Ridgely v. Federal Emergency Management Agency

Decision Date04 January 2008
Docket NumberNo. 07-30615.,07-30615.
Citation512 F.3d 727
PartiesDiane RIDGELY; Judy Sturken; David Bellinger; Tamica Dickson, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs—Appellees, v. FEDERAL EMERGENCY MANAGMENT AGENCY; United States Department of Homeland Security; Michael Chertoff, Secretary, Department of Homeland Security; R. David Paulison, Administrator of the Federal Emergency Management Agency; and their successors in office, Defendants— Appellants.
CourtU.S. Court of Appeals — Fifth Circuit

Gotshal & Manges, New York City, Lisa Royce Eskow, Meredith Bishop Parenti, Weil, Gotshal & Manges, Austin, TX, Angela Schwartz, Pub. Interest Law Project, Oakland, CA, for Plaintiffs-Appellees.

Alisa Beth Klein, Mark Bernard Stern, Eric Fleisig-Greene (argued), U.S. Dept. of Justice, Civ. Rights Div., Washington, DC, for Defendants-Appellants.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before KING, BARKSDALE and DENNIS, Circuit Judges.

KING, Circuit Judge:

Plaintiffs, a class of individuals who received rental assistance payments froth the federal government after Hurricanes Katrina and Rita, brought suit alleging various constitutional and statutory deficiencies in the process by which the rental assistance program is administered. In this interlocutory appeal, the Federal Emergency Management Agency challenges the district court's entry of a preliminary injunction requiring the agency to make payments to class members until certain notice, hearing, and appeal procedures have been provided. For the following reasons, we VACATE the challenged provisions of the preliminary injunction and REMAND for further proceedings.

I.

In the aftermath of Hurricanes Katrina and Rita, the Federal Emergency Management Agency ("FEMA") has provided awards of "rental assistance" to individuals displaced from their homes on account of either storm. These awards consist of payments that recipients are to use to rent alternate housing. FEMA's practice has been to award rental assistance in a single payment designed to cover rent for three months. If a recipient is in need of assistance beyond this three month period, he may apply for additional awards, known as "continued rent assistance," which are also made in three month allotments. This appeal concerns alleged due process violations in the process by which FEMA makes eligibility determinations for these additional awards.

FEMA's provision of rental assistance is governed by the Stafford Act, 42 U.S.C. § 5121 et seq., and its implementing regulations. Under section 408 of the Stafford Act, an individual is eligible for rental assistance if he has been displaced from his home or his home has been rendered uninhabitable as a result of a major disaster. See 42 U.S.C. § 5174(b)(1). FEMA's implementing regulations establish additional eligibility criteria for individuals seeking an award of rental assistance or continued rent assistance. See 44 C.F.R. §§ 206.113; 206.114.1

When an individual first applies for assistance from FEMA after a disaster, the agency typically conducts an inspection of the applicant's residence. In the aftermath of Katrina and Rita, though, FEMA waived this home inspection requirement for applicants with pre-disaster residences in the most severely damaged areas, and simply provided each eligible applicant from those areas with a rental assistance award of $2,358, In other areas that were accessible for inspection, eligible applicants received awards in amounts based on a fair market rent valuation. Recipients were informed that the awards were intended to cover rent for three months, but that they could apply for additional awards in the future if necessary.

Owing to the massive devastation caused by Katrina and Rita, many recipients of rental assistance could not return to their pre-disaster residences or otherwise find permanent housing within the three months covered by their initial awards, and indeed some remain unable to do so. Accordingly, these individuals have found it necessary to apply for multiple awards of continued rent assistance. Each time they seek an additional award, they must comply with certain requirements. Pursuant to FEMA's regulations, they must establish a realistic housing plan and submit documentation showing their efforts to obtain permanent housing, provide past rent receipts to show that they have exhausted funds previously received from FE MA, and submit documentation showing a continuing need for assistance. See id. § 206.114. FEMA refers to this as the "recertification" process.

In its actual practices, FEMA has at times simplified or relaxed the recertification requirements for victims of Katrina and Rita. During the first round of recertifications in late November 2005, for example, FEMA required only a signed document stating that the applicant had used up his initial award and was in need of continued assistance. At other times, FEMA has required fuller documentation, including rent receipts. And on one occasion, FEMA waived the recertification requirements entirely and provided an award of continued rent assistance to every individual who had been deemed eligible during the previous recertification.2

The four named plaintiffs received awards of rental assistance from FEMA after they were displaced from their. homes by Katrina, but were later found ineligible for continued rent assistance. On behalf of themselves and a class of similarly situated individuals,3 they filed this suit in the Eastern District of Louisiana, alleging that FEMA administers the rental assistance program in an arbitrary and inconsistent manner in violation of the due process clause, the Administrative Procedure Act, and the Stafford Act. Their complaint specifically charged that FEMA: (1) denies applications for continued rent assistance by issuing notices containing only confusing codes, instead of understandable explanations; (2) operates an unresponsive system that precludes effective challenges to FEMA decisionmaking before the loss of assistance; and (3) fails to publish eligibility standards. Plaintiffs requested a declaratory judgment and permanent injunction.

Before FEMA could answer the complaint, plaintiffs moved for class certification and for a preliminary injunction. The district court entertained oral argument on these motions, but did not conduct an evidentiary hearing. Plaintiffs submitted a variety of materials to the court in, support of their motions, including declarations from the named plaintiffs and other individuals describing their experiences with' FE MA, as well as records of correspondence with FEMA. FEMA submitted a declaration explaining its administration of the rental assistance program. Additionally, as part of its motion to alter or stay the preliminary injunction, FEMA submitted a second declaration and a number of sample letters, notices, and other documents relating to the rental assistance program. On the whole, it is not an exaggeration to say that the materials submitted by the parties, together with the pleadings, paint two very different pictures of FEMA's administration of the rental assistance program.

On July 13, 2007, the district court granted class certification and issued a preliminary injunction as requested. The provisions of the preliminary injunction relevant to this appeal enjoin FEMA from:

1. Terminating or discontinuing Section 408 assistance to any Section 408 class member without providing ... advance written notice of the reason(s) for the termination or discontinuance;

2. Terminating or discontinuing Section 408 assistance prior to issuance of a written decision on the class member's appeal ...;

3. Failing to provide written notice to any Section 408 class member with an appeal pending ... that they may have their assistance reinstated upon request, until FEMA has provided them with adequate written notice of the reason(s) for termination, an opportunity for a hearing, and a decision on their appeal;

4. Failing to reinstate Section 408 assistance to any Section 408 class member whose appeal . . . is currently pending and who requests reinstatement, until such time as FEMA has provided ... adequate written notice of the reason(s) for termination, an opportunity for a hearing, and a written decision on their appeal.4

In granting the preliminary injunction, the court found that plaintiffs had established a likelihood of success on the merits of their due process claims.5 The court rejected FEMA's argument that plaintiffs lacked the property interest necessary to support a due process claim, and credited plaintiffs' contention that FEMA's existing procedures are inadequate. We reproduce here, in its entirety, the district court's analysis on the question of whether plaintiffs could show a property interest.

[FEMA] also argue[s] that the plaintiffs have failed to state a due process claim because they do not possess a prothctable property interest in "continuing" Section 408 benefits because, in the end, FEMA retains absolute discretion as to the initial receipt and termination of Section 408 benefits. [citation to record omitted] The plaintiffs have all been deemed eligible to receive Section 408 benefits. The Court finds that the fact that the eligibility must be continuing does not deprive the plaintiffs of the property right incurred with their "legitimate claim of entitlement to it." [Bel. of Regents of State Coils. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).] The Court sees no relevant difference between the plaintiffs' property rights to Section 408 benefits and those rights belonging to the plaintiffs in [Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976)] (social security [disability] benefits), Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) (welfare), Thompson v. Washington...

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