Taylor v. Lavine

HAYS, Circuit Judge: This court is again called upon to pass on a challenge to New York’s administration of its program for state Aid to Families with Dependent Children (AFDC). The federal AFDC program found in sections 401 to 444 of the Social Security Act of 1935, as amended, 42 U.S.C. §§ 601-644 (1970), provides financial aid to states on a matching funds basis to assist the “needy child . . . who has been deprived of parental support or care by reason of the death, continued absence from the home, or physical or mental incapacity of a parent . . . . ” 42 U.S.C. § 606(a) (1970). Each state wishing to qualify for sums appropriated by Congress must submit a plan for “aid and services to needy families with children,” 42 U.S.C. § 601 (1970). The plan must contain each provision on the list set forth in section 402(a) of the Social Security Act and must be approved by the Secretary of Health, Education and Welfare. 42 U.S.C. § 602(b) (1970). Among the requirements found in section 402(a) are that the state plan furnish aid “with reasonable promptness to all eligible individuals,” 42 U.S.C. § 602(a) (10) (1970), and that the state agency in determining need “take into consideration any other income and resources of any child or relative claiming aid to families with dependent children.” 42 U.S.C. § 602(a)(7) (1970). New York has submitted such a plan and from time to time amended it. The plan and amendments have been approved by the Secretary. Among the New York regulations under which AFDC funds are distributed are 18 N.Y.C.R.R. § 352.30(d), which reduces the maximum shelter allowance available to a recipient family pro rata to the extent that there are noneligible lodgers living in the household, and 18 N.Y.C.R.R. § 352.31(a) (3)(iv), which treats a man living with a female recipient but not married to her as a “lodger.” Plaintiffs Hurley, Taylor and Otey challenged these regulations in separate actions in two federal district courts as creating a conclusive presumption offensive to due process, as denying them the equal protection of the laws, and as invading their rights to privacy and free association. They also claimed that the regulations are in effect “substitute parent” regulations forbidden for state plans by section 406(a) of the Social Security Act and 45 C.F.R. § 233.90(a) (1973). The single district judge upheld the statutory claims and thus found it unnecessary to consider whether a court of three judges should be convened under 28 U.S.C. § 2281. The New York regulations in question provide as follows: “When a female applicant or recipient is living with a man to whom she is not married . . . his available income and resources shall be applied in accordance with the following: “(iv) When the man is unwilling to assume responsibility for the woman or her children, and there are no children of which he is the acknowledged or adjudicated father, he shall be treated as a lodger in accordance with — 1211 — section 352.30(d).”1 18 N.Y.C.R.R. § 352.31(a)(3). “A non-legally responsible relative or unrelated person in the household, who is not applying for nor receiving public assistance shall not be included in the budget and shall be deemed to be a lodger or boarding lodger. In the event a lodger does not contribute at least $15 per month, the family’s shelter allowance including fuel for heating, shall be a pro rata share of the regular shelter allowance.” 18 N.Y.C.R.R. § 352.30(d). 45 C.F.R. § 233.90(a) (1973) provides as follows: “A State plan under title IV-A of the Social Security Act [relating to the AFDC program] must provide that the determination whether a child has been deprived of parental support or care by reason of the death, continued absence from the home, or physical or mental incapacity of a parent, or (if the State plan includes such cases) the unemployment of his father, will be made only in relation to the child’s natural or adoptive parent, or in relation to the child’s stepparent who is ceremonially married to the child’s natural or adoptive parent and is legally obligated to support the child under State law of general applicability which requires stepparents to support stepchildren to the same extend [sic] that natural or adoptive parents are required to support their children. Under this requirement, the inclusion in the family, or the presence in the home, of a ‘substitute parent’ or ‘man-in-the-house’ or any individual other than one described in this paragraph is not an acceptable basis for a finding of ineligibility or for assuming the availability of income by the State. In establishing financial eligibility and the amount of the assistance payment, only such net income as is actually available for current use on a regular basis will be considered, and the income only of the parent described in the first sentence of this paragraph will be considered available for children in the household in the absence of proof of actual contributions.” The district court in each of the two cases found the New York regulations offensive to the Social Security Act and 45 C.F.R. § 233.90(a), and accordingly granted declaratory and injunctive relief. We reverse and remand for the convening of a three-judge court to consider the constitutional issues raised by the appellees. I. The facts in both cases are uncontroverted. A. Hurley v. Van Lare. Appellee Rose Hurley lives with her three dependent children, aged ten, five and five years, in Mount Vernon, New York. She and her children have been living apart from her husband since 1967; she has had no contact with him since 1967 and does not know where he is. The Hurleys receive public assistance under the New York AFDC plan as it is administered by the Westchester County Department of Social Services. During the four-month period from November 1970 to February 1971, an unrelated male friend of Mrs. Hurley stayed with her and her children at their Mount Vernon residence. The friend was under no legal obligation to support the Hurleys, and in fact he made no contribution to their support. His presence did not increase the amount of rent that Hurley was obliged to pay, $150.00 per month. During the same four-month period, the Westchester Department of — 1212 — Social Services deducted $35 per month from Hurley’s recurring AFDC grant, presumably in accordance with 18 N.Y.C.R.R. § 352.30(d). On November 12, 1970, Hurley requested a “Fair Hearing,” a proceeding provided for in 18 N.Y.C.R.R. §§ 358.1-358.27, to review the reduction of her AFDC grant. A hearing was held on March 22, 1971, and on September 20, 1971, appellant Van Lare, the Acting State Commissioner of the Department of Social Services, rendered a “Decision after Fair Hearing” in which he found the facts to be substantially as stated above. He upheld the determination of the Westchester County Department that Hurley’s grant should be reduced, but diminished the amount of the reduction to $30.00. Thereafter, on August 11, 1972, Hurley brought an action in the District Court for the Southern District of New York on behalf of herself and all others similarly affected by sections 352.-31(a)(3) (iv) and 352.30(d) to secure declaratory relief, an injunction against enforcement of the regulations, and judgment for retroactive AFDC payments. Defendants Van Lare and Lavine, appellants here, are respectively Acting Commissioner and Commissioner of the Department of Social Services of New York, and defendant Kurtis is Commissioner of Social Services for Westchester County. Hurley based her demand for an injunction on the theory that she has not associated with her friend out of fear that her public assistance grant will be reduced, as it was in November 1970, by the enforcement of sections 352.-31(a)(3)(iv) and 352.30(d). She contended that the regulations are offensive to the Due Process and Equal Protection Clauses of the Fourteenth Amendment, that they are in violation of her rights of privacy and free association, and that they are invalid under sections 402 and 406 of the Social Security Act, 42 U.S.C. §§ 602, 606 (1970), and 45 C.F.R. § 233.90(a). The district court did not convene a three-judge court under 28 U.S.C. § 2284 (1970) to consider the merits of the constitutional claims. See 28 U.S.C. § 2281 (1970). But the district court determined that at least the Due Process claim is sufficiently substantial to vest the court with subject matter jurisdiction under 28 U.S.C. § 1343(3) (1970), and that under the doctrine of pendent subject matter jurisdiction it had the power to decide the statutory claim. On Hurley’s motion for summary judgment, the district court held that the New York regulations violate section 406 of the Social Security Act and 45 C. F.R. § 233.90(a), as interpreted by the Supreme Court in King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968), and Lewis v. Martin, 397 U.S. 552, 90 S.Ct. 1282, 25 L.Ed.2d 561 (1970): “[T]he inevitable result of these regulations is to reduce, perhaps drastically, the stipend for those who are eligible. In the case of a mother with one child, for example, the presence of a non-contributing male lodger would reduce the rental stipend by 33%%. This devastating reduction means in practice that rental payments must be met out of that portion of the welfare stipend allotted for food and clothing. “The [New York] regulations thus conflict directly with § 233.90 Despite the defendants’ protestations to the contrary, a pro rata reduction does indeed assume that the male lodger will pay his own way, whether or not he actually does. That is precisely the assumption found impermissible in King and Lewis.” 365 F.Supp. at 186. In granting summary judgment, the district court gave declaratory relief and enjoined appellants from enforcing the challenged regulations, but denied Hur — 1213 — ley’s claim for retroactive welfare payments.2 The district court also granted Hurley’s motion that the action be designated a class action under Rule 23(c). The appellants have appealed the order granting the summary judgment and class action motions, and Hurley has appealed the denial of retroactive benefits. B. Taylor and Otey v. Lavine. Annie Taylor, her six-year-old child, and her sister, Virginia Taylor, live together in Freeport, Long Island. Annie Taylor and her child receive public assistance under the New York AFDC program as it is administered by the Nassau County Department of Social Services. Prior to January 1, 1973, the sister had received aid under the state home relief program, but after that date she received no public assistance. The sister is under no legal obligation to support Annie Taylor or her child, and she in fact makes no contribution to Taylor’s $180 monthly rental. Prior to January 1, 1973, the three Taylors were receiving $155 per month in shelter allowance, the maximum allowance available for a household of three persons according to a schedule issued by the Nassau County Department of Social Services. When the sister was dropped from the home relief program, Annie Taylor’s shelter allowance was reduced to $110.00, two-thirds of $155, under 18 N.Y.C.R.R. § 352.30(d). Taylor requested the maximum shelter allowance for two persons, $145.-00. Her request was denied. She demanded and received a “Fair Hearing” at which facts were found substantially in accordance with the foregoing statement. Because the diminished shelter allowance was not enough to pay her rent, Taylor fell behind in her rental payments and was eventually the subject of an eviction order.3 Plaintiff Charlotte Otey and her thirteen-year-old son, like the Taylors, reside in Freeport, and are recipients of AFDC aid. When Otey’s 23-year-old son, not a public assistance recipient, moved into the Otey apartment in October, 1972, Otey’s shelter allowance was reduced from $145.00, the maximum allowance for two people, to $96.65, two-thirds of the maximum. Otey demanded an opportunity for a “Fair Hearing,” which was granted, but she failed to appear. Taylor and Otey brought an action in the Eastern District of New York, making claims similar to those asserted in Hurley v. Van Lare, and seeking similar relief, except that they did not contest the validity of 18 N.Y.C.R.R. § 352.31(a) (3) (iv). Defendant Shuart is Commissioner of the Department of Social Services of Nassau County. The district court granted the plaintiff’s motion for summary judgment, and gave the declaratory and injunctive relief sought, adopting the Hurley district court’s “reasoning on class action status, jurisdiction, inconsistency of the state regulation and injunctive relief. .” It denied retroactive AFDC payments. Lavine and Shuart appeal from the summary judgment. — 1214 — II. Without passing on the constitutional claims, we agree they are sufficiently substantial to support jurisdiction under the liberal test the Supreme Court has recently announced in Goosby v. Osser, 409 U.S. 512, 93 S.Ct. 854, 35 L.Ed.2d 36 (1973). Where the constitutional claim is sufficient to vest the district court with jurisdiction, it is proper for a single judge to decide the statutory question under pendent jurisdiction, Hagans v. Lavine, 415 U.S. 528, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974), and, if he sustains it, to defer requesting a three-judge court under 28 U.S.C. § 2281, pending review. Hurley, Taylor and Otey base their claim that the New York regulations are contrary to federal law on two Supreme Court decisions: King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968), and Lewis v. Martin, 397 U.S. 552, 90 S.Ct. 1282, 25 L.Ed.2d 561 (1970). On careful consideration of these cases, it is clear that neither justifies the district courts’ interference with New York’s program for distributing AFDC grants. In King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1970), Alabama AFDC recipients brought an action to enjoin enforcement of a state regulation which provided that “an ‘able-bodied man, married or single, is considered a substitute father of all the children of the applicant mother’ ... if ‘he lives in the home with the child’s natural or adoptive mother for the purpose of cohabitation.’ ” 392 U.S. at 313-314 (emphasis deleted). The effect of the regulation under Alabama law was to remove the family from the category of aid recipients created by section 406(a) of the Social Security Act: because of the presence of the “substitute father,” Alabama presumed that there was no “continued absence . . . of a parent.” 42 U.S.C. § 606(a) (1970). The Supreme Court held that the Alabama rule “defines ‘parent’ in a manner that is inconsistent with § 406(a) of the Social Security Act.” 392 U.S. at 333. Reasoning that the purpose of the federal AFDC program is to protect and benefit needy and dependent children, the Court said that “the only kind of ‘parent,’ under § 406(a), whose presence in the home would provide adequate economic protection for a dependent child is one who is legally obligated to support him.” 392 U.S. at 332. Alabama asserted that two state governmental interests were advanced by the substitute father rule: the state’s interest in discouraging meretricious sexual relationships, and the state’s interest in allocating its share of AFDC funds according to the needs of its citizens. As to the first interest, the Supreme Court allowed that states generally have broad discretion in regulating sexual behavior outside of marriage, but held after examining the legislative history of the Social Security Act that Congress did not intend section 406(a) to be a lever in the hands of state legislators to compel compliance with local standards of moral conduct. 392 U.S. at 320-327. As to the second interest, the Court granted that Alabama had the power to set the level of benefits and standard of need under its plan, but held that in determining need it must account for the actual resources of the child. 392 U.S. at 332. In one sense, the King holding does not bear directly on the instant case. Unlike the Alabama substitute father regulation, the New York regulation does not presume to define “parent” artificially to deny eligibility to the family housing a lodger. The meaning of the term “parent” as it is used in section 406(a) is therefore not directly at issue. The New York regulation merely determines the level of payment to the eligible family on the basis of the presence or absence of a lodger in the recipient household. This method of computing shelter allowance is permitted under the King v. Smith rationale if it is not designed to vindicate a moral interest un — 1215 — related to the need of the family, and it realistically determines the level of need. As to the first point, it is clear that there is not the punitive aspect to the New York regulation that there was in the Alabama substitute father regulation. This is not a case of New York trying to impose “middle class morality” on the welfare recipient, using AFDC as an instrument of social control. This fact is illustrated by the Otey and Taylor cases, cases in which the shelter allowances were reduced because of the presence of persons other than the mother’s paramour in the recipient household. The appellees’ claim that sections 352.-30(d) and 352.31(a) (3) (iv) offend the principle in King v. Smith thus stands or falls on their assertion that the regulations create a conclusive presumption of lodger contribution to the AFDC unit’s rental expense, and that this presumption does not account for the actual needs of the AFDC-eligible family. if Under the long-standing administrative interpretation of section 402(a)(7) of the Social Security Act, only real sources of income may be considered by the state in determining need. The most recent embodiment of that interpretation, section 233.90(a) of the Health, Education and Welfare regulations governing the content of state plans, clearly states that the presence of any individual except a person legally obliged to support the child “is not an acceptable basis for a finding of ineligibility or for assuming the availability of income by the State.” Any doubt remaining on the issue was removed by the Supreme Court’s holding in Lewis v. Martin, 397 U.S. 552, 90 S.Ct. 1282, 25 L.Ed.2d 561 (1970), that section 233.90(a) precluded California from attributing income to an AFDC-eligible child from a non-adopting stepfather who had no duty of support under state law. Although we agree that federal law prohibits a conclusive presumption of support, we do not agree that the New York regulations here in question imply such a presumption. The regulations imply only that the lodger’s presence evidences the recipient family’s diminished need for housing space. Section 352.30(d) does not attribute a nonexistent obligation of support to the lodger, nor does it deny the AFDC-recipient children or caretaker their share of the actual housing expenditures. Prorating housing costs between the recipient and non-recipient simply reflects the separability of the need of the AFDC-eligible family members from the needs of persons who have not demonstrated their eligibility for public assistance. Indeed, if a section 352.30(d) lodger can separately demonstrate his eligibility for public aid, the AFDC shelter allowance is increased to include his share, a principle illustrated by the Taylor case. See note 3, supra. Appellees have attempted to justify their position by incanting the words “conclusive presumption of contribution.” But it is clear that the New York regulations are based on the fair inference from the presence of the lodger in the household that the AFDC-recipient family actually needs less space for its own use than it is paying rent for. Appellees do not dispute that in the event an eligible family chooses to live as lodgers in a portion of a non-eligible person’s house, the state may pay only the eligible family’s pro rata share of the total rent, regardless of contribution, without offending federal law: the recipient family would be due shelter allowance only for that portion of the house they were actually using. The outcome is no different when the AFDC family uses a portion of its own premises to house a non-eligible person, whether or not that person contributes to the rent. Prorating housing expenses among recipients and nonrecipients of public aid accounts for the economies of scale that are realized when individuals live in groups; per-individual housing costs decrease as the number of individuals living together increases. In the Hurley case, for example, Hurley, her three children, and her lodger can live at a lower per capita housing cost than can Hurley — 1216 — and her children alone. Thus, the New York scheme does not attribute a false duty of support or a false source of income, but rather accounts for the actual cost of housing to an AFDC-reeipient family.4 The New York regulations have a more limited objective than those held invalid in Kings and Lewis. The objective of section 352.30(d) is to insure that all of the beneficiaries of an AFDC grant are entitled to enjoy it. Unlike the Alabama and California regulations, the New York regulations do not cut off all aid to families having non-eligible persons in their households. They merely prevent non-eligible persons from benefitting from free living space.5 New York’s interest in preventing non-eligible persons from sharing in AFDC benefits is coextensive with the federal interest in allocating AFDC appropriations only to eligible persons. Section 402(a) (10) of the Social Security Act, 42 U.S.C. § 602(a) (10) (1970), states that aid must be furnished “with reasonable promptness to all eligible individuals,” language necessarily implying that aid should not be furnished to non-eligible individuals. Reversed and remanded. Footnotes [1] In the version of 18 N.Y.C.R.R.. before the district courts, 18 N.Y.C.R.R. § 352.-31(a) (3) (iv) referred to section 352.30(c), rather than to section 352.30(d). The Hurley district court held that the reference was erroneous, that it should have been to seetion 352.30(d). 365 F.Supp. 186 at n. 1. Appellants, state officials entrusted with administering the regulation, did not contest that determination. The text of section 352.31 (a) (3) (iv) was amended effective April 2, 1973, to refer to section 352.30(d). [2] The district courts properly denied retroactive payments, relying on our decision in Rothstein v. Wyman, 467 F.2d 226, 235 (2d Cir. 1972), cert. denied, 411 U.S. 921, 93 S.Ct. 1552, 36 L.Ed.2d 315 (1973), which has recently been approved by the Supreme Court in Edelman v. Jordan, 415 US. 651, 664, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). [3] The eviction order was nullified when Taylor paid her overdue rent out of the proceeds of her April 1973 grant, a grant increased to the pre-January 1, 1973, level because of the fact that her sister began to receive aid under the joint federal-state Aid to the Disabled Program on March 14, 1973. On the basis of the limited record before us we do not decide whether Taylor’s claim for declaratory and injunctive relief is moot. On remand, the district court should consider whether her claim presents a justiciable controversy. See Hall v. Beals, 396 U.S. 45, 48, 90 S.Ct. 200, 24 L.Ed.2d 214 (1969); Golden v. Zwickler, 394 U.S. 103, 108, 89 S.Ct. 956, 22 L.Ed.2d 113 (1969). [4] In preparing for these appeals, the New York Department of Social Services addressed a letter to the Regional Attorney of the Social and Rehabilitation Service of the Department of Health, Education & Welfare containing a request for an opinion on the following question: “Is a state policy of prorating a shelter allowance so as to reflect the percentage of public assistance recipients residing in a household valid under 45 OPR 233.90?” The response of the Regional Commissioner of the Department was available a short time after these appeals were argued : “ . . . HEW has permitted states to prorate shelter allowances to reflect the percentage of public assistance recipients in a household. Such a proration is not considered an assumption of income, but rather a recognition that per-individual costs decrease as the number of individuals living together increases.” [5] In Battle v. Lavine, 44 A.D.2d 307, 354 N.Y.S.2d 680 (2d Dep’t 1974), the Appellate Division held that the regulation prorating shelter allowance violated 45 C.P.R. § 233.-90. Solely on the authority of the district court’s decision in Hurley v. Van Lare, it rejected the proposition that the purpose of the New York regulation is to prevent non-eligible persons from benefiting from shelter allowance payments. Since we reverse Hurley v. Van Lare, we do not give any weight to the Appellant Division’s holding.