is one that is based in part on age, that isn't the end of your case is it?

Mr. Schulder: No, it certainly would not be.

Unidentified Justice: I was wondering whether you're bogging down on the first point.

I'd like to hear about the rest of it.

Mr. Schulder: Well, we would argue that if the SSI exclusionary provision is read together with the medicaid eligibility provision that sprecifically applies to the appellees, the only factors that are really at issue here are age and presence in a public mental institution.

And we submit that niether of these two factors requires a heightened level of scrutiny.

First of all, this court held in Massachussettes Retirement Board versus Mergy and Vance versus Bradley that age isn't a factor that requires heightened scrutiny.

As to presence in public mental institutions, the fact that certain indivduals have to go to a public mental institution because of indigency does not require heightened scrutiney as this Court pointed out in Harris versus McCray.

Indigency is not a factor that calls for any heightened judicial review.

Similarly, presence in a public mental institution is not an immutable condition determend by accent of birth.

Some of Appelleees, as the record points out, were voluntarily committed to public mental hospitals.

In fact, Appellees brief points out on page 28, footnote 12, that the medium length of stay in a mental hospital is 41 days.

On the basis of that bit of evidence, we submit that presence in a mental institution certainly is not an immutable characteristic.

And third, the political powerlessness of public mental institution residents is based, at least in part, on legitimate considerations that these people are simply unable to contribute equally to the political process.

This is not a factor like sex or race, where disparate treatment is not a function of ability, but is simply a function of stereotyped views and discriminatory treatment.

It's more like the factors of intelligence or physical disability that were discussed in the plurality opinion of frontiero.

Because the statute does not discriminate against the suspect or quasi-suspect group, we submit that it need only have a rational basis to pass muster.

As we've shown in our brief, the statute meets this test.

Congress could limit benefits to those it was already helping under other programs, such as the Medicaid program here, and it could determine that the needs of these... of others who are not covered under Medicaid should continue to be met by the states.

Now, Appellees argue that the same reasons that support the Medicaid exclusion that was upheld in Legion do not support the SSI exclusion here.

But we do not argue that precisely the same reasons support both exclusions; Medicaid and SSI are two separate programs.

In enacting the statutory exclusion here, Congress was painting with a broad brush and was not limiting the exclusion to those within a particular Medicaid eligibility provision at issue in Legion.

The line in this case is one between public institution residents whose treatment is funded by Medicaid, and those whose treatment is not funded by Medicaid.

To say that Congress had to consider a separate--

Unidentified Justice: --Do I correctly understand that if Congress did fund the mental institution program with Medicaid, that the government would concede that they could not constitutionally deny the mental patients the $25?

Mr. Schulder: Well, under the operation of the statute--

Unidentified Justice: I understand the statute would take care of it, but assume that they have adopted a plan... with an amendment that provided federal funding for mental institutions and for these mental patients, but nevertheless, retained the exclusion of the $25 for these people... as I understand your argument, that would be unconstitutional and irrational.

Mr. Schulder: --I believe it probably would be and we would--

Unidentified Justice: Yes.

So you rest entirely on the fact that the funding is provided by the states exclusively without any federal support?

Mr. Schulder: --That's correct.

Unidentified Justice: And does that mean that there is a presumption that the state is given the equivalent of $25, or just the mere fact that because it's a different source of funding, we don't care whether they get the $25?

Mr. Schulder: I think the latter would be the proper consideration, although the amicus brief filed by the States of New York and Pennsylvania point out that... at least, the State of New York does provide this type of benefit out of its own funds.

I'm not sure whether other states similarly provide for this benefit.

In sum, our submission is--

Unidentified Justice: Well, that's why New York is against you, here.

They want to be relieved.

Mr. Schulder: --That's correct.

That's correct.

Our position in a nutshell is that at least where a statutory distinction is based on a neutral factor such as Medicaid eligibility, the classification should be judged on its own terms and not in terms of the specific impact on the various subgroups that happen to be affected by it.

Finally, we submit that contrary to the suggestion of the District Court, the statute here is not the product of Congressional inadvertence.

In the same legislative package that contained the SSI provision at issue here, Congress also provided for expanding Medicaid to include coverage of those under 21.

Congress also considered, and rejected in conference, a proposal to set up demonstrations projects to study the feasibility of expanding Medicaid coverage to those mental institution residents between the ages of 21 and 64.

The brief of the private psychiatric hospital association supports us in our contention that Congress knew what it was doing and knew the impact of what it was doing when it enacted the statute at issue here.

Unidentified Justice: Well if Congress inadvertently enacts a piece of legislation, does that make it unconstitutional?

Mr. Schulder: Not necessarily, Justice Rehnquist.

In fact, the next thing I was about to say was that if Appellees have any problem with the statute and believe that Congress did inadvertently exclude them, then their remedy is with Congress and not with the Courts.

For the reasons that I have stated here and we have stated in our briefs, we respectfully submit that the judgment of the District Court should be reversed.

I'd like to reserve any time remaining.

Chief Justice Burger: Very well, Mr. Schulder.

Mr. Weill.

ORAL ARGUMENT OF JAMES D. WEILL, ESQ., ON BEHALF OF APPELLEES

Mr. Weill: Mr. Chief Justice, and may it please the Court:

The Supplemental Security Income program is a wholly federal program, providing public assistance benefits to indigent, aged, blind and disabled people.

One important component of that program is this grant of $25 a month income maintenance for those people who reside in public or private medical institutions.

The government has tried to characterize the program as excluding residents of public institutions generally, and as involving no discrimination at all against the mentally ill.

But this ignores the broad grant of eligibility to virtually all aged, blind and disabled residents of medical institutions whether public or private, and the contrasting special exclusionary rules for certain mental institution residents.

The framework is created by the incorporation of the receipt of Medicaid as the trigger for SSI eligibility.

But under the Medicaid statute, virtually all residents of medical institutions get Medicaid.

That includes residents of hospitals, including specialty hospitals and residents of hospitals and wards treating psychiatric diseases.

It includes skilled nursing homes and intermediate care facilities; Medicaid also includes people over 65 and under 22 in mental hospitals.

The group that is excluded from Medicaid is the group of persons 22 to 64 in mental hospitals.

Unidentified Justice: Did I correctly understand Mr. Schulder to tell us that the Court has, through summary affirmance upheld the constitutional validity of the Medicaid?

Mr. Weill: That's correct, in Legion v. Weinberger.

Unidentified Justice: Okay.

Mr. Weill: And we are not taking issue with Medicaid exclusion.

In Legion, the Court locked to specific reasons that Congress had articulated in the Medicaid exclusion, that it felt were substantial reasons.

And we're not challenging that in any sense.

We're looking at the linkage here, to SSI.

Unidentified Justice: Right.

So... but you're proceeding on the premise that the Medicaid exclusions are valid?

Mr. Weill: That's right.

No dispute.

But it is Appellees, who are 22 to 64, and in public mental hospitals, who are excluded from SSI because they are excluded from Medicaid.

The SSI program, let me first talk a little bit about the nature of the discrimination.

The government has argued that this doesn't discriminate at all against the mentally ill.

We agree the statute discriminates to some extent among mental patients as well as against mental patients, but that doesn't alter the nature of the case.

This Court has frequently considered cases in which statutes discriminated both among and against women, illegitimate children, and aliens.

But the Court in each case identified the discrimination... the discriminated group, as aliens, women or illegitimate children.

The statute and the legislative history of the medical assistance provisions that have been incorporated into SSI, demonstrates mental health status of Appellees plays a key role in the discrimination.

The original medical assistance provisions excluded persons who were diagnosed as having psychosis and being treated in a medical institution as a result thereof.

Those provisions have been narrowed since the current provision, excludes the Appellees from Medicaid because they reside in an institution for mental diseases.

And it is this exclusion that Section 1611(e)(1)(B) incorporates into the SSI statute.

Thus, the Secretary's suggestion that mental health status of Appellees is irrelevant to the SSI exclusion is incorrect.

The $25 benefit at issue here is in some senses small but its significance to the Appellees is great.

For residents of a mental hospital, as for residents of any other medical institution, the $25 a month grant represents the ability to obtain the rudiments of a barely decent existence.

It's used to purchase personal clothing, eyeglasses, articles necessary for personal care, reading material, or to pay the costs of transportation for trips when they are permitted by the hospital, to visit relatives or friends, or to participate partially in the life of the society outside of the institution.

Unidentified Justice: What's that got to do with--

--So does that have anything to do with whether other people in the family unit could provide that assistance?

Is there any showing that needs to the made of need?

Mr. Weill: Yes.

By definition, the members of the class are indigent and eligible, except for the exclusion caused by Section 1611(e)(1).

Unidentified Justice: Well what has the... the benefit that goes with the receiving of the $25 a month got to do with the constitutionality of the statute?

Mr. Weill: It demonstrates that the Appellees needs for the items are identical and Appellees are identically situated vis a vis the purpose of the statute, as the people who are receiving the benefits.

That's all--

Unidentified Justice: So in your view then, the record shows that people in public mental institutions do not receive similar items?

Mr. Weill: --That's correct.

The record shows that and the government doesn't dispute that.

Unidentified Justice: No, I didn't say the same $25, but I meant similar care provided by the institution.

Mr. Weill: It was Congress that made the determination that medical institutions, by and large, do not provide these items.

We are relying, we don't have affidavits from every medical institution in the country or in the region, but we are relying on the Congressional determination that institutions meet the food, shelter and medical needs of recipients, but by and large, do not meet the needs for these types of items.

The Secretary has not disputed that.

Mr. Schulder suggested that the New York brief, amicus brief, indicates that New York does make a grant payment of this sort.

I disagree with his reading of that brief.

I think what he's referring to is a statement in the brief that New York allows people who have income from other sources to retain, including SSI, to retain the $25 or comparable amount, for these possessions, or to buy these items.

But the New York brief does not say that New York itself makes a grant for these items.

So Appellees have been denied this grant--

Unidentified Justice: Well on that basis, why is New York on your side of the case?

Mr. Weill: --New York is on our side of the case, representing the interests of the residents of its mental hospitals, as is Pennsylvania.

They are here not, not necessarily out of the economic interests of New York of Pennsylvania, but on behalf of the residents of their mental hospitals.

Unidentified Justice: Just some good charitable, generous approach?

Mr. Weill: Correct.

Unidentified Justice: But not, you can't rule out the fact that if they got in from the federal government, their own treasuries wouldn't have to bear any of the cognate responsibilities?

Mr. Weill: Well, it's not clear to what extent their own treasuries are bearing any of the responsibility now.

Unidentified Justice: But they must be bearing some, are they not?

Mr. Weill: Now, yes, they must be bearing some of it, Your Honor.

Unidentified Justice: Something more than a token.

Mr. Weill: Well, it's... it varies from institution to institution.

I mean, with the affidavits and... from the Illinois institutions that are in the record, describe the patients begging visitors and relatives who come to the institution for money to buy some of these items.

The institutions in Illinois that they reside in do provide institutional clothing for them, not personal clothing.

It varies from institution to institution.

But Congress, I keep returning to the point that Congress has made a determination here that people in medical institutions need this grant.

Congress has not said why residents of mental hospitals aged 22 to 64 as residents of medical institutions, don't need this grant, that all other residents of medical institutions get, assuming that they are aged, blind, disabled and indigent.

Okay.

And this denial has occurred not only without the slightest suggestion from Congress of a reason for it, but the Secretary has also not articulated any rational relationship to a legitimate governmental interest.

Unlike many of the public assistance cases on which the Secretary relies, in this case Congress did not differentiate between the covered group and the uncovered group on the basis of a judgment of differing economic need.

And the government concedes that Appellees needs for SSI are the same as that of other residents of medical institutions.

Unidentified Justice: But surely you don't deny that the Congressional statutory scheme as written has the effect that the only way your clients can get the money is to hold it unconstitutional?

Mr. Weill: No, we don't deny that.

The statute has that effect, legislative history does not describe the statute as it passed, we believe.

There is--

Unidentified Justice: Well, but if you don't have legislative history, you have legislation which prevents it?

Mr. Weill: --That's correct.

We're not making a statutory argument; we are challenging the statutory exclusion.

But Congress, all that the legislative history says, it's not directed solely to people in Medicaid institutions, but it's directed generally to residents of medical institutions.

For residents of medical institutions, both the House and the Committee reports say,

"while most subsistence needs are met by the institution and therefore full SSI benefits are not needed, some payment is necessary for remaining subsistence needs not supplied by the institution. "

The government does dispute that the Appellees are identically situated with regard to this determination and this need.

Unidentified Justice: Are you going to mention this new classification that the District judge referred to, the quasi-suspect classification?

Mr. Weill: Yes, I intend to, Your Honor.

If I may say one other thing first, about the government's rational basis, rationale.

Because we do believe that it's not necessary to reach heightened scrutiny here, that the exclusion is so patently irrational that the Court can strike it down on irrational basis grounds without reaching heightened scrutiny.

The Secretary's sole contention is that Congress will simply say, well maybe the states will take care of these personal needs for people who are not in institutions that aren't receiving Medicaid.

But that argument is flawed in several respects.

First, the argument is simply conclusory, it's merely descriptive of the statutory result, but has no content that's related to a function of the SSI program or the Medicaid program, or any other concrete concept of governmental interest.

Second, it misapprehends the nature of the SSI program.

Congress created SSI to take over existing state income maintenance responsibilities, in part because of the inadequacies of the prior state income maintenance programs.

SSI dramatically altered the previous governmental roles and responsibilities for providing public assistance to the aged, blind or disabled.

When the federal government has created a federal program, like SSI, like food stamps, like Social Security, to meet a perceived need, irrational discrimination in that program between similarly situated people can't be justified.

And this Court has never suggested that it can be justified by a hypothesis that the need may be met by the state.

That approach would simply subvert the Congressional determination, like the one here, that such needs were not being met, or were not being adequately met, or should be part of a federal income maintenance program.

In the Social Security, illegitimacy and gender discrimination cases, the Court has never suggested that state AFDC programs, which would cover illegitimate children or women and children, justify exclusion from Social Security.

The same is true with the food stamp cases the Court has decided on constitutional grounds, Moreno and Murry.

Traditional state assistance roles are no excuse for irrational exclusion in federal programs.

Third, the federal $25 grant is a federal grant to meet a Congressionally determined element of need for people in medical institutions generally.

It's not simply a bonus for the happenstance of eligibility for Medicaid programs.

As the Secretary agrees, the needs of Appellees exist, regardless of whether Medicaid subsidizes the state's cost for institutional care.

But the government's argument ignores the Congressional determination of purpose and the importance of the SSI benefit itself, and the importance of the federal role on income maintenance.

Congress found this to be an unmet need.

There is no indication that any state, including New York, provides such a grant to meet these needs; Medicaid is withheld in part because states are not meeting the needs of mental hospital residents, that's why Congress originally did not give the Appellees Medicaid and we do not dispute that.

But to withhold the federal SSI personal needs grant, because Congress didn't want to subsidize the inadequate state medical care for Appellees, turns rationality on its head and merely penalizes the mental patients for the inadequacies of the states.

The Secretary's argument also assumes, incorrectly, that there is an absolute consistent link between Medicaid and SSI eligibility.

And there is not.

There are groups of residents of institutions, including medical institutions, that get SSI even though they don't get Medicaid.

That includes residents of private mental hospitals aged 22 to 64, includes residents of educational and vocational schools, and residents of public non-medical institutions with fewer than 16 residents.

All these groups get SSI benefits, and not Medicaid.

The government--

Unidentified Justice: Mr. Weill, I am puzzled by the private mental institution.

How could someone be a resident of a private mental institution, and be able to afford a private mental institution and also be on SSI?

Mr. Weill: --The person might have Medicare paying part of the bill, there are some people eligible for Medicare but not social security.

Or there may be contributions from a church group or some other governmental contribution from the state.

Under the SSI rules, in that situation, I believe that church and governmental contributions to the cost of care are not considered income to the person.

Unidentified Justice: I see.

Those would probably be fairly rare, though, I mean is there anything in the record to tell us--

Mr. Weill: There's nothing in the record that says.

And I don't believe they would necessarily be rare.

Unidentified Justice: --Necessarily be what?

Mr. Weill: Rare.

Unidentified Justice: Rare.

Well, when you are dealing with a federal program that simply doles out federal money on a... basis of perceived need, do you think that your analysis can be carried over so that a Corps of Engineers dam approved in Utah and a Corps of Engineers dam disapproved in Wyoming would leave Wyoming to have a right to claim in this Court that the Wyoming dam should have been funded rather than the Utah dam?

Mr. Weill: Well it's not a situation that normally arises, it would depend on the structure of the federal statute.

Unidentified Justice: Supposing they were virtually identical and Congress simply chose to spend its money on the one in Utah rather than the one in Wyoming?

Mr. Weill: In that situation there's no violation of equal protection.

Unidentified Justice: Well why is there in yours?

Mr. Weill: If there were a statute that said anybody could work on a federal dam except... they had to be employed or be a contractor for a federal dam, except women, or except blacks, or except persons who were in a mental institution within the last ten years; that raises equal protection questions.

There's an entitlement there and an exclusion from that entitlement.

Not all federal programs, funding programs, create the types of entitlement that Social Security and SSI do.

And in certain circumstances, some exclusions from those entitlements are subject to equal protection... become equal protection violations.

Unidentified Justice: What sort of entitlement is it that you say Congress has created here, since, as I understood it, reading the statute as written, your class is clearly excluded?

Mr. Weill: That's correct.

But they are excluded on the basis of a factor that's irrelevant, not only to the primary purposes of the program, but to any governmental interests at all.

And this Court has consistently said, in entitlement programs, that an exclusion has to have a rational basis rationally related to a legitimate governmental interest.

The government here has not come up with any legitimate governmental interests, except the conclusory one that I just mentioned, that's inconsistent--

Unidentified Justice: Well--

Mr. Weill: --that's inconsistent with the program.

Unidentified Justice: --they don't want to pay out the money?

Mr. Weill: Well that's never been held by this Court.

The mere desire not to make a group eligible--

Unidentified Justice: Well what about the Dandridge case?

Mr. Weill: --Pardon me.

I believe there are two questions there.

The fiscal considerations that are involved have never alone been held by this Court to constitute a rational basis.

We discussed that in the motion to affirm.

The government here has not pressed the fiscal ground; I would add that the 30... in answer to the first question, Mr. Schulder, the 30 million dollar estimate is an estimate that the government made of what the cost would be if every mental patient in a public hospital aged 22 to 64 in the country got SSI.

There are about 100,000 such persons, if each person got it each month that would be about 30 million dollars.

The government conceded that that estimate did not discount for all the various other factors that would go into reducing that figure: some of those people aren't disabled, some of them have outside income and resources, et cetera, et cetera, et cetera.

Unidentified Justice: What if it's only 20 million, or 10 million; what's... how... what's that got to do with it?

Mr. Weill: Pardon?

Unidentified Justice: What if it's only 10 million or 20 million, not 30 million?

Mr. Weill: Well, I was just answering the previous question.

The amount of the money, unless the amount is tremendous, as was a factor in Medicaid exclusion, where it came to billions of dollars a year, money alone has not been a basis for upholding an otherwise invidious, discriminatory classification.

And as far as the rationale that Congress just didn't want to give it to this group, that's not a rationale that the Court has accepted.

In Moreno, the Court said that a bare Congressional desire to harm is not a legitimate governmental interest--

Unidentified Justice: Not a desire to harm, that was a withholding of food stamps, as I recall, from people whom it was felt, Congress felt, shouldn't have food stamps.

This may just as well be a desire to draw the line somewhere as to how much we're going to fund into these programs.

Mr. Weill: --Well, the things like line-drawing as I understand it, are elements that go into why this Court gives some deference to legislative judgments, because the legislature has to draw lines.

Unidentified Justice: Well presumably, we give a great deal of deference.

Mr. Weill: A great deal of deference.

But that does not make line-drawing itself a rational basis for an exclusion.

There has to be something beyond just the fact that, oh well, Congress drew the line there.

Well, in Dandridge, the Court said that classifications don't have to be imperfect.

And several months later in Moreno, the Court said well, this classification like that in Dandridge, is not only imperfect, it has no rational relationship to a legitimate governmental interest.

Classifications are not valid because they are imperfect.

Unidentified Justice: Well, do you--

--On the question of economy, isn't it true that the record is not clear that there was any legislative interest in that.

Mr. Weill: In this case, yes.

Unidentified Justice: Yes.

Mr. Weill: The legislative, both the House and the Committee reports are both... provide not only no reason for the exclusion, they provide no basis for suggesting that Congress understood that the exclusion was occurring.

Unidentified Justice: That's right.

Mr. Weill: While the Court, the Court could certainly look beyond what Congress says, in identifying a rational basis for discrimination, if there is one, there are situations where legislative silence or confusion simply reinforced the conclusion that the discrimination is not a product or any rational Congressional scheme.

That's... the Court said that in Schlesinger and Johnson v. Robison, and the Illinois State Board of Elections Commissioner's case.

Here, you just can't tell what Congress was doing, what it would have said to justify the denial of the grant, and contrary to the government's rather offhand argument, Appellees are in no political situation to seek relief from Congress.

They can't vote, and it is evident from the SSI history and the Medicaid history, that Congress has frequently noted the inability of the mentally ill to obtain equal amount of discriminatory treatment from Congress because they can't vote.

Unidentified Justice: Well if the government is right about the average stay in a private mental institution being 41 days, one would think that many people who have been in private mental institutions, are capable and eligible to vote if they wish to vote, in most elections.

Mr. Weill: Well, the median stay is 41 days, but voting disqualifications don't necessarily relate in most states, simply to being in an institution.

Most states disqualify people who have been found incompetent or have been found insane or have been committed, until there is a restoration of rights.

Unidentified Justice: Are you suggesting that all of these people who are denied benefits will never again be allowed to vote?

Mr. Weill: No, I'm not suggesting that.

Unidentified Justice: Well, and if they were sufficiently offended by the Congressional classification, wouldn't they register their protest in the ballot box?

Mr. Weill: Well, some of them might eventually, although, by that point they have presumably moved on to other interests.

Unidentified Justice: Do you have any information that any of them are organized?

Mr. Weill: Well--

Unidentified Justice: Any insane people... do you know of any organizations of insane people?

Mr. Weill: --None of any significance, that I know of.

The lack of a vote for people in institutions and for the people who have been labelled mentally ill, generally, by the state, is in part why, if the Court finds the discrimination survives the rational basis test, it is appropriate to apply heightened scrutiny.

The criteria the Court has used to invoke heightened scrutiny establishes propriety to discrimination against the mentally ill.

Unidentified Justice: But I understood you are not arguing that heightened scrutiny is required here.

Or are you?

Mr. Weill: No, we are arguing that the Court can and should first invalidate the statute under the rational basis test.

If the Court finds that the statute meets the rational basis test, then it is appropriate to strike down the statute under the heightened scrutiny standard, akin to that applied by the District Court.

We are not asking for strict scrutiny, we're asking for a form of heightened scrutiny, somewhat like that applied in Craig v. Boren.

Unidentified Justice: Quasi-scrutiny--

Mr. Weill: Well that's--

Unidentified Justice: --Quasi-heightened scrutiny?

Mr. Weill: --The District Court used the phrase quasi-heightened scrutiny, in Wengler this Court used the phrase heightened scrutiny, and I'll stick with this Court's phrase of heightened scrutiny.

Importance of political powerlessness, not just not having a vote, but being confined in institutions, being stigmatized, and having lack of political power escalate because of the relationship between these factors, has been recognized by this Court for many years.

It was recognized as early as Yick Wo v. Hopkins, and this Court has since indicated in cases like Ratzenbach v. Morgan, that non-discriminatory treatment in governmental services is normally secured by the franchise.

When political powerlessness is exacerbated by insularity, they have usually become, perhaps, the crucial indicia of heightened scrutiny.

Unidentified Justice: Mr. Weill, do you contend that the number of people in the... affected by the judgment has anything to do with this argument?

Mr. Weill: No, I don't.

Unidentified Justice: The fact that there are only... some fraction of 100,000 people involved, does that have anything to do with their political power?

Mr. Weill: No.

Minorities exist in many forms in our society.

On any political issue there is a minority which may be small, but if that minority can vote and participate and it's not stigmatized, it can trade in the legislative marketplace.

A minority that cannot vote and that is stigmatized cannot do that, and they are so totally shut out, so they are not like the minority of 50,000 ophthalmologists in the Lee Optical... this is a different type of minority of 50,000 people.

It's precisely like the aliens.

Aliens cannot vote, the reasons that this Court has given heightened scrutiny to discriminations against aliens are precisely applicable here.

Aliens can't vote, their situation is not immutable, since they become citizens.

But the voting factor and historical discrimination and the stigma, have been the crucial factors that have led this Court to give heightened scrutiny to aliens.

Thank you.

Chief Justice Burger: Mr. Schulder.

ORAL REBUTTAL ARGUMENT OF ELLIOTT SCHULDER, ESQ., ON BEHALF OF APPELLANT

Mr. Schulder: I would just like to address myself briefly to Mr. Weill's argument that Section 1611(e)(1) is inconsistent with the objectives of the SSI program.

I believe that the Ninth Circuit, in its opinion in Baur v. Mathews, at 578 F. 2d at page 233, deals with this specific objection.

In fact, the Ninth Circuit in that case refers to the legislative history as indicating that Congress considered efficient and an economical method of providing SSI assistance as one of the important factors that it was taking into consideration in structuring the SSI program.

And the Secretary has also interpreted this provision as reflecting Congressional intent to prevent the shift of public institutional programs which are traditionally the responsibility of state and local governments, to the federal government.

Thank you.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

U.S. Railroad Retirement Bd. v. Fritz - Oral Argument

Wed, 18 Feb 2009 06:13:12 +0000

Case:

U.S. Railroad Retirement Bd. v. Fritz

Media File:

79-870_19801006-argument.mp3

Related Transcript:

79-870_19801006-argument_transcript.xml

Transcript:

ORAL ARGUMENT OF EDWIN S. KNEEDLER ON BEHALF OF THE APPELLANT

Chief Justice Burger: We will hear arguments first this morning in No. 79-870, United States Railroad Retirement Board against Gerhard Fritz.

Mr. Kneedler, I think you may proceed whenever you're ready.

Mr. Kneedler: Mr. Chief Justice, and may it please the Court:

This case is before the Court on direct appeal from the United States District Court for the Southern District of Indiana.

The District Court held that Section 3(h)(1) of the Railroad Retirement Act of 1974 is unconstitutional under the equal protection component of the Fifth Amendment due process clause.

The Court rested this holding on its conclusion that Congress had no rational basis for excluding members of a certified class in this case for eligibility for the special benefit provided under that section.

The Railroad Retirement Act provides a system of retirement disability and survivor benefits for persons who pursue careers in the railroad industry, just as the Social Security Act provides these benefits for persons who pursue careers in other industries.

Indeed, this Court observed in 1963 in Eichel v. New York Central Railroad Company, quoting a lower court decision, that the Railroad Retirement Act is substantially a social security act for employees of common carriers.

Railroad retirement and social security have been separate systems since their inception in the 1930s but over the years they have been integrated in many respects.

Congress integrated the two programs even further when it thoroughly revised the Railroad Retirement Act in 1974.

Section 3(h)(1) at issue in this case is a product of these further efforts at integration.

That section limits eligibility for what Congress perceived to be a windfall accruing to certain persons who were eligible to receive both social security and railroad retirement benefits under prior law.

Because the relationship between social security and railroad retirement provides important background for addressing the issues presented in this case, I would first like to briefly describe that relationship and the origins of Section 3(h)(1).

I will then explain Appellee's constitutional challenge to Section 3(h)(1) in this case.

Railroad retirement benefits are paid out of a railroad retirement account established in the Treasury and financed by payroll taxes imposed on carriers and their employees.

In 1951 Congress instituted a financial interchange between this railroad retirement account and the social security trust fund, which was designed to place the trust fund in exactly the position it would have been in if railroad work had been covered by the Social Security Act.

Under this financial interchange, funds are transferred each year from the railroad retirement account to the trust fund in amount equal to the taxes the carriers and their employees would have paid if they'd been covered by social security.

In return funds are transferred back from the trust fund to the account in amount equal to the benefits that would have been paid to retired railroad workers, their survivors, and dependents, if railroad work had been covered by the Social Security Act.

The effect of this arrangement was to provide a type of reinsurance for the railroad retirement system.

However, it became increasingly apparent in the years following 1951 that this arrangement did not have the desired effect in the case of employees who were entitled to receive both social security and railroad retirement benefits, perhaps as a result of having split their careers between work covered by the one act and work covered by the other act.

Unidentified Justice: You said "perhaps".

It would always be the result of that situation.

Mr. Kneedler: But... yes; yes.

Well, one exception might be where a person was working full time in the railroad industry and had moonlighted, in effect, in a social security job.

I suppose that's splitting--

Unidentified Justice: He's splitting his career in a different way.

Mr. Kneedler: --Right.

This... the problem resulted because under the financial interchange program, whenever a retired railroad worker received social security benefits directly from the trust fund, the reinsurance payment from the trust fund to the railroad retirement account was reduced by the amount of the social security benefits.

The result was a shortfall in the income to the account necessary to pay the railroad retirement benefits.

But despite this shortfall, the individual beneficiary for whom that reduction was made remained eligible to receive his full railroad retirement annuity.

This shortfall therefore resulted in a substantial and accelerating drain on the assets in the railroad retirement account and was a substantial cause of the serious financial position of the account by the last 1960s.

Aside--

Unidentified Justice: What's the... Mr. Kneedler, under the Social Security Act standing alone, is there a vested interest in the particular pattern of payments?

Mr. Kneedler: --No, this Court held in Flemming v. Nestor that social security benefits are noncontractual and that Congress may alter or even eliminate them at any time.

Unidentified Justice: They can be given and they can be taken away.

Mr. Kneedler: Exactly, and two terms ago, in this Court's decision in Hisquierdo v. Hisquierdo, the Court applied this same understanding to the Railroad Retirement Act.

Aside from the financial difficulties that these dual benefits created, it was also perceived by the late 1960s that the payment of dual benefits was inequitable because a person who split his career between railroad and nonrailroad work received more in combined benefits than a person would receive if he had spent his entire career in an industry covered by just one act or the other.

Unidentified Justice: But isn't this also true of people who might spend 20 years with General Electric under social security and then go into government service and have... be part of civil service retirement?

Mr. Kneedler: Yes, it is, and the reports on the 1974 legislation do call attention to the fact that this problem of overlapping benefits does arise in several different situations and there is no deduction in the manner of this case in those other situations.

But the distinction that was perceived here, in the committee reports was that the railroad retirement system is different because it was really designed as a social security system, a parallel program, and there was a financial interchange between the two that does not occur, for instance, in the case of military retirement or federal civil service retirement.

And in addition, in those cases, in federal civil service and military, the Government stands as employer to the persons who were receiving the benefit.

Here, in this case, the Government is using its taxing and spending power, or the power to regulate interstate commerce, in collecting revenues and paying benefits in the private sector.

So these differences, I think, serve to distinguish why Congress took the first step in integrating the two programs under the Railroad Retirement Act.

Against this background Congress sought in the 1974 act to integrate the two programs further and to phase out the windfall that was perceived to result from the receipt of dual benefits.

First, Congress divided up the basic railroad retirement benefit that had been paid under prior law into two components which were discussed in this Court, by this Court, in Hisquierdo two terms ago.

The lower tier of those benefits is exactly comparable to what the person would receive under the Social Security Act.

The upper tier is smaller in amount and computed solely on the basis of railroad work.

In order to eliminate the dual benefit problem, however, Congress provided that the first tier of benefits, the one that corresponds to social security, would be reduced whenever the retired railroad worker received social security benefits directly from the trust fund.

This eliminated the windfall, it eliminated the drain on the railroad retirement account, and it also had the effect of passing through to the individual beneficiary the reduction that had been made in the reinsurance payment because of the receipt of social security benefits.

Although these changes were designed to eliminate the dual benefit problem in the future, Congress did include or carry forward in the 1974 act certain transitional provisions to preserve this windfall element for certain people who may have been eligible to receive benefits under both acts prior to 1974.

This transitional or 3(h) of the Act, the section that is at issue in this case.

Section 3(h) provides yet a third tier of benefits under the Railroad Retirement Act for certain of the persons whose first tier was reduced because they were receiving dual benefits.

Thus, in effect, the third tier adds back what was taken away under the first tier, and the effect is to isolate in a separate section and as a separate benefit that portion of the combined social security and railroad retirement benefits that Congress had perceived to be a windfall or an overlap under prior law, and the act limits the eligibility for these benefits to certain individuals who may have been eligible, who would have been eligible to receive these dual benefits under prior law.

First of all, everyone who is retired and already receiving benefits under both programs on the effective date of the act, December 31, 1974, may continue to receive benefits under both programs, including the windfall element, although this windfall element is not increased with the cost of living over time.

It's frozen from the date of retirement.

For persons who were not yet retired in 1974, however, the standards for determining eligibility for being protected under the grandfather provisions depend on whether the person was... in general, on whether the person was affiliated with the railroad industry in 1974 or whether he had left the industry and had started to pursue other work.

Employees who were still working in the railroad industry in 1974 or had what the act terms 12 out of the preceding 30 months... the two of them together I would call an affiliation with the railroad industry... those persons are eligible to receive this transitional windfall benefit if they had completed the necessary ten years of railroad retirement and the necessary amount of social security work, ordinarily 40 quarters, to complete the eligibility requirements under both acts by December 31, 1974, when Congress changed the law.

In addition to these persons who still had an affiliation with the industry, Congress also included in this category long-term employees who had 25 years of railroad service even though they may have left railroad work when the 1974 act went into effect.

Persons who had left railroad work before 1974 but did not have the 25 years of eligibility were treated differently under the act.

They could receive a windfall element only if they had satisfied the length of service requirements under both acts when they left railroad work.

And the amount they received is somewhat smaller.

It's under Section 3(h)(2) of the act.

It's smaller because the amount of the benefit is calculated on the basis of what they expected to receive when they left railroad work, as opposed to later, in 1974.

Thus, if a person left railroad work in 1966, for example, and had ten years of railroad work but had not yet work 40 quarters in social security, he would not be eligible under the act to receive any windfall or carryover benefit because it was not until later that he became qualified to receive social security benefits.

The present case, challenging the constitutionality of these qualification provisions in Section 3(h)(1) was filed in 1976.

I believe Fritz was the representative of the certified class of beneficiaries under the Act who had become eligible to retire after 1974 when the act went into effect, but before January of 1977.

That happened to be the span the court defined.

Persons who were eligible to retire but were not eligible to receive the windfall benefit because they had not either been affiliated with the railroad industry in 1974 or had not completed the necessary qualifications under both acts in whatever earlier year they may have left the railroad industry.

At least... yes, sir?

Unidentified Justice: Are there bills pending in the Congress to remedy this situation on a generous basis?

In other words, to reextend the benefits?

Mr. Kneedler: There have been bills introduced in each of the three... I guess, the last two Congresses, and those bills have not been enacted.

Unidentified Justice: Have they made any progress at all as far as you know?

Mr. Kneedler: They have not been reported out of committee.

Unidentified Justice: It is true that if an employee works only under one act, that for the same number of years... as Mr. Fritz, for instance, that he would receive much less.

Mr. Kneedler: If he worked only under one act in--

Unidentified Justice: Under one act.

This is your windfall approach?

Mr. Kneedler: --Right, right.

If he worked under one Act... in other words, the reduction or the exclusion from eligibility for the windfall element puts him in the same position as if he had worked under only one act.

Unidentified Justice: Is there any evidence in the record about labor-management connivance in reaching this result?

Mr. Kneedler: I don't think there's any evidence of labor-management connivance in... I think a reading of the minutes of the negotiating sessions, for example, demonstrate that the parties, as is typical in negotiating something such as this... there's a certain amount of give and take, but there is no suggestion that I have found that this is motivated by some animus toward persons who had left the railroad industry.

Unidentified Justice: Does the class include people who had already retired and were eligible for the so-called double-dipping benefits?

Mr. Kneedler: No, it doesn't, because they may receive the equivalent of the full benefits they expected to receive under prior law, so it's not increased over time.

Unidentified Justice: But, as the result of the judgment that that exception is unconstitutional also, or not?

Mr. Kneedler: That is unclear from the judgment.

The judgment... the District Court's opinion appears to find an irrational distinction only on the basis of those people who were affiliated with the industry in '74 and those who were not.

Unidentified Justice: So are you... well, I'll put it to you this way, are you attempting to justify a difference between that group and the other groups, or do you think that group is just out of the case?

Mr. Kneedler: No, I think... I think there are degrees... Congress was drafting a grandfather clause here, and there are degrees or--

Unidentified Justice: Must you defend that particular group, though, that particular exception?

Mr. Kneedler: --Well, I think perhaps that exception is--

Unidentified Justice: People who have already retired and are--

Mr. Kneedler: --I think that's perhaps the strongest--

Unidentified Justice: --But is the issue here or not, that issue?

Mr. Kneedler: --I don't believe that issue is here, no, because the District Court perceived the inequity to be only the difference between those who qualified who were not retired but were in the railroad industry in '74.

Unidentified Justice: Mr. Kneedler, you described as the people who were not entitled to participate in the windfall benefit, you gave an example of the person who had ten years of railroad service and less than 40 quarters of social security.

I had understood... maybe I'm wrong on this... that if a person had ten years of railroad service and 40 quarters of social security service, but no 1974 connection, he would also not receive the windfall benefit.

Mr. Kneedler: He would receive it if he had completed those 40 quarters and the ten years of railroad service in the year that he left the railroad industry.

In other words, what the act does is lock at your affiliation with the industry: did you become qualified when you were still affiliated with the industry, either in '74... for those people who were in the industry when the act was passed... or in an earlier year when they were affiliated, the last year in which they were affiliated with the industry, if they left before that time?

So, what in effect the act does is protect only those dual benefits that were earned while the person was still in the industry, not those of somebody who left and then earned the right to dual benefits by taking on social security work.

Unidentified Justice: I see.

So that if you have a person who in 1966 had ten years of service in both industries, but one of them got the ten years social security service first and the other one got the ten years railroad retirement service first, railroad service first, one would get the dual benefit and the other would not.

Mr. Kneedler: Well, I... it doesn't matter who gets it first, if the person who was qualified under both in 1966, he would get this windfall--

Unidentified Justice: And if 1966 marked his tenth year of non-railroad work, he would not get it, but if it marked his tenth year of railroad work he would get it?

Mr. Kneedler: --Only if... this is only true if 1966 is his last year of railroad work.

That's what you're looking at.

Unidentified Justice: I mean... well, no.

Mr. Kneedler: So that's what--

Unidentified Justice: In one example, the last year was 1965, say, and then--

Mr. Kneedler: --Okay.

Unidentified Justice: --he did his tenth year of--

Mr. Kneedler: In 1966?

Unidentified Justice: --Yes.

Mr. Kneedler: No, he would not be eligible, because he'd--

Unidentified Justice: If he did it just the converse, railroad work, last year 1965, social security work, last year 1966, he does not get it?

Mr. Kneedler: --Right.

Unidentified Justice: But if the other... if the '65 and '66 are transposed, he does get it?

Mr. Kneedler: That's right.

Unidentified Justice: Then you... and you do purport to defend that distinction?

Mr. Kneedler: That's right.

Because what... essentially what Congress did was preserve the benefits that... the larger benefits under Section 3(h)(1) are for those who were still affiliated with the industry in 1974 and those who had 25 years of service.

Congress... the reports on the bill say that these people had the strongest equities and the report submissions by the Joint Committee for Labor and Management said that this... indicated that this equity was because they still had an attachment, affinity for the industry.

But Congress did not totally exclude the possibility of eligibility for people who left before 1974.

It simply dealt with them under a different section, and said they too can be eligible as long as they accrued their entitlement to dual benefits when they were still in the railroad industry.

If they left and then went out and did their social security work afterward, then they did not accrue their dual benefits while they were still in the industry.

Unidentified Justice: If a person who had ten years of... would qualify the way I described a moment ago, in addition had a current connection in 1974, would that increase his benefit?

Increase his dual benefit?

Mr. Kneedler: He would be--

Unidentified Justice: He wouldn't have... I see, he couldn't have retired from the railroad industry under that hypothesis because--

Mr. Kneedler: --Right; that's right.

Because he comes, because he came back in 1974.

The distinction drawn here furthers a number of the statutory purposes of the act, and since this does not, since this act does not exclude on the basis of a suspect category, or exercise of a fundamental right, it is sufficient that the category be rationally related to legitimate Government purposes.

Now, first, this Court stated in Hisquierdo two terms ago, citing the committee reports on the act in the 1930s, that the purpose of the act was to provide retirement benefits for persons who were pursuing careers in the railroad industry, and so to provide them with the opportunity to live out the closing years of their life in comfort.

Well, the line drawn under Section 3(h)(1) accomplishes this purpose because when the act was passed the persons who were pursuing their careers in the railroad industry were those who were still affiliated with it, or people who had spent 25 years in the industry by that time had pursued the major portion of their careers in the industry.

The other people who had left the industry were pursuing their careers elsewhere.

Second, in a related purpose of the act, which was also identified in Hisquierdo, was to provide an incentive for older workers to retire and thereby to open up more job opportunities for younger workers and more rapid advancement.

Section 3(h)(1) is consistent with this purpose as well, because it is only necessary to provide an incentive to retire for people who are still in the railroad industry.

For people who have left there would be no... even if the windfall benefit was an incremental incentive to retire, their retirement would not open up jobs for younger workers.

The third purpose that is served is the one that I previously mentioned and one that's furthered by any grandfather provision, and that is trying to accommodate the equities if persons who may have been affected by a change in the law.

Unidentified Justice: --Well, does it encourage anybody to return to the railroad industry?

Mr. Kneedler: Well, the act does provide that if a person returns to the industry after 1974 and had a current connection with the industry when he retired, then he is also eligible to receive a windfall benefit.

Unidentified Justice: So this is sort of... has a counter influence as far as opening up positions in the railroad industry?

It brings people back to it, older people back to it?

Mr. Kneedler: Well, if they came back in the industry they would be eligible for the windfall benefit which would then create an incentive for them to retire, so even if they did come back, it creates an incentive for them to retire and therefore actually furthers the purpose of the act.

Unidentified Justice: But while they're there there's no vacancy?

Mr. Kneedler: That's right.

There is no vacancy.

That's true.

Unidentified Justice: Or a vacancy was filled?

Mr. Kneedler: That's correct.

Of course, in some of these cases the person who came back may have been someone who was laid off or had been laid off for a fair amount of time, or his former railroad employer went out of business, something of that nature.

And so, when he came back, his equities might be quite strong because the act still requires that he have completed his ten years of railroad service and his social security service before 1974.

Unidentified Justice: What standard do you think we have... judging this case by?

Do you think you've finished your case when you say, here is what Congress was trying to accomplish?

Here's what they did, (a), (b), and this is what they were trying to accomplish by it?

Mr. Kneedler: Yes, I do.

Congress, for the reasons I've explained, clearly had substantial reasons for doing what it did, and under this Court's decision--

Unidentified Justice: None of them included dissolvency or did all of them?

Did... was one of the purposes to make the fund solvent, or to keep it solvent?

Mr. Kneedler: --Yes, by all means, and to exclude certain people, to narrow the class of people who were going to continue to receive dual benefits.

Unidentified Justice: Would that have been a... would that always be enough?

Mr. Kneedler: Yes, I believe that would--

Unidentified Justice: Like, every other name in the phone book?

Mr. Kneedler: --Well, as long as Congress did it with some rational approach.

I suppose it couldn't take every other name and give it to every other name, and not to the other persons, but Congress certainly did it in an ordered fashion.

And the rational basis approach I've suggested is particularly appropriate in a case like this because the benefit we're talking about here is not one that was designed to meet an identifiable need that Congress saw on behalf of the beneficiaries, as is the case with most welfare or social security benefits, or even most benefits under the Railroad Retirement Act.

This benefit was a conceded anomaly that occurred under prior law solely by virtue of the fact that Congress decided to have two parallel social security-type programs rather than combining them into one comprehensive program.

So, this is not a situation where eliminating the benefit in the future for any category of persons can be presumed to have denied them of a benefit tailored to satisfying particular needs.

If there are no further questions--

Unidentified Justice: I have one further question, counsel.

Supposing we've got two men who both retired age 65, on their 65th birthday.

And each of them has worked ten years in the railroad industry, and ten years in social security work, but not in the railroad industry.

And one of them for the two weeks before he retired was a railroad man and the other one for the two weeks before he retired was a non-railroad man.

One gets the double benefit and the other does not.

Explain how that's rational.

Mr. Kneedler: --Well, on the basis of your hypothetical, you said, for two weeks before?

Unidentified Justice: Right.

Mr. Kneedler: If the person who was the two weeks--

Unidentified Justice: They both retired in 1970, at their 65th birthday.

Mr. Kneedler: --In 1970?

Unidentified Justice: Yes.

Mr. Kneedler: Well, in... if they retired before the effective date of the act, if they retired before 1974, they retain their full--

Unidentified Justice: I see.

Mr. Kneedler: --They retain the windfall element.

This only affects persons who retire after the effective date of the 1974 act, people who are not yet retired.

Unidentified Justice: I see.

And if in my example, then, one of them continues to, doesn't... actually retires later on, it depends on which industry he's in when he retires?

Mr. Kneedler: Well, no; it depends on which industry he was in in 1974.

If he was in the railroad industry in 1974, he gets the windfall element.

If he was not in the industry in 1974 but he comes back to the industry and retires from railroad work, he gets the windfall benefit.

Unidentified Justice: Yes.

While missing the very... qualifying for social security in the first place, you have to have worked for... well, I don't know whether it's a certain number of quarters or a number of years and made a certain minimum amount of money, and I suppose there are some people who come awfully close but just don't make it.

Mr. Kneedler: That's right.

In a statute such as this any eligibility criterion involves questions of line-drawing where people on one side of it have what may appear to be almost as strong equity as those people on the other side.

The Congress has to deal in categories of persons in a vast program like this and the categories drawn here are based on reasonable grounds.

No further questions?

Chief Justice Burger: Mr. Byron.

ORAL ARGUMENT OF DANIEL P. BYRON ON BEHALF OF THE APPELLEE

Mr. Byron: Mr. Chief Justice, and may it please the Court:

The correct issue of this appeal is this: did the District Court commit error when it found that the Congress's elimination of plaintiffs' then-vested retirement benefits denied them equal protection under the law?

Based upon the undisputed record made below, the District Court, we submit, rightly concluded that the 1974 act's classification which is here involved was utterly irrational.

It is my intent here to emphasize several of the primary reasons why the classification is indeed irrational.

Number one: I want to take up the point that we make in the briefs about this being contrary, the classification being contrary to the actual purposes of the act.

Number two: I want to take up briefly the fact that they are contrary to the Railroad Study Commission's recommendations made to Congress pertinent to resolving solvency problems relevant to the act.

And number three: the fact that regardless of the above, the distinction made in the act between the pertinent vested classes here to be discussed is in and of itself irrational.

First, the classification is contrary to the actual and declared purposes of the 1974 act.

Congress expressly declared in the purposes section of the report, twice, its intent to preserve all retirement benefits which were then vested under prior law.

Indeed, the Railroad Board itself, the defendant in this cause of action, assured Congress of this during the hearings on this bill.

Unidentified Justice: Well, Mr. Byron, how can you say that when in fact it's conceded that the legislation if read according to its meaning has the effect that you claim is unconstitutional?

Mr. Byron: I say that because the Railroad Board itself assured Congress that our class was included.

Unidentified Justice: But the Railroad Board isn't vested with the legislative power of the United States, it's Congress.

Mr. Byron: No, but I think it is easy to understand as we go through the legislative history here why Congress thought they were including everyone, but nevertheless did not; that the plaintiff's class was actually exempted.

You're absolutely correct that Section 3(h) does exclude the plaintiffs by its operation.

However, I would think it defies logical analysis to read Section 3(h)(1) and (2) and understand who might be, who might lose their vested benefit.

In fact, the act does not speak of vesting at all, and when you look at the committee reports, they never mention divestment.

The reports mention the concept that everybody who had then, were then vested under both systems, social security and railroad retirement, was actually covered under the act.

And they make it a primary purpose of the act.

And then they go on to say... because I pick up the point that the defense has made... that this is a windfall.

And they seem to be critical of the fact that this is a so-called windfall... which, by the way it is not.

But they seem to be critical of that.

Congress put in the primary purposes section of this statute, Congress said,

"Dual beneficiaries cannot be criticized because they relied upon the law as it then existed. "

And that's exactly what our people do.

They fit squarely within the pegs of any equities that were discussed by Congress.

Unidentified Justice: Mr. Byron, do you suggest that a statute enacted by the Congress is constitutionally vulnerable because some erroneous information was submitted to the Congress?

Mr. Byron: Mr. Justice, I've... I'm suggesting that in part based on the Delaware Tribal Systems v. Weeks, the note by Justice Stevens, I believe, in there, that while the motives of Congress, for example, is not... does not... germane to the decision here.

However, it has some relevancy as to what are the legislative objectives of the statute.

So I'm saying it has some relevancy; however, it is not a dispositive factor.

I think the concern here is the fact that this is written into the primary purposes section of the statute and they continue to pound away at the point that the Congress does not mean to criticize dual beneficiaries.

And if they really meant that, then they would not have meant to divest our rail-roaders, who were actually covered under both laws and had fully performed ten to 20 years of railroad service and were inactives and had then gone out.

But the point I wanted to make was the Railroad Board, after reviewing the final bill as it pertains to 3(h), in their written statement to Congress two of the three Railroad Board members said this, and I ask the indulgence of the Court to just give a very short quote:

"It is sufficient to state here that existing rights to such benefits will not be adversely affected by this bill. "

This was the recommendation of the Commission on Railroad Retirement and this bill so provides, and this bill does just the opposite.

That was the written testimony of Railroad Retirement Board members Neal Speirs and Wythe Quarles at the Senate hearings on this bill at page 289.

Unidentified Justice: Well, then that turns back to what were existing benefits or vested benefits at that time, does it not?

Mr. Byron: Yes.

Vested benefits as of the date of changeover to the new act, which was December 31, 1974.

Unidentified Justice: You're not suggesting the act doesn't, shouldn't be read as doing what the District Court said was unconstitutional?

Mr. Byron: I don't understand the question, Mr. Justice.

Unidentified Justice: Well, you... the act did hurt your client?

Mr. Byron: Fine... yes.

Unidentified Justice: There's no question that on its face it does.

Mr. Byron: No, Mr. Justice, what--

Unidentified Justice: You're not suggesting construing it otherwise?

Mr. Byron: --No, and in fact, there is no question about that.

Unfortunately, when you read through 3(h)(1) and 3(h)(2) you can come to no other conclusion.

However, it is so complex that it defies logical analysis unless you have an understanding of the legislative history.

The reason why you understand this is because you see the labor-management negotiations that went on prior to the time that the bill was provided to Congress.

Unidentified Justice: Well, nevertheless, this is what the act does.

Mr. Byron: Yes.

There is no question.

Unidentified Justice: And it does that, and the question is whether... let's just assume there wasn't a fragment of legislative history.

I suppose you would... you still have the problem of saying that it's irrational.

Mr. Byron: Well, Mr. Justice, there is this question about the rational connection to the legitimate objectives of the statute, but the objectives if the statute were to cover our class.

Then, if the act does the contrary, it is irrational because the connection must be connected--

Unidentified Justice: Why?

Why?

Which is irrational?

The act isn't.

Maybe the, maybe somebody's statement about what the purposes were is erroneous.

Mr. Byron: --As I understand equal protection analysis, we're looking at the legislative goals of Congress and our concern here is, what did Congress really... legislative intent, and what did Congress really intend to do here?

Unidentified Justice: What better source is there than the statute itself for finding out what Congress wanted it to do?

Mr. Byron: The written primary purposes of the bill contained in the House and Senate reports which say contrariwise.

Unidentified Justice: You say they would override the express declaration... the enacted legislation would?

Mr. Byron: Given the complexity of 3(h)(1) and 3(h)(2) I would submit, yes, and in further response, President Jerry Ford at the time vetoed this legislation in large part because of the failure to understand the great complexity of the act.

In fact, I might just parenthetically--

Unidentified Justice: Whose failure to understand it?

Mr. Byron: --Pardon?

Unidentified Justice: Whose failure to understand it?

Mr. Byron: President Ford said that it defied analysis, essentially, in his veto message to Congress.

And he with the veto was overridden by a great a margin.

In fact, it came up in the Carter-Ford debates--

Unidentified Justice: Congress did it twice.

Mr. Byron: --Pardon?

Unidentified Justice: Congress did what you say it really didn't intend to do twice.

Mr. Byron: Right.

Because what they--

Unidentified Justice: Both by two-thirds vote.

Mr. Byron: --That's right, Mr. Justice.

What you have to understand is that they thought they were doing something other than what they actually did when they wrote 3(h) and 3(h)(1).

What we're saying is that... we're not saying the Railroad Board deceived, that they read the bill and its purposes to--

Unidentified Justice: After the President says, you really don't understand what you're doing, they said, we understand perfectly what the act says, and passed it and overruled his veto.

Mr. Byron: --But, but, Mr. Justice, no one raised the question, the veto message did not say, we have a divestment problem here.

Because you could not perceive it.

The committee reports do not speak of divestment.

In fact, the committee reports suggest that the Railroad Study Commission which reported to Congress after analyzing the act for two years... reported on June 30, 1972... that everyone was to be protected, and I think, when you read through the legislative history and the primary purposes section, you would understand why Congress thought they were doing what the Railroad Study Commission told them to do, because--

Unidentified Justice: Let me ask you... approach it another... suppose it was perfectly clear from the legislative history that Congress intended to do what the act says on its face and suppose... I suppose you would still be here arguing that it was irrational.

Mr. Byron: --Yes, because... that's right, Mr. Justice, because we are submitting without question that there is no rational distinction between the similarly situated vested classes, those with ten to 25 years of service.

Unidentified Justice: Aren't these really the... isn't this really what you have to win on here if you're going to win?

Mr. Byron: Mr. Justice, I'll take a win on any particular point, that or any other.

But I think it is correct, that is, one of our points of analysis here to be discussed.

I want to mention, though, the Congress's other goal.

The question was put to Mr. Kneedler about the conserving of fiscal resources as being a basis, a sine qua non for actually having this statute pass muster with the Supreme Court.

That is not enough, obviously, because if it were you would be saying that every congressional cutback would avoid and be immunized from scrutiny under the equal protection clause.

And that's not what we're saying, and I don't think Mr. Kneedler is saying that either.

I think he is saying we still, you must still find rationality on this, and there is still equal protection analysis.

We are not here arguing a toothless standard.

But on this question of conservation of fiscal resources, it's very interesting because the Railroad Study Commission reported to Congress, concerned itself with the elimination of a 9 percent actuarial deficiency, and that is well and fine.

However, that was not resolved or furthered by the elimination of the plaintiff's benefits.

Instead, these benefits were confiscated so as to help fund other unrelated benefits that were liberalized.

The liberalization caused the deficiency to escalate to 12 percent, contrary to the very purpose that they were negotiating on this act.

The 3 percent increased deficiency which was created by the Joint Labor-Management Negotiating Committee was funded in part, as we point out in our briefs, by a trade-off of the plaintiffs' benefits.

And that, we submit, is contrariwise to what they were supposed to be doing to resolve the actuarial deficiency.

And the act's classification was also contrary to the Study Commission's recommendations to Congress in two ways.

Number one, the Commission strongly and repeatedly urged the retention of all vested rights to retirement benefits as of the new proposed changeover date, which would be December 31, '74.

The Commission also repeatedly stated that any liberalization of benefits must... and this is one of the few times the Commission used the word "must"... they said, must be accomplished without impairing any presently vested rights.

Further, they emphasized that liberalizations under this act can only be funded by an increase in taxes on employer-employee sufficient to pay for the liberalizations.

And that makes every sense in the world, because Congress was trying to resolve an actuarial deficiency, not create a greater one.

But the JLMC, but what happened here is, you sent the fox out to guard the chicken coop.

And the fox goes out and creates another 3 percent deficiency and the only way you can get that job done is to, in the words of the JLMC, "hit" or eliminate the plaintiff class because they're inactives and they don't have to answer to the unions anymore.

Now, the distinction here--

Unidentified Justice: Mr. Byron, are you arguing... it seems to me you're arguing that any cutback that didn't either exclude all vested benefits or no vested benefits would have been unconstitutional?

Mr. Byron: --No, I am not.

Unidentified Justice: But is... well, the presentation to Congress was, we're going to preserve all vested benefits, and you seem to place great emphasis on the vesting concept.

Mr. Byron: Yes, I do, because, you see, the JLMC in the colloquies they engaged in in Congress assured Congress everyone was being vested.

And secondly, the Commission recommended that.

They saw the distinction here but--

Unidentified Justice: I understand all that, but as soon as you admit that Congress could have constitutionally cut back on some of the vested benefits, it seems to me your whole argument is beside the point, the only argument you've made thus far, is beside the point.

Mr. Byron: --Mr. Justice, it is not... the... because we're looking at what the legislative objectives in this particular reported bill and statute are.

In other words, if there's actual legislative goals and objectives of this act; and this distinction does not further but is contrary to those goals, then I submit that under equal protection analysis we must have a win on that point.

Unidentified Justice: And that the goal you're relying on is the goal to preserve all vested benefits.

Mr. Byron: Yes, and that was the goal of Congress.

Unidentified Justice: Any cutback on that would have been inconsistent with that goal.

Mr. Byron: Yes; now, that's just... that's one argument.

However, I think the point is here that if Congress had not considered this point, then I'd say that our point would not be well taken.

But Congress here really meant to make the dividing line between the vesteds and the non-vesteds.

And they did that because the Railroad Board told them that was what was being done and the JLMC told them that's what was being done, and they also believed they were following the Commission recommendations when in fact they were not because of the Sections 3(h) and 3(h)(1).

Unidentified Justice: Mr. Byron, who misled Congress?

You say that the Board determined this, someone else determined something, and you determined that 135 people didn't understand that?

Mr. Byron: Yes.

Ah--

Unidentified Justice: Who misled them?

Mr. Byron: --In my opinion, the JLMC.

Unidentified Justice: In your opinion?

In what record can you point to your opinion?

Or is this your gut reaction?

Mr. Byron: That is not my gut reaction.

It is in our brief at various points where we point out that colloquies... and let me explain.

This, you know, it's a good--

Unidentified Justice: Well, do you take the position that Congress was misled?

Mr. Byron: --Yes, and I think that helps explain--

Unidentified Justice: And then can't you oblige and say by whom or by what?

Mr. Byron: --And JLMC.

And I don't think the Railroad Board intentionally deceived Congress.

However, they assisted this deception by stating that our people were covered when they in fact were not and everybody went about passing a statute without the understanding that--

Unidentified Justice: Who got them to do that?

Mr. Byron: --Well, they asked the JLMC to negotiate the statute.

And--

Unidentified Justice: Mr. Byron, following up on my brother Marshall's question, you've referred several times to the statement of primary purposes of the act.

Mr. Byron: --Yes.

Unidentified Justice: Where does one find that?

I've looked in the U.S. Code and I've looked in the statutes at large.

Is it a part of the enacted legislation?

Mr. Byron: It's not.

It's in the report of the House and the report of the Senate, and it's a--

Unidentified Justice: Oh, is it... it's not a statement of purposes contained in the legislation itself?

Mr. Byron: --No.

It's stated in the report, and it says, here in the front, first page, "Principal purpose of the bills", in the second paragraph.

Unidentified Justice: What you're saying then is that Congress made some mistakes.

Mr. Byron: Yes, but not just made a mistake.

I'm saying, further, that Congress thought they were including our class when they actually weren't because they saw, everybody saw the dividing line here between vesteds and non-vesteds, and the problem here is that the actuarial deficiency was not resolved by our class.

The problem was that they went out and made the deficiency from 9 percent to 12 percent and then used our class as part of the trade-off to fund the other 3 percent.

But I think... I want to get this point about the real distinction here, the rational distinction between the classes, because we're only talking here about a distinction based on timing.

It's a new timing requirement, you see, that divided the vesteds, the similarly situated vesteds, between... all of us, all of the vesteds, had 10 to 25 years of railroad service and ten years of social security, thereby earning a full dual benefit.

However, and for the first time ever, Congress in 3(h)(1) and 3(h)(2) brought about this new current connection requirement and gave four different ways in which our people who were vested back on December 31, 1974, could continue to be vested under the new act.

Actually, what that is is a divesting rule, and the Government concedes that only timing of their prior railroad service is the question here involved.

And this new timing requirement, you understand, amounted to a changing of the vesting rules ex post facto, i.e., after the game was played and the benefit had been earned and acquired.

Its sole purpose as the legislative history we've put in our brief shows, the sole purpose was to "hit" and to "eliminate" the inactive railroaders who had no... that the unions, they felt, had no allegiance to anymore.

Somebody had to go, in their opinion, and that was not true, because as we've said, it was only true because they raised the deficiency to 12 percent.

Timing has nothing to do with the extent or the length of the railroaders' credited service.

It has nothing to do with the earning or the gaining of the retirement benefit.

It is non-sensical, in fact.

The timing distinction is not based on character of service, length of service, or the amount of the contributions of the employer or the employee.

A railroad retirement benefit, as the Commission noted, is earned on the basis of past service and past contributions, not present service or some so-called tenuous connection like present affinity--

Unidentified Justice: Mr. Byron, isn't it true that in a lot of pension situations a person who retires with 20 years of service in 1974 will get a higher pension than someone who retired with 20 years of service in 1970, say, simply because there's been a decision to increase benefits; and therefore the timing of the date of retirement has a rational... provides a rational explanation for why you get a higher benefit?

Mr. Byron: --Well, I can't... I'm not familiar with the hypothetical I've never seen that--

Unidentified Justice: But would that be irrational?

Say there's inflation and say that people amend their plan in 1974 and say that from here on people who have 25 years of service will get a greater benefit than they used to get, than the people used to get who retired two years ago?

Isn't that all that's really happened here?

Because you're just saying the railroad service is the more valuable benefit, more valuable criterion for eligibility, and that happens to come later.

Therefore, you get a higher benefit.

Mr. Byron: --No, that is incorrect, in our opinion.

That what we were saying here is that... we're talking about past earned retirement benefits, we're not talking about getting a new benefit or an additional benefit.

Unidentified Justice: Put the vesting concept to one side.

I understand you are objecting to the vesting.

But if there have been no vesting here, would my hypothetical be any different?

Mr. Byron: Well, that might be the case if there were no vesting or no actually having earned it, but if you're talking about non-vesteds, they're in a different category and that's a different situation.

But what our concern is that these people have earned their vested retirement benefit.

It was vested under prior law at that time.

In fact, the Government, the Railroad Board, had a benefit pamphlet, the last one before the act was February, 1974.

In that benefits pamphlet, they said, if you have ten years of railroad service, you have a "permanent" right to this benefit.

Now, I submit that having this destroyed and emasculated in the way it has been is not the same, or the equivalent of a permanent right to a benefit.

They relied on the Government.

And what did they get for their reliance?

They lost this so-called windfall.

And it is not a windfall.

A windfall is an unexpected sum of money.

This was expected.

This was relied upon by these people.

It is a windfall only because the Railroad Study Commission said it's an excess dual benefit if you assume, arguendo, that both benefits were earned under social security.

But, of course, since they were not earned under social security, the hypothetical doesn't stand up and so the windfall is not there.

It's not a real windfall, it's not a gratuity that these people were being given.

It was an earned retirement benefit.

Unidentified Justice: Can you distinguish in fundamental terms between the Railroad Retirement Act and the Social Security Act as to purpose and objective?

Mr. Byron: Yes, Mr. Justice.

Unidentified Justice: What are the distinctions?

Mr. Byron: As the dissent--

Unidentified Justice: They're contributory, aren't they?

Mr. Byron: --They're both contributory.

However, social security contributions were half that of the railroad retirement.

Secondly, as the dissent pointed out in Hisquierdo, the--

Unidentified Justice: How would the amount affect the vested or non-vested aspect?

Mr. Byron: --In this way: as the Railroad Board pamphlet showed, if you have past service, plus in addition to that made the necessary contributions over those particular years of past service; then you earned your permanent right to the benefit.

So, it was a key or an element to earning the benefit.

Now, I wanted to take up the argument of the Government about what is this great rational distinction between these ten to 25-year vesteds?

Unidentified Justice: Would you still be here if they... if the law had been changed so as to destroy all of the windfalls?

Mr. Byron: Because the act had been--

Unidentified Justice: Suppose all vested benefits had been terminated?

Mr. Byron: --Your Honor, I'd have a different class.

Unidentified Justice: Well, you'd have quite a different class.

Mr. Byron: And I'd have a much more difficult problem.

And I... no question about that.

Unidentified Justice: So this reliance business, that doesn't carry the day, does it?

Mr. Byron: It... it assisted--

Unidentified Justice: The fact of vesting in reliance, in that statement in the pamphlet?

Mr. Byron: --Yes.

That helps carry the day.

I mean, all of this taken together--

Unidentified Justice: But it wouldn't if they'd--

Mr. Byron: --Well, no, I disagree with that.

Unidentified Justice: --If they'd really been mean about it, it wouldn't.

Mr. Byron: No, I disagree in the sense that if I had that class to come here and present--

Unidentified Justice: --you'd have a tough case.

Mr. Byron: --I'd certainly be arguing that.

Unidentified Justice: But you'd have a tough case.

Mr. Byron: I'd have a tougher case than I've got right here.

The reason is because they say this current connection rule and the work-in-1974 rule is intended to favor career railroaders who have greater equities, or as they put in their reply brief, a greater stake to dual benefits.

But the protected class has no more career time than the plaintiffs' divested class and they have no greater "stake" than our railroaders.

They have, number one, no greater contributions; they have no greater length of service; and they have no greater vesting basis.

In fact, they have the same exact amount of time, ten to 25 years.

But this rule, I submit, is antithetical to a career.

It speaks of a current connection, not a career connection.

No one is calling this the career connection rule.

Nor was it ever suggested in Congress or anywhere else that it might be.

It says, for example, all you need to do is have a 1974 connection and you can, then disregard any career notion that you might have.

Of equal importance, of course, is that neither Congress nor the JLMC ever suggested such a connection between the rule and a career during all the negotiations under the act.

Now, of course, trying to make career railroaders out of 10-year men... and the question was put to Mr. Kneedler; I think it's a good question... is contrary and antithetical to the purposes of the act ever since 1937.

This is so because a major purpose of the act is to encourage elder workers.

They don't say career workers, they say older workers... to retire so as to encourage younger workers to take their place, and to do this in a declining employment industry.

It moved from 1,280,000 back in the old days to... in the 1970s... to 500-and-some thousand.

It's now in the 400,000-level.

Plaintiffs' departure--

Unidentified Justice: All of these things certainly are persuasive that Congress acted unwisely, possibly even unfairly.

But how do we find out about the statute except by reading the statute, if the language is clear?

Mr. Byron: --We find that out by looking at the House and the Senate reports, and--

Unidentified Justice: If the language is clear?

Mr. Byron: --The language is not clear.

You know, I understand that if you take the legislative history... if you take the legislative history, and you look at what the Railroad Study Commission said, and you understand that Congress's determination for dividing the classes was a vested basis, then it's clear that our class was to be included.

But even... but as I'm saying, assuming arguendo regardless of that fact, the point is, there is no rational distinction here because we are not arguing here over a welfare benefit, for example, or a gratuity, or an unexpected sum of money.

This is not a new benefit that's being awarded.

And I want to mention, just very briefly, the fact that historically the current connection use is negated here, because it was never used in connection with the basic retirement benefit, and it was never used as a divesting mechanism, which is what it's used here for.

It has only been used in connection with a brand new supplemental benefit or some other new benefit to be awarded.

And we wouldn't complain if that were the case.

But that is not the case here.

This is not, we're not talking about trying to get some additional benefit that we're being denied.

We're asking for a benefit that our class already had.

It was always a reward for an additional benefit, so they... historically, it has never been used in the context here.

And indeed, of course, the Railroad Study Commission never considered it and Congress never really addressed it in the hearings.

Now, we mention several other points that we feel heighten the irrationality of the statute here involved, including the reliance on benefits and the vested nature of them.

We also point out that the age and inability of our railroaders to rework their careers... because, you see, they're all of advanced age... they cannot relive their lives; they cannot recoup their loss by some other means of employment.

For our railroaders, the loss comes about at a point when it's too late for them to say, well, I guessed wrong, and I've got to go back.

They can't do it.

But, of course, there is no encouragement under this act to get them back.

In summary, let me say that to reverse the decision of the District Court in this case would be to say that the plaintiffs, whose working lives are essentially over, guessed wrong as to that most finite and once-only resource, their own working years and lives; that what they were told by Congress were the requirements for vesting, and what they were told would be their reward for staying with the industry for ten years--

Unidentified Justice: Mr. Byron, could you give me an example so I'll understand it better of a man who could have made a different choice in the past and qualified?

Mr. Byron: --Yes.

I believe you touched on it before when you said that if you flip-flop, if you have social security first and railroad retirement second, you qualify and get the dual benefit.

However, if you did it conversely and had railroad retirement first and was encouraged, actually... because the act was trying to encourage these workers to leave, so our people followed the purpose of the statute.

They left, and now they've lost their benefit because of it.

Now, they would not vest.

Unidentified Justice: Well, they didn't lose the railroad benefit that it vested.

Mr. Byron: Yes--

Unidentified Justice: And they did get the social security... what did they... and they did get additional benefits by additional work in the social security program, didn't they?

Mr. Byron: --No, no.

We're talking about the same dual... in other words, we're using two people, the same, both entitled to a full dual benefit.

That means he gets, you know, a benefit because of ten to 25 years in the railroad service and another benefit because he had 40 quarters of social security.

Now, the one who did his conversely, or who was lucky enough to work one day in 1974 on the railroad--

Unidentified Justice: I understand that.

But we're talking, you're talking about the choice, that he was kind of misled.

Mr. Byron: --Right.

That's it.

Unidentified Justice: And it is true that at the time he left railroad service he knew he was going to get a lesser benefit, or did he?

I'm trying to place--

Mr. Byron: No, no.

He did not.

Unidentified Justice: --Is the railroad service always more--

Mr. Byron: No, and they followed... the benefits pamphlet said they had a permanent right to it.

Unidentified Justice: --I see.

Mr. Byron: But they... so, they did not, and what they're saying is, there's an excess of--

Unidentified Justice: What did Hisquierdo case say about that contract you've been talking about, that pamphlet?

Mr. Byron: --Well, Hisquierdo did not bring it up.

And in fact--

Unidentified Justice: It said it wasn't contractual, didn't it?

Mr. Byron: --It said... yes, the majority said it was--

Unidentified Justice: It was not contractual.

Mr. Byron: --noncontractual, the dicta did.

Unidentified Justice: Well, where do you get a contract?

Mr. Byron: Well, I'm not saying... I'm not here arguing under the due process component.

I'm arguing under the equal protection component.

I--

Unidentified Justice: But you are arguing contract?

Mr. Byron: --Well, I'm saying it's something that can, certainly.

It's certainly something more than a gratuity or a welfare benefit, and I think... you know, I take note, Mr. Justice, that in some of your analyses under the equal protection analysis, that the kind of property that is involved here--

Unidentified Justice: I'd be very interested--

Mr. Byron: --has some bearing.

Unidentified Justice: --I'd be interested if you'd give me one that was a majority opinion.

Chief Justice Burger: Your time has expired.

Mr. Byron: I see my time is up.

Chief Justice Burger: Your time has expired, Mr. Byron.

Mr. Byron: Very well.

Chief Justice Burger: Do you have anything further, Mr. Kneedler?

ORAL ARGUMENT OF EDWIN S. KNEEDLER ON BEHALF OF THE APPELLANT -- REBUTTAL

Mr. Kneedler: Just several points I wanted to make.

We submit that it is not necessary to look beyond the plain meaning of the language of the act to determine that the Appellee class was excluded, but if it were, the committee reports on page 12 of each report could not be clearer.

They both say it in identical language, '74... they would not receive a dual benefit upon retirement unless they also had fully qualified under social security by the close of the year prior to '75 in which they left railroad service.

If they had so qualified under both systems at that point, however, they would receive dual benefits.

So Congress plainly knew what it was doing.

Secondly, Appellee suggests that all, that Congress really had to take an all-or-nothing approach.

It either had to wipe out what he refers to as vested benefits, which I think are more properly referred to as an expectation of receiving benefits under prior law.

Congress had the choice of either wiping them all out of wiping none of them out, and could not take a middle course.

The Congress was faced with a serious financial problem in the railroad retirement account.

And Congress tried to accommodate the financial needs of the system against what are inevitably degrees of equity among people who may have had expectations under prior law.

The concept of reliance really has no basis here, because as was pointed out in Hisquierdo these benefits are not contractual.

Railroad retirement is a direct parallel of social security, and this Court made clear in Flemming that Congress can change those.

Anyone who was, who had enough--

Unidentified Justice: Mr. Kneedler, I understand the legal argument based on Flemming.

Let me just be sure I understand the practical argument your opponent makes about a man not being able to live his life over again.

Is it correct that in, say, 1955, a man who had ten years of railroad service and therefore had vested rights under that service could have been motivated to retire from railroad service with the expectation that he would supplement his retirement income by earning social security benefits which Congress has now taken away from him?

That is correct, is it not?

Mr. Kneedler: --Well, I think it's... yes I think it's conceivable that persons could have done that.

Unidentified Justice: Well, he would have been carrying out the purpose of the Railroad Retirement Act when he did it, because part of the purpose was to encourage early retirement.

Mr. Kneedler: Well, yes, but not in the... I mean, the purpose is to... is... talk about early retirement.

It suggests going on the retirement rolls.

Unidentified Justice: Or getting out of the railroad business.

Mr. Kneedler: Well, by retiring.

I mean, that's what the Railroad Retirement Act is directed at, in this context, is retiring.

Easily... what you're referring to is--

Unidentified Justice: Well, it would have been consistent with their purpose to go to work as, say, a milkman or a baker driver or something else, wouldn't it?

Mr. Kneedler: --That's right, but--

Unidentified Justice: So that these people that I am discussing in my hypothetical did fulfill the purpose of retirement, whole retirement program by leaving with the understanding they would get more money under social security?

Mr. Kneedler: --Yes, it is... I mean, it's conceivable that there could be people who did that, but I think it would be a considerable leap to say that--

Unidentified Justice: I understand.

You're not conceding that that--

Mr. Kneedler: --I concede that that would be the majority of the persons in the class.

And Congress can, I think, legislate on the basis of what it could presume to be the characteristics of the class as a whole rather than, rather than in certain individual cases.

Unidentified Justice: --Why wouldn't that be a typical person?

Seems to me I've given you a typical example of a class member, haven't I?

Mr. Kneedler: He may have had an expectation but in terms of that being the motivating factor for his leaving the railroad industry, I think that I don't really know--

Unidentified Justice: It's certainly not unreasonable.

I know a lot of people in the Navy, for example, who calculate their retirement benefits by different choices.

And if he knows he's earned his railroad benefit and he can increase his social security benefit, why wouldn't that be a perfectly rational, normal motivation, one we should assume he made?

You say it's legally irrelevant.

I understand that.

Mr. Kneedler: --Right.

Unidentified Justice: Going on, why should we--

Mr. Kneedler: No, I... of course, I think that just goes back to whether he had an expectation under prior law.

Unidentified Justice: --You are saying, well, maybe he did that it's too bad.

Congress can be rough on these people if it wants to.

Mr. Kneedler: That's right.

Unidentified Justice: Yes.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Califano v. Westcott - Oral Argument

Sun, 20 Jun 2010 20:42:56 +0000

Case:

Califano v. Westcott

Media File:

78-437_19790416-argument.mp3

Related Transcript:

78-437_19790416-argument.xml

Transcript:

Argument of William H. Alsup

Chief Justice Warren E. Burger: We'll hear arguments first this morning in 78-437, Califano against Westcott and the consolidated case.

Mr. Alsup, you may proceed whenever you're ready.

Mr. William H. Alsup: Mr. Chief Justice and may it please the Court.

This is a direct appeal from the United States District Court for the District of Massachusetts.

The District Court held unconstitutional, Section 407 of the Social Security Act that's a provision which extends Aid to Families with Dependent Children, the two-parent families whose father is unemployed.

The District Court held the provision unconstitutional because it does not likewise extends such aid to similarly situated families whose mothers are unemployed.

The Secretary of HEW appeals the holding that that Section is unconstitutional.

John Pratt, Commissioner of Public Welfare and a consolidated appeal appeals only from the remedies selected by the District Court.

The Aid to Families with Dependent Children provides financial assistance to families with needy children.

It's a program under which if a state elects to participate and submits a plan which complies the Section 402 of the Social Security Act, the federal government will participate in funding of the program.

Originally, the program was limited to needy children who where deprived of parental, the support of a parent by virtue of the absence from the home of the parent or a parent or the death of a parent or the incapacity of a parent.

Principally, this was limited to single parent families.

Later in adjunct program, that is the program that we're concerned with today was added.

That program extended AFDC benefits, the two parent families where there was an unemployed father.

Now, that program appears in Section 407 of the Social Security Act, that's 42 U.S.C. 706, I'm sorry 607.

In order for a two-parent family to qualify under that provision, the family must show that the father has a minimum but recent connection with the employment market and that he is unemployed.

The Act does not require that the mother be in a labor market nor does it require that she be unemployed or that she be employed.

In fact, she may be employed and the only effect of her earnings is to reduce the amount of the benefits that are paid to the family.

In this case, the appellees are two families which did not qualify because the father's lack the requisite employment history.

The Act as mentioned requires that there be some recent but minimal connections with the labor market.

Justice William J. Brennan: In both cases, the mothers and the appellee family would've qualified under the statute had they have been fathers instead of mothers, correct?

Mr. William H. Alsup: That's correct.

The fathers did not qualify because the Act requires that within one year prior to the date of application, the father have been employed that is earned at least $50.00 in six out of the preceding 13 quarters or it counts in addition to earning of $50.00 per quarter if the father had been enrolled in a training program that would've counted toward the six out of the 13 quarters.

As mentioned, neither Mr. Westcott nor Mr. Westwood satisfied this prerequisite.

And as Justice Stewart points out in both cases, the mothers did satisfy that requirement and they we're unemployed.

Accordingly, they were denied benefit under the program.

These two families then brought this action in the District Court.

On summary judgment the Court held the program was unconstitutional either under the rational basis test or under the substantial connection test.

Justice Byron R. White: Now, but under what provision of the Constitution?

Mr. William H. Alsup: Under the Due Process Clause of the Fifth Amendment and the equal protection component of that Due Process Clause.

Justice Byron R. White: Because it discriminated on the basis of gender?

Mr. William H. Alsup: Correct.

The District Court in fact sustained that claim.

The District Court reasoned that there were only purposes that could be imagined for such a program, one was to assist needy children of families which were impacted adversely by unemployment.

Secondly, the Court said, the unemployed fathers program have been designed to remedy a structural flow in the basic AFDC program which had encouraged unemployed fathers to desert in order that their remaining family could qualify for benefits.

Justice William H. Rehnquist: Mr. Alsup, is “impact” a verb?

Justice William J. Brennan: It is these days.

Mr. William H. Alsup: I think that's -- It has been recently.

I'll re-modify that to say that families adversely effective by unemployment.

Well, the District Court reasoned that with respect to the first of those two objectives, that is to assist families adversely affected by unemployment, it didn't make any difference whether it was the woman or the man who had been discharged or lost employment that both families we're just as needy.

I should say by the way that the Government does not disagree with that part of the analysis of the District Court.

Our disagreement concerns the second goal of the statute.

That again is to remedy a structural flow in the basic AFDC program that had created an incentive for an unemployed father to leave home so that the mother and child or other children could qualify.

Chief Justice Warren E. Burger: Some reports of the Secretary or a Congressional Committee indicated that that was rather pervasive, did it not?

Mr. William H. Alsup: Yes, Your Honor.

In fact, I would like because that has become such an important issue in this case.

I would like to spend a fair part of my argument time going over some of the legislative history but I think you're absolutely correct that was a predominant goal in both 1961, 1962, and 1967 when this program took final shape.

With respect to that goal though, the District Court said that the program might go to a part of the way towards eliminating the incentive to desert but there was still an incentive to desert and exactly the case before the Court because the mother had lost her job and therefore the family needed income and the father, though he had been connected with the labor market within the meaning of the act, nonetheless might leave home in order to qualify the family.

Therefore, the Court said the statute was -- did not go as far as necessary and to remedy the desertion problem and in fact afforded the desertion remedy intended by Congress and therefore did not satisfy the substantial connection test nor the rational basis test.

Now, our appeal here is a narrow one as I mentioned we do not -- in fact we agree that if the sole purpose of the unemployed fathers program had been to provide relief to needy families hurt by unemployment that it would be unconstitutional to limit the benefits based upon a stereo typical assumption that working mother's incomes are less important that working father's incomes.

We disagree however with the District Court's refusal to sustain the program as substantially related to the purpose to remove or mitigate that incentive for fathers to desert that was existent and identified under the prior program.

Let's consider that latter point for a moment.

The AFDC program began in 1935 as President Roosevelt said at the time he proposed it to Court the program was to provide to aid to children.

There we're two basic principles involved.

First, the President and Congress reason that needy children with two able body parents with be assisted by general work relief programs and unemployment compensation.

Therefore, there was no especial need to enact the program for them.

However, second, children with only a single parent would not be assisted by such general work relief because as was all too common in that day such a parent would be an able to accept employment without placing the child in an institution.

That was an order to avoid breaking up the home where there was a single parent that Congress originally enacted the AFDC programs so as to give that parent a choice to be able to stay home and take care of the child in the event there was only a single parent and that applied whether the -- it was a father or a mother.

Now, over the years it became generally accepted in Congress so found that 1961, 1962, and 1967 that rather than “maintaining and strengthening family life” as Section 401 proclaims its goal to be the AFDC program in fact had a very perverse effect of breaking up homes.

President Kennedy said in his first State of the Union Address, “too many fathers unable to support their families had resulted to real or pretended desertion in order to qualify there children for help.”

So, the President asked Congress to pass what was then called an unemployed parent program.

That program provided aid both unemployed fathers and unemployed mothers but where the predominant reasons behind that --

Chief Justice Warren E. Burger: Well, let me have that again.

Aid to them?

Mr. William H. Alsup: Aid to the families.

Chief Justice Warren E. Burger: Yes.

Not to the unemployed mother or father but for the benefit of the family unit.

Mr. William H. Alsup: You're absolutely correct Your Honor and I misspoke and it is important to emphasize that this is aid to the families and not to any particular individuals within that family.

The whole program is designed for families with children.

Now, two reasons were given by the administration and throughout the legislative history for enacting the program in 1961.

First, the country was in a recession and extension of AFDC to families that were hurt by unemployment was a form of temporary unemployment relief.

Second however, Congress did want to reduce or mitigate the incentive for fathers to desert which have been caused since 1935 by the basic AFDC program itself.

Now, even though we're concern principally with 1967 change, this legislative history in 1961 and 1962 is very pertinent because it reflects and eliminates Congressional intent in dealing with this problem over the years.

Secretary Ribicoff appeared as the lead of witness or the second witness behind Secretary Goldberg.

He said, “This bill would eliminate one of the major concerns expressed through the years about aid to dependent children namely that unemployed fathers are forced to desert their families in order that their families may receive aid.”

He presented convincing evidence of this.

He showed that there was an overwhelming percentage of cases in which there was no father in the home.

In fact, the 1958 statistic show this and only 1% of the AFDC cases, 1% was there just a father in the home with the children.

And 70% of the cases there was mother in the home with the children but no father and --

Justice Potter Stewart: How about the other 29%?

Mr. William H. Alsup: In 19.5% both were present and in 10% both had deserted or neither was present.

Justice Potter Stewart: I thought the program up until then was applicable only to families and which there was one parent and only one parent.

Mr. William H. Alsup: That's principally correct except for the incapacity point if a parent is incapacitated if they were not able bodied and therefore they were able to qualify.

As a practical matter, most of the families were single parent families but an exception was made when the father (voice overlap) --

Justice Potter Stewart: Well, some 29% of the total, we're not one parent family.

Mr. William H. Alsup: No, it's 19.5%.

Justice Potter Stewart: 70% were no father, 1% were no mother?

Mr. William H. Alsup: And 10% was in neither.

Justice Potter Stewart: And 29%?

Mr. William H. Alsup: And 10% of those were neither that means that the children were living with relatives and not with the parents.

Justice Potter Stewart: With or such family with kinfolk?

Mr. William H. Alsup: Correct.

Chief Justice Warren E. Burger: Or foster homes?

Justice Potter Stewart: Wouldn't apply in foster homes?

Mr. William H. Alsup: Not to a foster home.

Usually, the grant parents or uncles or aunts foster homes came in later in a later amendment.

So, again there's 1% a father only, 70% mother only, 19.5% both and 10% neither.

Now, 18% of all those cases was a case in which the father had deserted.

And by desert, I don't mean that they had died or divorced there's another category for those.

This 18% were people who literally deserted their family.

Now, there was no evidence that there was a problem with maternal desertion.

The statistics that were presented showed that the number of cases in which a mother had deserted from a two-parent-family at most could be 1.8%.

That 1.8% also included departures due to death or incapacity or divorced.

So, although we can't give you the exact breakdown within that 1.8%, we know that number of maternal desertions was quite small.

So, we only have a problem of massive fathers deserting in order at least in some cases to qualify for benefits virtually, no mothers doing the same.

Justice William O. Douglas: Mr. Alsup, can I ask one question about the facts to this case?

If the fathers in this case both families should desert, would the families then become eligible?

Mr. William H. Alsup: That is correct.

Now, representative McCormick --

Justice Potter Stewart: Under the original concept the families would then become eligible, wouldn't it?

Mr. William H. Alsup: That's correct under the original program.

I don't believe that's happened in this case but you're correct.

Justice William O. Douglas: No, but to the extent you're emphasizing the desire to prevent a paternal desertion from qualifying a family the statute really doesn't accomplish anything in this particular case and does it, because the incentive is still aware?

Mr. William H. Alsup: That's correct.

Congress did not remedy this precise situation and the 1967 Amendment.

Now, for example on the House in 1961, in the House Floor, Representative McCormick said about this great provision, “it is my considered opinion which is shared by many social welfare leaders that these restrictions referring to the previous program have contributed to advance instability and synthetic desertions when such desertions represented the fathers only means of getting adequate financial protection for his minor children.

That has been cited in the briefs but because it's in a footnote let me call the Court's attention to that.

That's 107 Congressional Record 3768.

Now we cited other passages similar to that in our brief.

The program was passed it was optional only with the states just the unemployed parent program in 12 states quickly adopted it.

But the program ran out a year later.

Secretary Ribicoff came back to Congress and successfully obtained another extension of the same program.

He submitted the report during the senate hearings on the bill which showed that in fact it had accomplished the purpose in part of preventing family breakups.

He said that one of the most significant services which the ADC-UP referring to unemployed parents program offered the recipient families was “the prevention of family breakups.”

Assistant Secretary Wilbur Cohen also testified one of the reasons why the recommendation was made was to provide assistance where there was unemployment.

So as not to encourage men to leave their homes in order to make their families eligible, it appears page 154 of the Senate Hearings.

And then Representative Keil (ph) said concerning the extension.

“It seemed to me last year or it seemed to us last year before the provision was first added that Congress was saying this to the unemployed father.

If you stay with your family and try to hold it together during this critical period, we can offer you no federal assistance but if you happen to desert them, your family will be fully eligible for Aid to Dependent Children.”

He continued, this seems then and it seems to us now an anomalous and indefensible situation.

Moreover, there is evidence which indicates that this new program has already had the effect of returning fathers to their families.

A study he said conducted by HEW for the first seven months of the program's operations shows that of the 66,100 applications allowed at that time 2,900 families which have been receiving Aid to Dependent Children for reasons other than unemployment became eligible under the new program usually because an absent father had returned to the home.

Now, in 1967 Congress restricted the program to unemployed fathers only.

The recession had passed at that time and the principle objective in 1967 in restricting it only to unemployed fathers was that Congress had intended to remedy the structural incentive built-in to the original program for fathers to desert.

I will only burden you with one quotation from the Senate Report in 1967.

They said, “many is concerned about the effect that absence of a state program has on family stability where there is no such program and let me pause here.

There were only 22 states at that time which had adopted this program.

Congress was concerned that the other 28 had not yet adopted it where there is no such program there is an incentive for an unemployed father to desert his family in order to make them eligible for assistance.

This will be a matter of continuing study by the committee.

This program was originally conceived by Congress as one to provide aid for the children of unemployed fathers.

However, some states make families in which the father is working but the mother unemployed eligible for assistance the Bill will not allow such situations.”

Thank you, Your Honor.

Justice William H. Rehnquist: Mr. Alsup, could I ask you a question?

The District Court did certify this case as a class action, did it not?

Mr. William H. Alsup: Correct.

Justice William H. Rehnquist: And it did define the class as all Massachusetts families who would be eligible for the AFDC-UF and therefore medicate benefits except for the requirement 407 that the unemployed parent be a father?

Mr. William H. Alsup: I believe that's correct.

Justice William H. Rehnquist: So that yes, it's the relief that granted and its decision really went far beyond the facts of this particular case, did it not?

Mr. William H. Alsup: That's correct in this sense.

The facts of this case are that the fathers do not even meet the connection with the employment market test of the six out of the 13 quarters.

The relief afforded by the District Court would also provide relief in the case where the father actually is employed.

But the mother becomes unemployed and therefore because they below the standard of need are eligible for assistance.

So, you are correct.

The relief, I believe does extend beyond the facts of this individual case.

Justice Byron R. White: Mr. Alsup, your opponent's brief says that the tax for zone sex discrimination of the civil rights division last October made in this report to the President made a flat statement that the statute overtly and sub-sensitively discriminated against women, do you have any comment about that?

Mr. William H. Alsup: Yes.

I've looked at that provision of the task force report it's about a page and a half and the context of a much longer report concerning discrimination against women in federal legislation.

That report does not purport to have to any exhaustive analysis of the legislative history.

In fact, there is no analysis on the legislative history and on its face this does appear to be some sort of curious sex discrimination but once you get into the legislative history and you see that there was a very permissible purpose that Congress had in mind and that this is substantial related to curing that problem.

Then, you see that it is not a suspect or unconstitutional classification and the task force report didn't address itself to that legislative history.

So, we disagree with the analysis of that report and I believe had they considered the legislative history that we know like that they might agree with us.

Justice Byron R. White: Does the Department of Justice assume any responsibility for what the task force?

Mr. William H. Alsup: Well, of course the Solicitor General speaks for the United States and the Department of Justice before this Court with respect to one of our legal positions are.

So, to that extent, the Solicitor General has disapproved the report of the task force.

Argument of Paul W. Johnson

Chief Justice Warren E. Burger: Mr. Johnson.

Mr. Paul W. Johnson: Mr. Chief Justice and may it please the Court.

My name is Paul Johnson.

I'm an Assistant Attorney General representing the Commissioner of the Massachusetts Department of Public Welfare.

The Commissioner has only appealed from the District Court's remedy for the defect which it found in Section 407.

This appeal raises a fundamental question concerning the balance to be struck between equity powers of the federal courts and the separations of power's principle.

The District Court elected to extend Section 407 under inclusive class in order to salvage the AFDC-UF program.

While this decision to extend the class was correct, the District Court extended the class too far.

The District Court rewrote Section 407 such that the unemployment of either parent would qualify the family for benefits even though the family's principal wage earner was still employed.

Under this remedy, a parent who had been only a casual member of the labor force could trigger benefits by his or her unemployment.

Justice Byron R. White: Do you agree that then that the challenge provision is unconstitutional?

Or do you agree with the United States in that respect?

Mr. Paul W. Johnson: We incorporated United States' arguments before the District Court.

We have not appeal from the District Court's ruling.

We have no objection.

Justice Byron R. White: That isn't quite what I've asked you.

Mr. Paul W. Johnson: We have no objection to the District Court's ruling on the unconstitutionality of the provision (Voice Overlap) of the Congress.

Just the remedy Your Honor.

Justice William H. Rehnquist: Will you get reimbursed with regards of how it comes out on that point?

Mr. Paul W. Johnson: Well, we get reimbursed to a 50% rate, Your Honor.

So, the gross spend out by the state does go up of course and dramatically in the case of the remedy ordered by the District Court.

Justice William H. Rehnquist: Whether reversal on the federal appellant's appeal moot your client?

Mr. Paul W. Johnson: Yes, Your Honor it would.

Justice Byron R. White: And save this amount?

Mr. Paul W. Johnson: It would be a less expensive program, Your Honor.

Contrary to the District Court's ruling, Section 407 legislative history demonstrates the Congressmen to assist only those families whose principle wage earner had become unemployed.

This legislative goal is the critical fact in this case.

The judicial power to extend and under inclusive class depends upon an implied grant of power from Congress to recast its programs in a unconstitutional form.

Justice Potter Stewart: Well, Mr. Johnson, didn't they District Court's remedy do no more than provide that the existing statutory framework shall be applicable when -- to unemployed, to situations where the mother is not employed as it has been in passed to situation for the father's unemployment.

Mr. Paul W. Johnson: That was the District Court's remedy, Your Honor.

It simply attempted to --

Justice Potter Stewart: In other words, even today under the existing statute quite apart from -- I mean assuming it's all valid.

When the father is unemployed even though the mother is the primary wage earner in the family, when the father is unemployed, benefits are payable if the family income is below the standard of need, isn't that correct?

Mr. Paul W. Johnson: Yes, Your Honor.

The present practice is not less beyond --

Justice Potter Stewart: But the District Court did no more than I suggest, isn't that correct?

Mr. Paul W. Johnson: Your quite correct, Your Honor.

Justice Potter Stewart: Having found it invalid and so far is that didn't -- discriminated against the women.

It said the same statutory test and framework shall be applicable now when the mother is unemployed as it has been up to now when the father is unemployed, isn't it what it did?

Mr. Paul W. Johnson: Yes Your Honor, but that rather straight forward attempt to extend to extend the statutory classification, ignores the fact that 1967 Congress at it's level made a decision that families would not get benefits simply because the mother whom Congress assumed to be a secondary --

Justice Potter Stewart: The Government says of course that that's perfectly valid legislation and that is my brother White suggests would be the end of your case if we agree with the Government of United States that this is not unconstitutional, then that's the end of it.

Mr. Paul W. Johnson: But Congress has always meant the AFDC-U program.

Justice Potter Stewart: Congress also in 1967 enacted the law that said these AFDC payments shall be made only when the father is unemployed but that was held unconstitutional?

Mr. Paul W. Johnson: Yes, Your Honor, but in order to fashion a remedy which stays true, the Congressional intent.

Justice Potter Stewart: If we state true the Congressional intent we'd reverse the District Court's judgment holding that the intent of Congress was an unconstitutional.

Mr. Paul W. Johnson: But a remedy -- the remedy of extension finds its fountain of justification in what Congress would've done if they had known that the program is written was incorrect.

What Congress meant to do at bottom was to establish a program for families whose principal wage earner had been knocked out of labor market.

Congress traditionally assumed that that principal wage earner was the father.

Justice Potter Stewart: But in fact under the assuming the validity of the present program if the principal wage earner was in fact the mother, nonetheless AFDC payments are payable if the father is unemployed, isn't that right?

Mr. Paul W. Johnson: That practice has been tolerated by the Congress, Your Honor.

Justice Potter Stewart: Well, isn't that true in the statue not the practice being tolerated, isn't it with the statute provides?

Mr. Paul W. Johnson: Well, statute simply says the father's --

Justice Potter Stewart: Unemployment.

Mr. Paul W. Johnson: -- unemployment.

Justice Potter Stewart: Right.

Mr. Paul W. Johnson: But the legislative reports in 1967 when that term came in specifically said the reason for this was because states had abused the term “parent” by providing benefits to families where the mothers are unemployed even though that principle wage earner, the presumed principle wage earner the father was still working.

Congress specifically reacted to that syndrome of allowing a secondary wage earner to trigger benefits by unemployment.

That, I think when you strip away the sex characteristics that Congress used to define these economic terms is the underlying intent of Congress.

If you consider a program that provides benefits when a secondary or even a casual wages earner is knocked out at the labor market that is a great step forward from the limited goal which Congress sought in 1961, 1962, and 1967 to achieve what was simply to help families whose principal wage earner, their economic means that have a knock out of that employment market.

Chief Justice Warren E. Burger: Some of your arguments make me wonder why you did not appeal on the constitutional question instead of just on the remedy.

Mr. Paul W. Johnson: Your Honor, I think that may highlight the fact that the Commissioner differs tremendously with the Secretary and the Solicitor General on his reading of legislative history.

The Solicitor General has retreated to the concept that the only purpose of AFDC-U was to kept fathers from leaving the home, a prophylactic against the defect in the AFDC structure.

Chief Justice Warren E. Burger: The simulated desertions you mean?

Mr. Paul W. Johnson: Pardon?

Chief Justice Warren E. Burger: The simulated desertions, the synthetic --

Mr. Paul W. Johnson: Yes.

Chief Justice Warren E. Burger: -- as they were called?

Mr. Paul W. Johnson: Yes, Your Honor.

But we say the a fundamental reason that Congress enacted this program, and my brief bares this out in terms of legislative history was to get benefits out of families whose principal wage earner had been laid off.

When President Kennedy came into office in 1961, he found the tremendous recession and institute two major programs right after that to extend that employment compensation and to provide benefits to wage earners who couldn't find jobs.

The concept was one of the equality of treatment why should a child whose father sits at home because his employer is shut down be any less needy, any less where the benefits in a father -- than a child whose father has simply walked out the door, the idea was to take care of children whose wage earners had been let down by the economy.

This is what AFDC-U was generated to do.

In short, the District Court's remedy has two flaws, as a constitutional matter, it over steps the limits which Congress set for AFDC-U program.

As a matter of equity, its remedy exceeds the scope of the constitutional wrong which it would remedy.

A principal wage earner remedy that advocated by the Commissioner would assist every family whose principal wage earner whether male or female is an unemployed.

That is a complete remedy and more accurately preserves the Congressional conception of the AFDC-U program which I discussed with Justice Stewart and Mr. Chief Justice Burger.

The Secretary in its brief now attempts to buttress the District Court's remedy from another direction.

He asserts that his power to define unemployment by this Court from adopting the principal wage earner remedy even if that remedy more accurately reflects the intent to Congress.

Secretary's argument misreads Section 407, it must be rejected.

Turning first to legislative history and quite briefly because I've discussed it, the key when the commission is I to this case is what Congress meant when it selected the father as the parent who must be unemployed.

Congress identify the principal wage earners whose unemployment would impoverish their families as fathers, purged to this sex bias only the legislative focus upon the family's principal wage earner remains.

Substitution of the term “principal wage earner” for term “father” would preserve the legislative purpose to assist those families whose true bread winners were unemployed no more and no less.

Turning to the Secretary's argument, the plane language of Section 407 rebuts the Secretary's assertion the only he has the power to adopt the principal wage earner remedy.

The Secretary now points to exclusive discretion under Section 407 to define unemployment.

Section 407 defines an eligible family in terms of and I quote, “the unemployment has determined in accordance with standards prescribed by the Secretary of its father.”

Section 407 only authorizes the Secretary to define unemployment.

It does not authorize him to redefine term “father.”

These two terms expressed very different concepts unemployment is a relative notion subject to empirical definition.

A definition appropriately left to administrative discretion on ongoing basis.

Congress' choice of the term “father” on the other hand represents a policy judgment as to which families should be entitled to benefits.

The Commissioner argues those families whose principal wage earner has been knocked out of the labor force.

In order to reaffirm the limits on the judicial ability to rewrite legislation, this Court should reverse the remedy ordered by the District Court and put the principal wage earner remedy in it instead.

Thank you very much.

Argument of Henry A. Freedman

Chief Justice Warren E. Burger: Very well, Mr. Johnson.

Mr.Freedman.

Mr. Henry A. Freedman: Mr. Chief Justice and may it please the Court.

Under Section 407 of the Social Security Act, appellees are denied desperately needed cash and medical benefits for one reason and one reason only.

The parent and the family whose unemployment cause the destitution is female.

These families are just as needy as those who received benefits.

The female parent has extensive of work history and does has willing to comply with work requirements as the male parent whose unemployment qualifies the family for benefits.

The problem with the appellee families apparently, is that the mother for reasons of circumstance or of choice does not conform to traditional stereo types and is or has been a family breadwinner, but only traditional that is male bread winners can qualify family for AFDC-U benefits.

The gender discrimination that we have in this case is more onerous than that what this Court has encountered in any prior gender discrimination cases because of a combination at work here.

First, subsistence benefits, benefits needed for survival are being denied and secondly, the act imposes an absolute bar to receive to those benefits rather than simply applying a further test under which a showing must be made such as a test of dependency.

Since there is gender discrimination in this case, the test to be applied as this Court most recently reiterated in Orr versus Orr last month is that the gender classification must serve important governmental objectives and be substantially related to the achievement of those objectives.

Justice Potter Stewart: Was Orr against Orr was not a case involving a government largesse?

Mr. Henry A. Freedman: That's correct Your Honor that was in a case involving claim between parties.

Justice Potter Stewart: Right and then in any events it was, what that did was limited discretion of a divorce court judge no matter what the situation was he was simply not prohibitive from ever awarding alimony in favor of a husband against (Voice Overlap) wife but that involved private property of two other people, this involves government largesse and there are opinions in that area or somewhat -- it was somewhat different cast, don't they?

Mr. Henry A. Freedman: Well, there might be somewhat more division it is still clear that the Orr decision was applying to test that it previously been applied by this Court in Califano versus Webster, Califano versus Goldfarb cases involving the Social Security Act.

So, Government benefits have been tested under the same standard by this Court.

In seeking to avoid the effect of this test however, the Solicitor General particularly in his brief has argued that there was one objective really and one objective only for the AFDC-U program.

And that was to encourage fathers not parents not the father or the mother but just the father to remain in the home.

But as the state has also argued the overriding objective of the AFDC-U program through out its history has been to meet needs of children cause by unemployment of parent.

And that objective is of course totally unserved by the gender classifications to this (Voice Overlap).

Justice William H. Rehnquist: Well, does your argument boil down all to at what point you slice this thing so to speak?

Did you determine intent as of 1935 or as of 1967?

Mr. Henry A. Freedman: For purpose of this case we would argue it doesn't matter as of what you determine there it.

There were really two years here were decisions were made with regard to the AFDC-U program.

The first was in 1961 when the program was created and then was clearly sex neutral.

If no change has been made 1967, the Westcott family, The Westwood family would have qualified for benefits.

So, what we have here is a cutback made in 1967.

Justice William H. Rehnquist: But I thought you are arguing is the overall purpose of AFDC program which I understood was adopted in 1935?

Mr. Henry A. Freedman: That is correct and the AFDC-U program is a sub-program clearly sub-program of the AFDC.

AFDC was designed to meet the needs of dependent children.

AFDC-U was added in 1961 to expand the class of dependent children whose needs were going to be met by the program namely to include the children of the unemployed and that definition of the dependent child has been maintained in the AFDC-U program until the state, the dependent child.

The child qualifying for benefits of the program is the child deprived of parental supporter care by reason of the unemployment and it was just the word of strange in 1967 was unemployment of a father instead of unemployment of the parent.

The clearly, the purpose reflective by the statutory language and by the legislative history through out was to meet a need cause by an unemployment.

Indeed in 1967 former HEW Secretary Ribicoff, now Senator Ribicoff has stated that a child can be just as hungry if a parent is unemployed as a parent is dead absent or incapacitated.

Indeed, nowhere in the legislative history is there any statement or any reflection that the fundamental purpose of the AFDC-U program to meet needs was being rejected or abandoned or even diminished by Congress.

Justice Byron R. White: But in fact it was?

Mr. Henry A. Freedman: Indeed it was.

Justice Byron R. White: So, I mean --

Mr. Henry A. Freedman: But nowhere did Congress say we are cutting back on the program because we believe they are needy children whose needs we don't want to meet.

Justice Byron R. White: But Congress did cut back in the program --

Mr. Henry A. Freedman: It certainly did.

Justice Byron R. White: -- whatever that be or you wouldn't be here?

Mr. Henry A. Freedman: That's correct and but we're trying to discern is why the Congress cutback on the program.

Justice Byron R. White: As a representative of the people of the United States he did.

Mr. Henry A. Freedman: It had power to act.

The question is, is why they did act.

Under the test that we're applying today the Court has set out for itself the test to determine was the actual purpose of the gender classification.

Justice William H. Rehnquist: Well, are you telling us that there is something to this Court knows that Congress didn't know about what its purpose was in 1967?

Mr. Henry A. Freedman: Not at all with this Court has to do is to read the act which tells us that the purposes to aid dependent children and then look at legislative of history and attempt to discern why wasn't that Congress made the change that it did in 1967 and then does the gender classification substantially served that purpose and when we look at the legislative history in 1967 as I was saying refined no indication that there was desire to move away from needs meeting purpose and move as the Solicitor General argues to an anti-paternal desertion purpose what we do far is that the debate was pervaded by sex stereo typing that the words “father and parent” were used interchangeably without any indications or sense that something different was being said.

Justice William H. Rehnquist: Well, what do you say the purpose of Congress in 1967 was when did enact this as reflected in the legislative history?

Mr. Henry A. Freedman: We would say that the purpose of the introduction of the gender classifications was consistent with the general concern that Congress had in 1967 as regard to AFDC-U program that some states were qualifying families for benefits on the basis of the so-called unemployment of a family member who they assume to be homemaker, the housewife when that person really had no prior task into the workforce and was not the type of person whom Congress saw as unemployed who was losing income and therefore someone who created the need that Congress was to meet.

Congress addressed this in several ways.

It addressed it by adding a primary attachment to the work force task.

But it would seem that in terms of the stereo difficult thinking that the real wage earner in the family is the father and that the mother is basically person who stays at home but a way of nailing down that decision was to deny a whether there was unemployed mother.

Now, we don't really know because that the problem we have here is that the legislative history is generally so uninformative.

But what we do know is that no one claims that the purpose was being changed.

No one attached real significance to this change.

Rather they spoken terms of the type of the stereo types which this Court is consistently rejected such --

Justice William H. Rehnquist: Well, are you saying that where legislative history is not clear you're not free to look at language of the statue itself?

Mr. Henry A. Freedman: Not on the list, not on the list the argument is that the language of the statute demonstrates concern about need caused by deprivation and the Solicitor General is arguing that the purpose here was to deter desertion and we looked at the language of the statute and no where do we see any discussion of that.

That is why we suggest that it is valid to look at legislative history.

Chief Justice Warren E. Burger: Do you have difficulty finding that concept in legislative history?

Mr. Henry A. Freedman: The deterrence of desertion?

Chief Justice Warren E. Burger: Yes.

Mr. Henry A. Freedman: Not all.

We find it quite easy to find in the legislative history with regards to other sections of the AFDC program which were enacted specifically to address the question of desertion.

In fact, in taking the action that Congress took in the Social Security Amendments of 1967, the bill that we're addressing here today both committee reports had a heading.

One heading that said AFDC-U program and another heading that said desertion.

And under the heading desertion, two provisions were discussed, one, to strengthen the child support program under which states would identify and pursue absent parents for child's supports; and the other to impose a so-called AFDC freeze under which federal reimbursement to the states there will be cut on federal reimbursement to the states for absent parent cases so that if the states absent parent case load increase there will be no further federal funding.

Congress made it clear that the reason for this was to store the states into action to do something about desertion to improve their family services, to strengthen the child support program but in both of those instances and which Congress explicitly addressed the question of desertion it did so clearly in a sex neutral matter in terms of the legislation.

There is no indication that it was a less concern about a mother deserting family than about a father deserting a family.

And clearly if Congress had such an anti-desertion objective related to the AFDC-U program it too would've been sex neutral and of course the gender discrimination would not bear fair and substantial relationship to such an objective.

The Solicitor General to be noted has made no attempt to defend to the gender discrimination in this case on the basis of a general congressional desire to maintain family stability or to deter desertion.

Moreover, we would want to point out that the Solicitor General has this morning relied almost entirely upon the 1961 and 1962 history the Act when the act was clearly sex neutral where an unemployed --

Justice Byron R. White: Supposed in 1961, was it this first adopted in 1962?

Mr. Henry A. Freedman: At 1961 for one day.

Justice Byron R. White: 1961, suppose the 1967 has been adopted the 1961 and the 1967 form and were perfectly clear from legislative history which you dispute that the reason they want to adopt it was to aviate the desertion of fathers.

Would you still argue that there was unconstitutional gender discrimination?

Mr. Henry A. Freedman: We certainly would Your Honor for at least two reasons.

One would be that it's concern was to deter desertion of fathers as Justice Stevens noted before it simply doesn't work that way if the cases in which, cases such as a plaintiff's cases in which it was the mother who became unemployed are still cases and which there's the father or the mother as the cases from the father becomes unemployed.

The father or the mother will be in a position where the family can only qualify for benefits if one of the parents leaves home.

We should note in response the question before that indeed in this case Billy Westcott although his landlord suggested that he leave home in order to qualify the family for AFDC benefits and able to pay the landlord rent but he didn't not found rather the family went out benefits until --

Justice Potter Stewart: What is true that up until 1961 if two parents were in the home even though the father became unemployed they were totally ineligible for AFDC payments?

Mr. Henry A. Freedman: That is correct.

Justice Potter Stewart: Until 1961 unemployment didn't have any thing to do with it if both parents were there and therefore if an unemployed father became unemployed prior to 1961 there would be an incentive for him to leave home and so it will be a single parent family so they'll be eligible?

Mr. Henry A. Freedman: There was an equivalent incentive for the mother to leave home and the point is that there is no gender discrimination.

The AFDC-U -- the AFDC program in 1935 (Voice Overlap) until the present time has not drawn a distinction on basis itself.

Justice Potter Stewart: Well, up until 1961 the family was eligible only if there was a single parent it was not eligible if they were -- if both parents were in the home even though unemployed.

Mr. Henry A. Freedman: Unless one was incapacitated of course as you pointed out before.

Justice Potter Stewart: Right.

Mr. Henry A. Freedman: That is correct.

Justice Potter Stewart: But after and that was the problem to which Congress is addressing itself because that prior to 1961 regime provided an incentive to unemployed father who became unemployed to leave home so his family would be eligible, isn't that right?

Am I might quite wrong about that?

Mr. Henry A. Freedman: You are right that the eligibility is based upon there being a parent absent.

Justice Potter Stewart: Away, physically gone.

Mr. Henry A. Freedman: That is correct.

We would not agree that that was the problem that Congress was addressing in 1961.

We believe the legislative history shows that the overwhelming problem that Congress was addressing in 1961 was that there were needy two-parent families out there at this point of recession who are not eligible for benefits and who desperately needed benefits and as purpose of the program as the legislative history shows through out is to meet the needs of these children.

It was also noted that this would have the desirable effect of eliminating an incentive that was precedes in the existing AFDC program.

There are those who argue in Congress that there was no such incentive to desert that indeed states had general assistance program which often provided for these families.

They were certainly the skeptics.

They said this was not the purpose.

Everyone did agree that the purpose of the legislation that the overwhelming purpose at least was to meet needs was to provide for families who otherwise not receiving benefits or who were receiving inadequate benefits under state plans or who exhausted unemployment compensation.

Chief Justice Warren E. Burger: Are telling us that this counterfeit or synthetic desertion pattern was not part of motivation of Congress?

Mr. Henry A. Freedman: We do not believe that the record shows that the motivation of the committees who adopted this legislation as the Congress has adopted that the motivation was affected in any significant way by concern about desertion real or synthetic.

But it clearly was discussed and certainly our case doesn't turn upon rejecting that is a purpose where is the Solicitor General's case, at least the way the brief has been represented, turns upon his establishing that there was no purpose related to meeting need.

It is our argument however that in 1967 when this chain was made there is no reflection that Congress adopted the gender discrimination because it was abandoning a fundamental needs meeting purpose of the program and moreover there is no indication that when adopted this change it was related to the issue of desertion.

Once again, all of the discussion about desertion comes essentially in two sources.

One is the other provisions of the act that I referred to, the concern desertion.

Child support program, the AFDC freeze and so forth.

There, responses of the legislation the committee chairman and so forth spoke in terms of desertion.

The other time desertion was discussed.

Well, was with regard to AFDC-U program and was by those upon who the Solicitor General relies who were those, who were oppose or rather who supported expansion of the program and will ultimately voted against this bill was adopted.

Those individuals said, we need a mandatory AFDC-U program and every state to fight desertion.

And that was voted down by the Congress.

But the Congress supported was a bill presented by Senator Long, by Congressman Mills which -- to which they attached no significance.

They never even noted on the House of Senate floor in presenting the bill that a gender discrimination it's been introduced here.

It went entirely without notice as Senator Long in discussing the bill with other Senators referred interchangeably to the unemployed fathers and the unemployed parent bill.

He didn't see it is a significant apparently and no one else called him on it said, why are we changing this from unemployed parent to unemployed father?

The reason we submit is that they were thinking consistently in terms of the type stereo type for this Court has rejected.

Rejected in standing, the assumption that men are going to go out into the world of work and women will stay at home.

The (Inaudible) can overbroad generalizations in Wiesenfeld that it is only the male parent's earnings that provides significance source of support.

Justice William H. Rehnquist: Mr. Freedman, isn't that somewhat inconsistent with your use of the word “archaic” if in your view the Congress had used correct perceptions of male and female roles in 1935 and 1961 and 1962?

Isn't that a little ironic that all of a sudden 67 years after those dates, it all of a sudden reverted to what you described as archaic notion?

Mr. Henry A. Freedman: It certainly is and we really have no explanation for that.

It did happen, it was not the law before the AFDC and AFDC-U benefits were divided in the sex neutral basis and we have searched through the legislative history as of our opponents and the best explanations have been offered and we believe the best explanation is that they even didn't think about it.

They slip into some format.

We believe because they were indeed looking to a prior touch into the work force and assumed when you look at the question of employment that women did not contribute significantly to their families in the past.

Justice Potter Stewart: I think you said that you understood the Solicitor General's argument to be entirely based upon this legislative purpose with which you disagree.

And it's true that he spent great deal a time this morning in oral argument on that subject.

But as I read the brief, the basic argument is that this is simply not the kind of gender discrimination with which this Court has previously dealt because this deals with benefits to families and the families might be all female or might be all girl, children and that the benefits that are payable or not payable are not in anyway discriminatory upon the basis of gender unlike our other cases to which you just been citing us?

Mr. Henry A. Freedman: Well, Mr. Justice Stewart, we were struck --

Justice Potter Stewart: Isn't that their argument?

Mr. Henry A. Freedman: We were struck by the fact that what appears to be a major argument in their brief that there's no gender discrimination in this case at all.

I was not trust before this morning --

Justice Potter Stewart: No gender discrimination with respect to the benefits are not payable?

Mr. Henry A. Freedman: Distribution of these benefits.

That's right, and that we simply believe --

Justice Potter Stewart: Because the beneficiary is maybe at least half have more female and maybe in of any particular case 100% of them are.

Mr. Henry A. Freedman: Well, indeed in every family their argument is that in every family where unemployed mother is denied benefits there is a father also because by definition we're talking about two-parent families.

Justice Potter Stewart: And there are children, there may be boys or girls.

Mr. Henry A. Freedman: Maybe boys, maybe girls.

The issues in this case however is that the benefits that are being provided --

Justice Potter Stewart: But didn't you understand that to be a large part of their argument in their brief?

Mr. Henry A. Freedman: That's right, Your Honor and I did not address it this morning because they seem to have pretty much abandon this morning --

Justice Potter Stewart: Well, I think they filed their brief here and I don't think they withdrawn any part of it.

Mr. Henry A. Freedman: Fine and our response to that is that the benefits that are issue in this case are benefits based upon past employment when Government distributes benefits on the basis of past employment.

And then denies them, when the person who is employed in the pass as a woman it is clearly denigrating the efforts of women who we're --

Justice Potter Stewart: But this is not employment compensation?

Mr. Henry A. Freedman: No, it is not a normal compensation.

Justice Potter Stewart: This is not based upon past employment?

Mr. Henry A. Freedman: It is based upon past employment and need Your Honor that the federal government has by statute determined that certain people are eligible for benefits and the criteria for illegibility are essentially for its purposes, its need and past employment.

Justice Potter Stewart: His need unlike Social Security payments and unlike unemployment compensation.

Mr. Henry A. Freedman: It is need and past employment there's a specific past employment test 6 out of 13 quarters.

Justice Potter Stewart: There's a test as to where -- when a person is unemployed.

Mr. Henry A. Freedman: That is correct.

It is so based upon past employment.

It is not based upon past contributions to a fund.

Justice Potter Stewart: No.

Mr. Henry A. Freedman: It is based upon past employment.

And it's determined that past employment of men qualifies the family for benefits and the past employment of women --

Justice Potter Stewart: It is not unemployment but isn't it?

Mr. Henry A. Freedman: But that is defined in terms of past employment.

Justice Potter Stewart: Yes.

Mr. Henry A. Freedman: There's no question --

Justice Potter Stewart: (Voice Overlap) its present unemployment?

That's the test?

Mr. Henry A. Freedman: Yes.

Justice Potter Stewart: Yes.

Mr. Henry A. Freedman: And we would submit to that is no different from the kind of discrimination that this Court has found in many previous cases in Goldfarb and Wiesenfeld for example, the Court found that there was discrimination against one particular category of family, that and which the female spouse is the wage earner.

And in Frontiero and in Jablon the (Voice Overlap) Court found that --

Justice Potter Stewart: (Voice Overlap) there's a compensation, were they not?

Mr. Henry A. Freedman: Well, these are different cases.

In Frontiero, it was a question of husband wife families some of them receive larger benefits.

Justice Potter Stewart: Military compensation?

Mr. Henry A. Freedman: But they were benefits that went to the family not every person, not every serviceman or servicewoman received those benefits.

It was only if there is a dependent it was to a husband-wife family that those benefits were being provided and they were provided to all families in which the husband was the employee, but they were not provided to all families in which the woman was employee and they were family benefits that issued in those cases.

So, we submit that there is clearly gender discrimination involved in this case.

And therefore it's unconstitutional.

In sum then with regards to the case on merits, it is our argument that the purpose -- the overriding purpose of the AFDC-U program is to meet the need of children caused by the unemployment of parent and the denial on the basis of the sex of that unemployed parent neither to serves nor as related to important governmental objectives.

The purpose for the gender classifications was not to deter desertion but rather that purpose was served in sex neutral terms.

And finally, the classification was based upon sex stereotypes upon archaic and overbroad generalizations about the roles of men and women as breadwinners and I should also note, we have not discussed but the roles of men and women as family deserters with the assumption that it is the father who always desert the family despite the statistical showing that there are more fathers and mothers who desert.

But still clearly desertion is something that might confront either parent and this Court has never accepted sex stereotyping simply on the basis that more of one sex than another sex might engage in certain behavior and therefore denied benefits to all members of the sex because of the possible behavior of a certain members of the sex.

Accordingly, the decision on merit should be affirmed and I will turn to the question of remedy raised in this case solely by the State of Massachusetts.

I will first discuss for a moment the traditional choice of remedy, the choice that has always confronted this Court in the past between invalidation of the program itself or extension to the class that has been excluded.

In this case, the class of families with an unemployed mother where the families denied benefits solely because the unemployed parent was a female and not male.

We raise this for minute because the state's attack on extension has included the argument that extension violates the principle of separation of powers.

We will then turn to the restructuring primary wage earner remedy urged by the state.

Extension of benefits to the excluded class follows the consistent line of this Court's equal protection benefit cases including gender discrimination cases and it's clearly correct.

Invalidation would cause the abrupt termination of benefits to more half a million needy children and their parents would disrupt the state and local treasuries involved whereas, extension would continue benefits to those needy families and also provide benefits to needy family in which --

Justice Byron R. White: Do you have another case where the Federal Court ordered the state to remedy an equal protection violation one way or another?

Mr. Henry A. Freedman: Where a Federal court ordered this time I mean all of the Social Security Act cases before this Court extension has been the remedy and of course --

Justice Byron R. White: (Voice Overlap) Well, give me --

Mr. Henry A. Freedman: Example in the residency cases the duration of Shapiro against Thompson and so forth involved state AFDC and other public assistance programs and the remedy there was to extend to those who had less than a year's residence in the State.

Again, in all of these programs as we would point out there's an option to the state to participate in the program or not.

Indeed, with regard to the AFDC-U program.

There's an option to the state to participate in the AFDC-U program and still retain its participation in the basic AFDC program.

So, the order of extension here simply makes it possible for the State of Massachusetts and every other state to decide whether or not it wishes to participate in the extended program.

Whereas, in validation would make it impossible for any state even if it wants too to participate in the extended program and this Court as the earlier received an amicus brief from the State of Pennsylvania which indicated affirmatively that it wanted and extended AFDC program who would be denied that opportunity if invalidation --

Justice William H. Rehnquist: Denied that opportunity by whom the Pennsylvania legislative?

Mr. Henry A. Freedman: No, no if the Court's order were to invalidate the AFDC-U program the state then could only provide benefits to families of the unemployed by using its own money entirely had been denied the opportunity to request federal reimbursement in effect.

And that's what that issue here in terms of invalidation or extension.

And that is clearly why invalidation is simply not adopted in benefit cases because of the problems it would present.

Justice William H. Rehnquist: Well, why doesn't the state and invariably want the broadest possible option in terms of invalidation and if it's purely optional with the state and if it's just a question how much extra federal money of the state can pick up?

Mr. Henry A. Freedman: Well, the argument here is apparently the State of Massachusetts would like to get some federal matching for certain families but not for others.

So, it is taking the occasion of this case to do an effect and I believe Mr. Justice Stewart was suggesting before to try to redefine the terms in the act not really as a matter of extension or invalidation.

Extensions to the excluded class clearly extension to the excluded class here means picking up the families would be eligible but for the sex of the unemployed parents.

Justice Potter Stewart: Right.

Mr. Henry A. Freedman: And there's no really much complication, you're rather with the State of Massachusetts has said is why were added.

Why don't we redesign these programs away with in 1979 but really like to see it and that's why having a primary wage earner test with the state in effect is doing is arguing that as a matter of statutory construction that indeed perhaps is a way of avoiding the constitutional issue.

The Court could say that looking at the legislative history Congress in 1967 said file there but really meant primary wage earner.

The problem is that will clearly fail as a matter of statutory construction.

Congress said father, Congress meant father, Congress never said primary wage earner whenever been used the term.

So, instead what we have here is the state seeking a --

Justice Byron R. White: If you say the judge may add father and mother the Congress clearly meant father but you said the judge you can order those words that one word to mean mother and father?

Mr. Henry A. Freedman: That is extending the benefits to the classes it's been excluded.

Justice Byron R. White: No.

All the state suggests is that we said -- saying father and mother.

We say father and mother depending on father or mother whichever is the primary wage earner.

Is that much of a --

Mr. Henry A. Freedman: That is what the state is saying but we did run in many ways runs a file of the test for remedies starting with the separability clause that is in the Social Security Act itself which provides that the invalidation of any provision of the act and we are discussing remedy of course only if the provision of the act has been held invalid as it applies to certain persons shall not effect its application to others and yet with the state is arguing for is determination of benefits to many families currently receiving them because there some reason the father, well unemployed and while his unemployment has made the family needy the father does not satisfy the primary wage earner test for some reason.

So, clearly the separability clause of the act should be violated.

Moreover, the administration of the AFDC-U program would be seriously disrupted throughout the country.

The states attempted to grapple with the term primary wage earner as I suggest before the legislative history does not give any guidance as to what primary wage earner means.

What Congress did do in 1961 and 1967 is make irrelevant the employment of the spouse and we believe the Court should adhere to that.

And finally, --

Justice Potter Stewart: Mr. Freedman, what is the -- please refresh my recollection as to what is the procedural posture of this case, it was a class action?

What?

For declaratory judgment?

Mr. Henry A. Freedman: And injunctive relief.

Justice Potter Stewart: A declaratory judgment that this statutory scheme was constitutionally invalid?

Mr. Henry A. Freedman: Correct.

Justice Potter Stewart: And that's -- the Court so found wouldn't that -- shouldn't that as a matter of appropriate exercise of the judicial power be the end of it?

Mr. Henry A. Freedman: Well, it really was the end of it Your Honor, that the Court entered its injunction on April 20th and at least I think the United States and plaintiff thought the case was over.

The state then came back and in the process of implementing the Court's order sought to impose the primary wage earner test then the parties had to go back and litigate the state's changing of the test.

Justice Byron R. White: Why didn't the court just say I enjoin enforcement of this statute, I just found them constitutionally.

Justice Potter Stewart: Because it's unconstitutional.

Justice Byron R. White: Why didn't you say that?

It went much far than that.

It said, I'm not going to invalidate the statute I'm going to rewrite it.

Mr. Henry A. Freedman: Now, the Court did not rewrite it, the Court decided as between the choice it could either invalidate --

Justice Byron R. White: Yes, but the statute still enforce.

Justice Potter Stewart: After it's been held invalid.

Mr. Henry A. Freedman: The statute, the statute of the AFDC program was continued in effect but the (Voice Overlap) --

Justice William H. Rehnquist: (Voice Overlap) statute.

The 1967 amendment has been invalidated.

Mr. Henry A. Freedman: To the extent that changed the word “parent to father”, yes but not the rest of the act.

Justice Potter Stewart: Well, so that reinstated the earlier?

Mr. Henry A. Freedman: That's correct.

Justice Potter Stewart: 1961-1962, I see.

Mr. Henry A. Freedman: That's correct.

Justice Potter Stewart: Although that have been repealed, haven't it?

Mr. Henry A. Freedman: It had been repealed by the -- or it's been amended by the change of father, I don't believe it's been repealed the --

Justice Potter Stewart: But --

Mr. Henry A. Freedman: -- word have been changed.

Justice Potter Stewart: -- in effect it had.

Justice Byron R. White: Well, why -- that still doesn't explain why they needed and injunction to require the inclusion of women?

Mr. Henry A. Freedman: Well, the injunction was needed both as against the state to have it so long as it had in AFDC-U program to provide benefits in the sex (Voice Overlap) --

Justice Byron R. White: Why?

Justice Byron R. White: That that doesn't more than reinstate the 1961 law.

Mr. Henry A. Freedman: Well, no the state could off out of the program in any time.

The injunction is -- as de novo for cases what so long as you are in the federal program you must comply with the federal law that it's now been rendered constitutional.

Justice Byron R. White: Now been rendered the --

Mr. Henry A. Freedman: By the Court's decision.

Justice Byron R. White: -- now been held unconstitutional (Voice Overlap) to say I enjoined the enforcement of this unconstitutional statute.

Mr. Henry A. Freedman: Why I think the result would've been the same as this we're arguing before in this case.

I'm not sure what the differences (Voice Overlap)--

Justice Byron R. White: Why would the state within had to decide what to do about it?

Mr. Henry A. Freedman: Well, to size up inner out which still the decision that it has.

The one thing it cannot do is continue to discriminate (Voice Overlap) --

Justice Potter Stewart: Well, the Congress wouldn't to decide it, wouldn't it if the Court had held this statute, this 1967 statute is unconstitutional and I enjoined its enforcement for that reason period.

Then there would have been no unemployment, there would've been no AFDC-U?

Mr. Henry A. Freedman: That would have been invalidation of the program.

Justice Potter Stewart: Correct.

Mr. Henry A. Freedman: One of the two remedial choices (Voice Overlap) --

Justice Potter Stewart: It would because it was held to be unconstitutional.

Mr. Henry A. Freedman: It would've been the sex discrimination --

Justice Potter Stewart: Then about (Voice Overlap) whether they have anything at all, any AFDC-U or to put in a sex neutral one or none at all but until the Congress acted this 1967 statute would've been held unconstitutional and the District Court would've enjoined its enforcement for that reason.

Mr. Henry A. Freedman: That is not the course of course it is been followed in any of the prior cases in Weinberger against Wiesenfeld for example, the Court had the option of denying benefits to all young widows who were carrying for children in the home.

Justice Potter Stewart: But really that's an option of Congress.

Mr. Henry A. Freedman: Well, this Court did not if Congress that option of course that extended benefits and in Goldfarb, this Court did not give Congress the option to extended benefits and in every case it did the right thing.

We would submit the only thing that could be done under the circumstances because the test as all the parties agree Justice Harlan has announced to most succinctly in his concurring opinion in the Welsh case is --

Justice William H. Rehnquist: Was that a court opinion?

Mr. Henry A. Freedman: No, it was not.

It was a concurring opinion under just cited --

Justice Byron R. White: The only vote that way in the (Voice Overlap) --

Mr. Henry A. Freedman: He was the only vote the way in the case but various courts have -- had described that as the correlation of the case --

Justice William H. Rehnquist: This Court?

Mr. Henry A. Freedman: Alright, I withdraw that.

We would submit --

Justice Potter Stewart: One distinctive thing about that opinion is that none of the other aid agreed with it.

Mr. Henry A. Freedman: That is correct.

But the principle announced, the principle announced with regard and the principle followed in every case --

Justice Byron R. White: Since no one since have as far as I know.

Mr. Henry A. Freedman: The principle followed has been that the question that the confronting of court in determining at aspect of the statute unconstitutional is whether the entire program is to be abolish whether it is more consistent with Congress' purposes in terms of the entire program to abolish the entire program or to extend benefits to the class that have been excluded from the program.

Now, we submit that the legislative history here shows consistently that Congress's overwhelming concern was with the needy children of unemployed parents that benefits are quadrupled in the program since 1967 when this provision was last adopted and that therefore the congressional purposes is served by extending benefits to the class and leaving the Congress over time the choice of how it may wish to change the program in any way.

Thank you, Your Honor.

Chief Justice Warren E. Burger: Thank you gentlemen.

The case is submitted.

Featured:

Quern v. Jordan - Oral Argument

Sun, 20 Jun 2010 20:42:28 +0000

Case:

Quern v. Jordan

Media File:

77-841_19781108-argument.mp3

Related Transcript:

77-841_19781108-argument.xml

Transcript:

Argument of William Wenzel

Chief Justice Warren E. Burger: We will hear arguments next in 841, Quern against Jordan.

Mr. Wenzel you may proceed whenever you are ready.

Mr. William Wenzel: Mr. Chief Justice and may it please the Court.

Petitioner, Arthur F. Quern, the current Director of the Illinois Department of Public Aid, requests this Court to review and overturn the en banc ruling of the Seventh Circuit Court of Appeals, which petitioner submits has undermined this Court's ruling in this very litigation in Edelman v. Jordan, which established the state’s sovereign immunity from suit under the Eleventh Amendment to the Untied States Constitution.

The en banc ruling of the Seventh Circuit authorizes a Federal Court to mandate the issuance of a class notice regarding entitlement to retroactive welfare benefits to more than twenty thousand welfare recipients, relief, which petitioner contends is designed to secure indirectly the very same monetary award, which this Court prohibited under the Eleventh Amendment in Edelman.

The facts in this case are not in dispute.

In 1971, plaintiff filed the Civil Rights Class Action in the district court in the Northern District of Illinois, challenged the failure of the Illinois welfare officials to comply with federal time standards for processing applications for assistance under former Title 16 of the Social Security Act, the Aged, Blind and Disabled program.

Federal regulations have been issued by the department of Health, Education and Welfare in 1968, which established specific time standards for processing applications.

From 1968, until plaintiff filed his lawsuit, the defendant welfare officials had processed applications pursuant to state regulations, which were inconsistent with the federal time standards.

Accordingly, the district court on April 16, 1971, preliminarily enjoined the welfare officials from enforcing their own state standards and compelled them to follow the federal time standards issued by HEW.

In March of 1972, the preliminary injunction was made permanent.

In addition, the district court awarded equitable restitution for retroactive welfare benefits wrongfully withheld for all those applicants for AABD who had applied between the date of the issuance of the federal regulations in 1968 and April 16, 1971, the date that the state regulations had been declared invalid.

This award of equitable restitution was ultimately reversed by this Court in Edelman v. Jordan as violating the state sovereign immunity from suit under the Eleventh Amendment.

This Court reasoned that an award of equitable restitution is in all practical sense, relief against the state as the real party in interest.

This Court further reasoned that under the doctrine of ex parte Young, a federal court's remedial powers consistent with the Eleventh Amendment are limited to perspective injunctive relief and may not include a retroactive award or relief which compensates for pre-litigation conduct or past misconduct, which is completed.

This Court accordingly reversed and remanded the Seventh Circuit decision to the contrary with instructions to have further proceedings not inconsistent with the Eleventh Amendment ruling.

However, on remand in the district court, plaintiff filed a motion to require the state defendant to issue a notice to each of the twenty thousand individuals or more whose applications for assistance had been delayed during the period of 1968 through 1971 and informed them of their possible entitlement to the very same retroactive welfare benefits, which this Court had denied and to inform them of their right to appeal through administrative proceedings, the denials of those welfare benefits.

This was over, of course, the state's objection that it violated the law of this case as handed down in Edelman and that it violated sovereign immunity as embodied in the Eleventh Amendment.

The district court disagreed.

The district viewed notice relief as a relief which did not compensate per se, and that Edelman was limited to relief which compensated per se, and that this relief while related to the possibility of securing a retroactive monetary award was something different than an actual award itself.

On appeal to the Seventh Circuit, a three-judge panel of the Seventh Circuit disagreed.

It found that the actual notice that the district court had allowed contained a predetermination of state liability and that this sort of notice relief therefore violated the law of the case and violated the Eleventh Amendment.

Plaintiff sought a rehearing en banc, which was granted.

The Seventh Circuit sitting en banc, four judges to three, decided that the district court had in fact erred in the specific notice relief that it had envisioned, because it did contain a predetermination of the state's liability.

However, the Seventh Circuit sitting en banc did feel that a Federal Court could authorize notice relief, which was related to retroactive welfare benefits, as long as it did not contain a predetermination of liability.

The Seventh Circuit in authorizing this some form of notice relief conceded they would operate against the state sovereign and not merely against the Director of the Department of Public Aid.

So, the issue now before the Court is whether or not retrospective equitable relief against a non-consenting sovereign in the form of a notice related to retroactive welfare benefits is consistent with this Court's decision in Edelman or is consistent with the state's sovereign immunity from suit under the Eleventh Amendment.

Justice William H. Rehnquist: How much of a case do you think we still have here in view of the majority of the en banc Seventh Circuit's opinion, which on the state's appeal, reversed the judgment of the district court, but said if the district court was so inclined, it could enter a more modest decree?

Mr. William Wenzel: Your Honor, there is a case of controversy.

We do have a significant controversy, because we feel that any form of notice relief under this case which will ultimately secure members of the plaintiff class, the retroactive benefits which were denied by this Court will either violate this court's ruling in Edelman or violate the Eleventh Amendment.

Justice John Paul Stevens: Mr. Wenzel as a matter of Illinois law, would the state have the power or authority to give some retroactive relief for a period prior to April 8, 1971?

Mr. William Wenzel: As a matter of state law, during this very period in time you mentioned, 1968 to 1971 and up through 1974 as a matter of fact, Illinois did participate in a federal state scheme of cooperative federalism known as the Aid to Aged, Blind and Disabled Program.

At that time, as a mater of state law, Illinois would have permitted people who had been denied assistance to appeal and if they prevailed under administrative appeal or if they eventually prevailed in a judicial review, would have permitted the payment of retroactive relief.

This case, however, is not that simple because of the action of the United States Congress in 1974 in repealing former Title 16 of the Social Security Act and replacing it with a wholly federally funded and authorized supplemental security income program.

Therefore, at present and since 1974, Illinois has not been participating in a federal program.

So the question becomes, if a particular recipient were to seek administrative review today, and if he were to go into state court and this court were to consider the question whether he was entitled to retroactive relief, I think it would first have to deal with the threshold question of whether the state was still participating in the federal program and it is not today.

Justice William H. Rehnquist: Well, but the district, the Court of Seventh Circuit as I read its opinion, left that completely up to the state courts to determine.

It doesn't say the state courts have to award retroactive relief.

It just says that this class of people may be told that they may have a claim in the state courts and remits them to the state courts?

Mr. William Wenzel: Your Honor, we view notice relief as very closely related to an actual award of benefits themselves, but our position goes further than that.

We do not view the principles of sovereign immunity nor this Court's decision in Edelman as to limit the application of the doctrine of sovereign immunity to only those cases involving an actual award of monetary relief.

We believe that the principles of sovereign immunity must include those cases, which require the sovereign to act affirmatively or which triggers the operation of governmental machinery.

We draw support for that proposition from this Court's rulings under the issue of federal sovereign immunity from suit in the Larson versus Domestic & Foreign Commerce Corporation and --

Justice John Paul Stevens: Mr. Wenzel before you get too far into your argument, I want to be sure I got your entire answer to the question I put before.

Do I correctly summarize it by saying that if someone, whether he got this notice or not, who was did not receive benefits during the period prior to April 8, 1971 were now to file some kind of a claim in the Illinois state system, whether administrative or judicial, we don't really know whether the state would pay him anything, is that right?

Mr. William Wenzel: That is correct.

Justice John Paul Stevens: But either result is possible as far as we know from the record and the law that you may be able to point out what is right?

Mr. William Wenzel: Yes and I really did not complete my exposition of the state procedures.

If I could back up to answer both Justice Stevens' and Justice Rehnquist's questions, notice relief will trigger governmental machinery and will intrude upon the sovereign state of Illinois in the following respects.

The notice will go out.

Twenty thousand or more welfare recipients will file request for appeals with the administrative agency.

The agency will hold hearings themselves and depending upon the conclusion or the final decisions in those agency hearings, the recipients will have a right to seek judicial review in the state courts.

If the state court should arrive at the conclusion that retroactive assistance should be paid to members of the plaintiff class, as a matter of state law, petitioner, the Director of the Department does not have the power to request the state comptroller to draw or the state treasurer to pay an assistance warrant, which relates to an appropriation which has lapsed.

We are talking here with obligations that relate to appropriations for the years 1968 through 1971.

Under Illinois law those appropriation members have lapsed.

The director does not have the power nor does the --

Justice John Paul Stevens: But isn't that just like various other claims that are asserted against the state that the claim maybe asserted before the court of claims or whatever it is called, I forget, and it may be established and then the legislation - the general assembly in its wisdom decides whether or not to pay the claim.

So isn't it possible that twenty thousand people who did not get the money they should have gotten, could establish this sort of claim and then they might have enough political influence to get the legislature to adopt or pass a Bill saying let's pay this money?

Mr. William Wenzel: That is correct, the next step --

Justice John Paul Stevens: But they really won't have a chance to do this unless they initiate the claim in the first instance?

Mr. William Wenzel: That is correct.

So, we are at the point at the court of claims perhaps even ruling in the favor of the members of the plaintiff's class here, which under Illinois law is a mere recommendation to the general assembly to pay or not to pay, but the catch it seems to me, is that the Federal Court that has issued the notice relief stands ready to intervene at any particular point in these proceedings whether they be administrative, the judicial or the legislative and use its powers under Title 28, Section 2283 to protect or effectuate its judgments, to use its powers under Title 28, Section 2202 to grant further relief.

Justice John Paul Stevens: But the Court of the Appeals say that the one thing they can't do is order payment?

Mr. William Wenzel: That is correct, but I think that what they could do is at each step of the proceeding whether administrative or judicial [Voice Overlap] They can keep on intruding into legitimate state affairs and nudging this matter closer and closer to the point where payment will occur even though it couldn't be said directly that the Federal Court actually ordered it.

It did everything, but in fact order it and we feel that, that is so closely tide up with the actual award of monetary relief itself that it really amounts to a subterfuge.

Justice William H. Rehnquist: I can understand why you would say that about the district court's order in this case, but the Seventh Circuit majority rather substantially modified it, didn't it?

Mr. William Wenzel: It said that it envisioned a notice which would not contain a predetermination of the liability of the state.

It did, whatever notice it might send out however I think would include the right to appeal this denial of benefits in the period of 1968 to 1971.

Once we trigger the fair hearing process everything else follows, judicial review, court of claims, the legislative matters.

Justice William H. Rehnquist: But that is by virtue of state law?

Mr. William Wenzel: But assuming that the Federal Court would retain power to enforce and protect its notice relief, it would seem to me that it - the court is not merely -- the court stands ready to intrude into state law and state procedure to see the desired result of an eventual monetary award realized.

Justice William H. Rehnquist: I would think if the majority of the Seventh Circuit felt the way you think it felt, it would simply would have affirmed Judge Will's order rather than reversed it.

I can see why you could say that about Judge Wills' order, but I have some difficulty with your interpretation of Judge Wood's opinion in the Seventh Circuit?

Mr. William Wenzel: Maybe another way of approaching the problem is to attempt to delineate what Edelman precludes in the way of a Federal Court's remedial power for relief.

This notice by any stretch of imagination is not perspective.

It must be deemed to be compensatory.

It is not perspective, because the only perspective injunctive relief that was dealt with in 1971 and 1972, were federal time standards.

There has never been a question of notice relief in this case.

That leaves us with notice relief which is designed to compensate for pre-litigation conduct.

And this Court said in Edelman that compensatory relief, dealing with past completed misconduct is beyond the powers of the Federal Court, when the objection of the Eleventh Amendment is raised.

Justice John Paul Stevens: Would there be any objection if some community organization decided to -- say you win the case and then some community organization decides that well, these people, a lot of these are blind, disabled elderly people who were wrongfully denied some money about seven or eight years ago or ten, well, this community organization decides they ought to know what their rights are and send out precisely the same notice, would there be any -- would that have a different consequence and if the answer is no, are we really talking about who pays for the notice?

Mr. William Wenzel: The answer would be no.

It would I suppose they could come -- the members of the plaintiff class would be able to come into the offices of public aid and request to appeal the denial of benefits --

Justice John Paul Stevens: No, my question is some do gooder, some organization says well, these people ought to know what their rights are and send out a bulletin in the same words as the notice that Court of Appeals apparently thought was appropriate, wouldn't that produce all the consequences that you are concerned about?

Mr. William Wenzel: Yes, but it would not be as a result of a Federal Court's order over the objection of the state that it is in violation of its right to be free from suit under the Eleventh Amendment.

Chief Justice Warren E. Burger: Seriously if a private association did it as they would when the court of appeals en banc does so?

Mr. William Wenzel: Well, especially in the very litigation in which the prohibition of an award of monetary benefits had been precluded by this very Court, we feel that very strongly that what is happening here is they are attempting to achieve the ultimate goal of retroactive benefits by indirection and the Seventh Circuit Court of Appeals is aiding and abetting this indirection, we feel, in violation of this Courts' decision and certainly inconsistently with the principles of sovereign immunity because, because of the federal order to grant notice relief, there will be a significant intrusion upon the state affairs.

These hearings would of necessity follow, judicial review would follow and I think it does matter significantly Mr. Justice Stevens that this would occur as a result of a Federal Court order and not merely because some do gooder at his own cost and expense --

Justice John Paul Stevens: But the do-gooder could say there has been a federal decision that the state of Illinois wrongfully denied you money that you are entitled to and that the do-gooder could tell all that and in fact in this Court of Appeals' notice need not necessarily recite that it was ordered by the Court of Appeals?

Mr. William Wenzel: There is one significant difference.

At this point in the proceedings, the only way that the names and identities of those people who have been denied benefits in the past would be able to be put together and disseminate it would be as result of a Federal Court order which viewed notice relief and the identity of members of the plaintiff class as part of some prospective relief which it had the power to require the state to put together and disseminate.

So a do-gooder really just putting out a notice as to your --

Justice John Paul Stevens: He might not be able to benefit the entire class, just those that don't know their rights would just let them fall by the way side and we just protect those that are on the surface, I see.

Mr. William Wenzel: I think that notice relief under the circumstance of this case in any form cannot be deemed to be consistent with the principles of federalism which are embodied in the Eleventh Amendment.

Those principles of federalism require that there be a respect for both the federal sovereigns and the state sovereigns and that each sovereign should to free to act consistently within its own sphere of operation under our constitution in Edelman versus Jordan and in Ex parte versus Young, this Court attempted to make sure that both the reaches and proper applications of the Fourteenth Amendment as well as Eleventh Amendment are given their full play as long as one does not require the lessening or the weakening of the other.

If we are to believe what plaintiff say in this case about the notions of federalism?

In effect, we will have federal courts' being able to grant relief, which effectively renders the Eleventh Amendment a hollow shell.

Our notion of federalism as evidenced by the distinction between perspective equitable relief and retroactive relief recognized in Edelman we think is the proper balance and this Court was able to work with the Edelman distinction between retrospective and prospective in the Milliken versus Bradley case.

It was able to find a justification for wiping out ongoing incidences of any quality in the Detroit School System, by granting prospective relief which contained remedial reading programs.

The distinction between prospective and retroactive when applied to this particular case, however, shows that we are talking about relief, which is measured in the teams of past breach of legal duty.

Chief Justice Warren E. Burger: We will resume there at 1 o'clock, counsel.

[Luncheon Break]

Mr. Wenzel you may resume.

You have about eight minutes left, I observe.

Mr. William Wenzel: Mr. Chief Justices and may I please Court.

If there are no specific questions of petitioners counsel at this time, I would like to reserve the balance of my time for rebuttal.

Argument of Sheldon Roodman

Chief Justice Warren E. Burger: Very well.

Mr. Roodman?

Mr. Sheldon Roodman: Mr. Chief Justices and may I please the Court.

The central question presented to the Court today is whether the Eleventh Amendment immunity of the state of Illinois maybe invoked by a state official as a bar to an order, requiring him to send notices to members of a duly certified class.

This question arises as one aspect of three pronged relief, granted by the Federal Court.

First, there has been a declaration by the Federal Court that the Director of the Illinois Department of Public Aid promulgated his own administrative regulations contrary to the Social Security Act and therefore void under the Supremacy Clause.

Second, in light of this declaration, the Federal Court enjoined the future enforcement of these administrative regulations.

These two aspects of the relief have already been held by this Court to be consistent with the Eleventh Amendment.

On remand, from Jordan I, it must be emphasized, that members of the plaintiff class were wholly in the dark regarding this lawsuit.

Accordingly, the class representative in fulfillment of his fiduciary obligations to the class, sought an order requiring the petitioner to send notices to the members of the class merely explaining; one, that a federal suit had been filed on their behalf; two, that they have been denied certain AABD benefits; three, that there were preexisting state administrative procedures for challenging the denial of such benefits and four, the method by which they might trigger those procedures.

Justice William H. Rehnquist: Mr. Roodman, class action procedures have come into play largely since I left the private practice.

Is that ordinary that as you say members of the plaintiff class would be largely in the dark after a remand from this Court in Edelman, after decision on the merits?

Mr. Sheldon Roodman: Yes your Honor, this was a B2 class on the federal --

Justice William H. Rehnquist: Injunctive --

Mr. Sheldon Roodman: Correct, under the Federal Rules of Civil Procedure and therefore no notice is required under the federal rules and no notice had been sent to these members of the class.

So, after the decision of this Court in Jordan I they were ordered no notice, they had never received any notice during dependency of the case of the proceeding.

So, the notice that the respondents did seek on their behalf merely advised them that there had been this lawsuit pending.

It advised them of the declaration of the Court and then advised them of pre-existing administrative procedures by which they might challenge the denial of those benefits.

The Seventh Circuit approved the sending of such notices, but only to the extent that those notices in no way predetermined the liability of the state of Illinois.

The notices which were sent were appropriate both under Rule 23-D2 of the Federal Rules of Civil Procedure and also appropriate as an exercise of the general equitable discretion of the court.

Further, under the Declaratory Judgment Act, the federal courts have the authority after entering a declaratory judgment to give further necessary and proper relief, these notices fall within that Section as well.

Justice William H. Rehnquist: You are talking now about an affirmative basis for the district court's authority to act.

Your opponents contend that whatever that affirmative authority might support in other cases, the Eleventh Amendment bars it here?

Mr. Sheldon Roodman: That is correct Your Honor.

That is the sole basis of their argument before the Court today.

There could be in other cases, other equitable considerations that might compel a Federal Court to decline, to send notices to a class even after finding a violation of the Social Security Act.

Those are questions of equity, not of Eleventh Amendment jurisprudence.

The only question raised before the Court today is the Eleventh Amendment immunity of the state of Illinois.

We believe a close examination of the principles of sovereign immunity and federalism embodied in the Eleventh Amendment will show that the petitioner is seeking to use the Eleventh Amendment in a way in which it was never intended and contrary to the purposes of the Eleventh Amendment.

I will first discuss the Eleventh Amendment issues and then turn to the 1983 issues presented in this case.

In Jordan I, this Court reaffirmed the principle that the Eleventh Amendment bars a Federal Court from entering awards for money damages directly against the state.

This interpretation of the Eleventh Amendment fell within the historical purposes of the Eleventh Amendment, to protect state treasuries from Federal Court orders, both to avoid a potential clash between federal and state sovereigns and also to prevent a direct and substantial intrusion upon the sovereignty of the state by the Federal Courts, a question of federalism.

Neither of these historical purposes of the Eleventh Amendment, however, are in anyway jeopardized by the sending of the notices approved by the Seventh Circuit en banc.

The order challenged here by the petitioner does not result in any clash between the federal and state sovereigns.

On the contrary, the order respects the institutions of state government and leaves to the institutions of state government, the ultimate determination of the fiscal liability of the state.

Justice William H. Rehnquist: What if the order had provided in addition to what the Seventh Circuit said it could provide that can't -- although Illinois law did not provide for any hearing in this situation, as a matter of federal constitution law under the Goldberg versus Kelly line of cases, a hearing was mandated by the Constitution and therefore regardless of Illinois law, the Illinois state system would have to give hearings?

Mr. Sheldon Roodman: Your Honor, we believe that that order is well would be permissible under the Eleventh Amendment.

That order would not displace the state from determining its own question of fiscal liability in accordance with state law to the extent that the order does not intrude upon central decisions of the state government that are central to its Sovereignty.

Such an order would --

Justice William H. Rehnquist: Certainly it would be imposing a rather substantial aspect of retrospect of relief, would it not?

Mr. Sheldon Roodman: Your Honor, it would not necessarily be imposing such a burden, that question would be left to the state.

Justice William H. Rehnquist: Except that the state would be required to hold a hearing?

Mr. Sheldon Roodman: Yes your Honor, there is the fact that the petitioner has violated the federal rights of the members of the plaintiff class is central.

There is a weighing of the federal interest in this case with the state interest.

We have as a central finding in this case, a violation of the Supremacy Clause, a knowing violation of the Supremacy Clause, plus there are federal interests at stake in this case.

What the federal court here has done has accommodated and harmonized the federal interests with the state interests.

It has done so in a way that is not intrusive upon the state government.

It leaves to the state government that a final determination of fiscal matters that are central to state government.

The direct, excuse me --

Justice Byron R. White: Are you finished with Mr. Justice Rehnquist?

Mr. Sheldon Roodman: Yes.

Justice Byron R. White: I just wondered if, what was the jurisdictional basis for this civil matter?

Mr. Sheldon Roodman: The original jurisdictional base for the lawsuit is Section 13.43.

Justice Byron R. White: And your claim was based on the federal law?

Mr. Sheldon Roodman: Your Honor, the original claim was based both on the Equal Protection Clause and the Supremacy Clause.

The federal court never reached the Equal Protection Clause.

They relied solely upon the Social Security Act and Supremacy Clause.

Your honor, we would submit that in fact the petitioner, a state officer is not here seeking to protect the Sovereignty of the State of Illinois.

What he seeks to do is block access by the respondents to the state created remedies.

The state, the Sovereign state of Illinois, (a) agreed to provide administrative remedies for all public aid recipients who wish to challenge the denial of benefits.

That requirement was part of the Social Security Act, but the state of Illinois went even one step further.

They provide for judicial review of the administrative decisions of the Director of the Illinois Department of Public Aid.

So the very procedures and remedies that the Sovereign state has adopted for members of the plaintiff class, the director here seeks to prevent them from utilizing.

We submit that there is no basis for assuming that the interests of the Sovereign state of Illinois are aligned with the interests of the Director of the Illinois Department of Public Aid.

The director of the Illinois Department of Public Aid originally violated the Social Security Act.

Chief Justice Warren E. Burger: Who speaks for the state of Illinois in this Court?

Mr. Sheldon Roodman: Your Honor, the Attorney General does represent the director of the Illinois Department of Public Aid before this Court.

Chief Justice Warren E. Burger: Well, should we look to hear the views in the state of Illinois.

Mr. Sheldon Roodman: Well that is the -- Your Honor, that is the sole person before the Court today I think.

Chief Justice Warren E. Burger: I'm not sure and I understand your prior statement.

Mr. Sheldon Roodman: Your Honor we think that the --

Chief Justice Warren E. Burger: I understood you, to say there is nothing to indicate or that the director is speaking for the Sovereign state of Illinois.

Mr. Sheldon Roodman: We were maintaining your Honor that his interests and the interests of the Sovereign state of Illinois are not necessarily aligned.

The Sovereign state through its legislature has adopted explicit remedies for the respondents in this case to challenge denial of benefits.

The director on the other hand is a state officer.

It is not true that in all cases, a state officer has the identical interests of the Sovereign, particularly when a state officer is responsible for the initial violation of law.

We think in cases of this kind, the state officer is seeking to block the respondents from utilizing procedures of the state through its legislature has expressly adopted.

Chief Justice Warren E. Burger: How do we resolve this potential conflict that you are implying?

Mr. Sheldon Roodman: Your Honor, I think --

Chief Justice Warren E. Burger: Do we decide what is good for what the state of Illinois thinks about this?

Mr. Sheldon Roodman: No the question is whether the state officer should be permitted to invoke the immunity of the state of Illinois.

Chief Justice Warren E. Burger: Can the Attorney General invoke the immunity?

Mr. Sheldon Roodman: No.

your Honor, the Attorney General in representing the state officer here, we think should not be permitted to invoke the immunity of the state of Illinois except in those cases in which there is a direct and substantial intrusion upon state government.

This Court held in Jordan I that money damages against the state are a direct intrusion upon the state and therefore it is appropriate for the state officer to be able to invoke the immunity of the state of Illinois.

In the tax cases of 1940s, which were claims for money judgments against the state, once again, a state officer could claim the immunity of the state.

However, in those cases in which if there are no cases other than money damages cases in which a state officer has been permitted to claim the immunity of the state of Illinois or any other state in this nation, the notice relief here, we submit, does not create a clash between the sovereign state of Illinois and the national government through its federal courts.

Instead, the notice remedy is a carefully tailored remedy, which is designed to avoid such a clash.

The remedy by sending the members of the class back to the state institutions avoids any clash between the sovereigns.

Ultimately, the question of whether they shall recover the benefits that have been denied them is a question for the state government to decide through its administrative agencies and through its judicial branch.

Justice William H. Rehnquist: The original district court decree in this case didn't speak in terms of damage, did it?

It spoke in terms of equitable restitution, suggesting that you know, it wasn't quiet as air-tight as an award of damages.

So, are you correct in saying that it's just strictly and only damages that is forbidden by the Eleventh Amendment?

Mr. Sheldon Roodman: Money judgments, Your Honor, are judgments that have a direct monetary impact upon the state for a past conduct.

This Court did hold and say that the equitable restitution was indistinguishable for money damages that have been barred previously or money judgments for the recovery on bonds or the tax cases in which a person sought to recover taxes that they claim had been illegally exacted from them.

In the absence of a money judgment and with the particular notices that have been ordered here, there can be no problems of enforcement that this Court was concerned about in cases involving money judgments.

The enforcement is solely against a state officer.

If in fact the plaintiff's do not recover in this case, the state officer is not in contempt of the federal court.

The only requirement on the state officer is to send the notices.

After that the questions of liability are reserved to the state government.

Chief Justice Warren E. Burger: Now what if the state's executive branch pursuant to your suggestion, decides not to pay, then what?

Then they go on to the state courts?

Mr. Sheldon Roodman: Yes your honor.

Chief Justice Warren E. Burger: And what if the state court decides they should pay, then what happens?

Mr. Sheldon Roodman: Well I would assume if the state courts decide that they should pay that the state officer would respect the judgments of the state.

Chief Justice Warren E. Burger: What if the Attorney General says that the purposes of illustration that violates the Eleventh Amendment and our holdings?

Mr. Sheldon Roodman: The Eleventh Amendment would not apply in the state courts, Your Honor.

Chief Justice Warren E. Burger: And that's why I posed it, what if he asserted that?

Mr. Sheldon Roodman: Our only remedy your Honor would be for within the state court system, we might pursue the remedies of contempt within the state court system.

He would not be in violation of the federal court order and we would have no remedy of contempt in federal court and no potential clash between the state sovereign and the federal sovereign.

Chief Justice Warren E. Burger: And conversely, if the state courts in that hypothetical decide no entitlement that's the end of it, is it?

Mr. Sheldon Roodman: Yes your Honor, that is correct.

Justice William H. Rehnquist: Mr. Roodman, what you do with cases like In Re Ayers and Hagood against Southern that was cited in Edelman against Jordan, where the Court refused to permit suit in federal court for specific performance of a contract which I take it could well not have involved monetary damages?

Mr. Sheldon Roodman: Your Honor, those cases did involve collection on Bonds.

Those cases didn’t were intended specifically to recover the principal -- payment of principal and interest on Bonds.

They did involve money judgment.

Those cases fell within the historical purposes of the Eleventh Amendment and the original case of Chisholm versus Georgia in which there was a suit for the collection of money.

Justice William H. Rehnquist: Would you allow -- would you think the Eleventh Amendment allowed a district court in a case such as this to order a state official to specifically perform a contract in which the state had engaged so long as it did not involve actual payment of money, supposedly to involve furnishing of supplies to a group of people?

Mr. Sheldon Roodman: The question, Your Honor, we think would turn on principles of federalism.

It would be the extent to which the federal court order was so intrusive upon the state sovereign that it should not stand within our federal system.

That we think is the basis -- the balancing test that the federal court would have to apply in that situation.

The question is throughout though -- almost two hundred years of the Eleventh Amendment has always been whether the particular relief is consistent with this nation’s federalism.

And federalism requires a sensitivity to both the state interest and the national interest.

In this case, in the absence of such relief as approved by the Seventh Circuit en banc, the federal court will be ignoring and condoning the violation of the federal rights of the plaintiff class.

In our federal system, the violation of federal rights cannot go un-redressed.

What the lower courts have done here is to tailor a remedy that is sensitive to those federal rights and to the Supremacy Clause of the Constitution while at the same time recognizing the interest of -- the legitimate interest of the state government and not intruding upon the institutions of state government.

By leaving to the state government, the ultimate determination of liability, the federal court here has harmonized the interests of the federal government, the federal funds that are at stake in the AABD program, the federal rights that are involved in the Social Security Act and of course, the federal interests involved in seeing that the Supremacy Clause is adhered to.

The federal interests in this case are quite different from those in the tax cases of the 1940’s and the bond cases in the later part of the Nineteenth Century.

In those cases, it was not, there was no program that was based upon co-operative federalism.

There were no federal interests involved directly in those cases.

Justice William H. Rehnquist: Well, Mr. Roodman, in the tax cases wasn’t the claim of Ford motor company for example that the tax violated the federal constitution?

Mr. Sheldon Roodman: Yes.

Justice William H. Rehnquist: Would you say that was not of federal interest?

Mr. Sheldon Roodman: Your Honor, there is certainly is a federal interest in the Fourteenth Amendment.

That question then could be raised and presented through the state court system and ultimately considered by this Court.

And what we seek here is no more than in that case, we seek to have the issues of liability referred back to the state court system and then determine within the context of state law in the federalism -- in the state court system.

Justice William H. Rehnquist: Well, I was puzzled by your statement that there were no federal interests about the same magnitude involved in the tax cases in the 40s as they were in this case.

I would think the federal court set to vindicate the Fourteenth Amendment quiet as much as they do to the Supremacy Clause?

Mr. Sheldon Roodman: I certainly would agree, Your Honor.

The point was that in this case there has been a finding of a violation of federal law that this Court has upheld.

So, there because of the free-prong nature of the relief, there is a finding of a violation of federal law whereas in the tax cases the entire matter is referred in ab initio to the state court system for consideration.

The petitioner here does not explain how the notice relief in any way undermines federalism.

Further, the petitioner cites no cases in support of his position.

The petitioner seems to suggest that the state is the real party in interest and that the notices will be a burden upon his office.

However, it is important to distinguish between equitable considerations and the Eleventh Amendment considerations.

If the class here involved only 500 persons, that is a question in comparison to the equities of the case.

It is a question that this Court would weigh in the balance in deciding whether to send notices, but the Eleventh Amendment community of the state does not turn on the question of the number of persons in the class.

What is important here is for the -- is for the federal courts to provide a remedy that is co-extensive with the violation.

Unless the federal remedy here of notices to the members of the plaintiff class is approved then those persons who are actually harmed by the violation of law would seek -- would receive no redress whatsoever.

The petitioner further argues that the respondents are seeking to accomplish by indirection what Jordan wanted barred directly.

It is not true that this Court held in Jordan I that the members of the plaintiff class were to be barred from recovering.

What this Court held only was that the federal court could not order such recovery and therefore the decision by the federal court en banc is consistent with the original decision in Jordan I.

Finally, it is important to take into account also the principles of federalism embodied in Section 1 of the Civil Rights Act of 1871, now codified as 1983.

In enacting that provision, Congress clearly intended to provide an effective federal remedy for infringement of federal rights by state officers, just as occurred in this case.

In doing so, Congress recognized that the federal courts would be (1) overriding certain state laws; (2) providing a federal remedy where state law was inadequate and (3) providing a federal remedy where the state remedy though adequate in theory was not available in practice and that is precisely the situation we have today.

A state remedy that is available in theory, but not in practice, it is a state remedy that is only triggered by the sending of a notice and unless the members of the plaintiff clause have such notice they would be unable to utilize those procedures.

Thus it is consistent with the intent of Congress in 1983 to provide for the sending of notices to these individuals.

For the state officer here, to frustrate the intent of Congress there is a heavy burden.

The state officer must be able to show that the remedy appropriate under 1983 is a direct intrusion upon the Sovereignty of the state.

In the absence of such a showing, the argument that the 1983 remedy should be frustrated must fail.

In conclusion then, we urge the Court to affirm the judgment of the Seventh Circuit en banc, to hold the Eleventh Amendment bars an order merely requiring a state official to send notices would be inconsistent with the historical purposes of the Eleventh Amendment, it would be inconsistent with our federalism and would be inconsistent with congressional mandate embodied in 1983.

Justice Byron R. White: Can I pursue my previous question with you for a moment?

Mr. Sheldon Roodman: Yes sir.

Justice Byron R. White: Suppose that in this complaint there had been only the so-called statutory issue, it is the claim of conflict no equal protection issue.

Would there have been a jurisdiction under 1543?

Mr. Sheldon Roodman: Your Honor, we believe there would be this question is --

Justice Byron R. White: Because?

Mr. Sheldon Roodman: Because the Supremacy Clause is an integral part of the Constitution.

Violation of the Social Security Act is in fact a violation of the Supremacy Clause and therefore --

Justice Byron R. White: If you are wrong on that?

Mr. Sheldon Roodman: If we are wrong on that question that would not disturb in anyway the Court's affirmance of the order of the Seventh circuit.

Justice Byron R. White: Well, I didn’t -- just take my example, only the statutory claim, that is in the complaint?

Mr. Sheldon Roodman: Excuse me, you mean jurisdictionally?

Justice Byron R. White: Yes was there jury -- is there any.

I will ask you two questions.

Do you think you state a cause of action if there was only that, that claim in the compliant and secondly if you did, would there be jurisdiction in the Federal Court?

Mr. Sheldon Roodman: Yes, Your Honor, to both the questions.

This Court in fact and Jordan expressly held that 1983 was an appropriate cause of action for enforcing the Social Security Act.

We would find jurisdiction --

Justice Byron R. White: Under the -- any law as part of 1983, is that it?

Mr. Sheldon Roodman: Yes Your Honor, there is a dual, both under the constitutional language of 1983 as well as the and laws.

Justice Byron R. White: Let's assume that 1983 did not reach and laws?

Mr. Sheldon Roodman: Yes.

Justice Byron R. White: Would there be a jurisdictional problem in my example?

Mr. Sheldon Roodman: Your Honor, we would have jurisdiction under 1331.

This is a question of rising under the Constitution.

We would claim that in this case there is an excess of $10,000.

Justice Byron R. White: Yeah, there your cause of action would be arising under the Social Security Act?

Mr. Sheldon Roodman: If we were then to claim that the cause of action for the violation of the Social Security Act was not a question also under 1331?

Justice Byron R. White: Yes, if 1983 does not reach all federal statutes and the Social Security Act isn't covered by 1983 and you went in under 1331 attempting to state of cause of action, you would have to successfully claim that the Social Security Act gives a private cause of action?

Mr. Sheldon Roodman: Well, we would have to.

Your Honor, in addition there is the Declaratory Judgment Act.

We would have which provides a cause of action and we would seek equitable relief under first the declaratory judgment that the acts of state officer were contrary to federal law and the Supremacy Clause and pursuant to that declaration, we would seek equitable relief to enjoin the future violations of the Social Security Act.

So, we would have no remedy adequate at law.

The plaintiff’s would be suffering irreparable injury and therefore we would meet the tests under equitable jurisdiction under normal equitable principles to secure an injunction against the acts of state officers in violation –

Justice Byron R. White: In any event, there has been no jurisdiction issue raised in this?

Mr. Sheldon Roodman: That is correct, Your Honor.

Justice Byron R. White: But I suppose, we are permitted to raise it on our own?

Mr. Sheldon Roodman: Well, the jurisdiction of the Federal Court here is clear.

It's already been upheld in Jordan I.

We are clearly properly in Federal Court.

It is conceivable that in other cases now pending before the Court, Houston will offer rights on it.

Justice Byron R. White: Well, you maybe properly in the Federal Court on the constitutional issue that you asserted under 1530 or 1543.

The question is how about the appended claim.

Mr. Sheldon Roodman: Well, Your Honor after seven years of this litigation, I think it is appropriate for the Court to exercise that pendent jurisdiction.

Justice William J. Brennan: Did you say you thought that Edelman had sustained the cause of action under 1983?

Mr. Sheldon Roodman: Yes, I did.

Justice William J. Brennan: Merely because, the allegation was in violation of a federal law, namely the Social Security Act?

Mr. Sheldon Roodman: That is correct, Your Honor.

Justice William H. Rehnquist: You also allege a constitutional violation in your compliant, so that you would we presume we have an argument for pendent jurisdiction under Hagans against Lavine?

Mr. Sheldon Roodman: Precisely, that --

Justice Byron R. White: Yes, but there still has to be a cause of action?

I mean, for a cause of action to be appended, there has to be a cause of action?

Mr. Sheldon Roodman: Yes.

Justice Byron R. White: And if 1983 doesn’t reach the Social Security Act, there is no cause of action --

Mr. Sheldon Roodman: Well, declaratory judgment --

Justice Byron R. White: -- and there is nothing to be appended?

Mr. Sheldon Roodman: Well, if 1983 would be the proper cause of action for the constitutional claim, we would have a pendent claim under that Declaratory Judgment Act and under general equitable principles for what your denominating as solely the statutory claim.

Justice William J. Brennan: Yes, but would you under 1983 have a claim that is the question for a violation of the Social Security Act?

Mr. Sheldon Roodman: Yes it is –

Justice William J. Brennan: You say and I think what you said was Jordan I said you did?

Mr. Sheldon Roodman: Precisely.

Thank you.

Rebuttal of William Wenzel

Chief Justice Warren E. Burger: Very well, if you have anything further Mr. Wenzel.

Mr. William Wenzel: In response to counsel’s comments, I’d like to return to what I think are two crucial facts that are particular to this case which are decisive of the issue of whether any form of notice relief is appropriate under this Court’s decision in Edelman under the Eleventh Amendment.

Those two facts are; one, when plaintiff brought his compliant in Federal Court in 1971, he alleged that he had no available administrative remedies, paragraphs 27 and 39 of the compliant, appendix A12 and A14, he purposefully chose to ignore his right to seek a hearing in state court and now some six or seven years later he is back in court saying that now he is entitled to notice.

The second crucial fact --

Justice Thurgood Marshall: What he was now saying is the class was entitled --

Mr. William Wenzel: That is correct in fact, the plaintiff Mr. Justice Marshall if Mr. Jordan has received his retroactive benefits, he would not even be seeking.

The second crucial fact I believe is that in 1974 Congress repealed former Title 16 of the Social Security Act.

Any right to notice or hearing which members of the plaintiff class may have had in 1971, I believe are extinguished by the fact that there are no longer any rights or obligations with respect to notice, which are binding in --

Justice Potter Stewart: Well, both of these propositions are propositions that maybe, that will only be considered and maybe accepted by the state administrative agencies, of course ie, that there is no administrative remedy or B if there may have once been, now Congress is repealed the law, so there now no longer is, but that is a matter for the state courts to determine.

That doesn’t really directly bear on the Eleventh Amendment question in this case, does it?

Mr. William Wenzel: Well, we back up to whether or not the notice.

Whether or not it will also --

Justice Potter Stewart: Maybe the notice is a vain thing, may be it's futility, but that again doesn’t directly bear on the Eleventh Amendment?

Mr. William Wenzel: Insofar is noticeable trigger the request for hearings, the hearing themselves judicial review, possible action by the legislative is triggering governmental machinery, which is far as we are concerned substantially intrudes upon the Sovereign and violates the Sovereign’s freedom form suit.

Counsel for the plaintiff stated that the state officer is not seeking to protect the state, but to block access of state remedies and I think we have sufficiently dealt with that, for the fact that we no longer are operating under a formal Title 16.

Federalism, plaintiff’s assert requires a balancing of the competing interest of the states and the federal government.

I think what plaintiff is trying to do in this case is confuse the notion of federalism as used in cases in Younger v. Harris, which I understand is a prudential notion of federalism, with the federalism that is inherited in every Eleventh Amendment controversy.

Federalism here must take into account that the Eleventh Amendment renders an absolute bar to jurisdiction of the Federal Court.

This Court has said so in Monaco versus Mississippi and the Eleventh Amendment must be given effect as far as it reaches.

So, it is not really a question of balancing the interest and for ever violation of federal law there must be a remedy.

The point is that of the suit is essentially against the state.

The state is free to assert its Eleventh Amendment immunity from suit.

Thank you.

Chief Justice Warren E. Burger: Thank you gentleman.

The case is submitted.

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Califano v. Aznavorian - Oral Argument

Tue, 15 Jun 2010 00:31:21 +0000

Case:

Califano v. Aznavorian

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77-991_19781106-argument.mp3

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77-991_19781106-argument.xml

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