Swan v. Stoneman

Citation635 F.2d 97
Decision Date17 October 1980
Docket NumberNo. 1080,D,1080
PartiesJohn L. SWAN, on behalf of himself and on behalf of all others similarly situated, Plaintiff-Appellant, and Paul E. Ambrose, Richard W. Bowley and Linda J. Gaudette, Intervenors- Appellants, v. R. Kent STONEMAN, Commissioner of the Department of Social and Rehabilitation Services, State of Vermont, Defendant-Appellee. ocket 79-7729.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

James C. May, Springfield, Vt. (Neil Mickenberg, Vermont Legal Aid, Inc., Springfield, Vermont, on brief), for intervenors-appellants.

Geoffrey A. Yudien, Asst. Atty. Gen., Waterbury, Vt. (M. Jerome Diamond, Atty. Gen., Waterbury, Vt., on brief), for defendant-appellee.

Before LUMBARD, VAN GRAAFEILAND and KEARSE, Circuit Judges.

KEARSE, Circuit Judge:

The action giving rise to this appeal was commenced by plaintiff John Swan on February 2, 1979, seeking declaratory and injunctive relief under 42 U.S.C. § 1983 on behalf of himself and all others similarly situated, on the grounds that certain practices and procedures of the Vermont Department of Social and Rehabilitation Services deprived the purported class of rights under the federal Rehabilitation Act of 1973 and the Due Process Clause of the Fourteenth Amendment. Jurisdiction was alleged under 28 U.S.C. §§ 1343(3) and (4) (1976). 1 On May 24, Paul E. Ambrose, Richard W. Bowley and Linda J. Gaudette moved for leave to intervene pursuant to Fed.R.Civ.P. 24(b). Three days later, Swan died.

On September 12, 1979, the district court denied class certification and granted defendant's motion to dismiss on the grounds that the deceased plaintiff could not represent the class, that the court lacked jurisdiction over the proposed claims of Bowley and Gaudette, and that Ambrose had failed to exhaust state administrative remedies. Since we conclude that the exhaustion doctrine does not bar Ambrose's due process claim, we reverse the dismissal as to Ambrose and remand to the district court for further proceedings.

I

The Rehabilitation Act of 1973 (the "Act"), 29 U.S.C. § 701 et seq. (1976 and Supp. II 1978), established a program to provide federal funds, through state agencies, for the training of physically or mentally handicapped persons, with a view to enabling such persons to obtain gainful employment. The Act defines a handicapped individual, for purposes of rehabilitation services, as

any individual who (i) has a physical or mental disability which for such individual constitutes or results in a substantial handicap to employment and (ii) can reasonably be expected to benefit in terms of employability from vocational rehabilitation services....

29 U.S.C. § 706(7)(A). 2 Both the Act and the regulations promulgated thereunder by the Secretary of Health, Education, and Welfare (the "Secretary"), envision that there may be an extended period of evaluation, not exceeding eighteen months, during which rehabilitation services may be rendered with the aid of federal funds, before a determination is made as to the reasonable expectation that a given handicapped individual would benefit from vocational rehabilitation services. 29 U.S.C. §§ 706(5)(G), 723(a)(1), 731; 45 C.F.R. § 1361.36 (1979).

A state seeking funding under the Act must, inter alia, submit a plan and designate a state agency responsible for supervising and administering the plan. 29 U.S.C. § 721(a)(1)(A). Vermont has empowered its Department of Social and Rehabilitation Services (the "Department") to provide vocational rehabilitation for disabled persons and to "(c)ooperate with appropriate federal agencies in receiving federal funds in support of programs which the department administers." Vt.Stat.Ann. tit. 33, § 2595 (Supp.1979). The Department's Vocational Rehabilitation Division ("VRD") is responsible for administering Vermont's vocational rehabilitation program.

Under the Vermont plan, VRD may classify applicants as eligible or ineligible for rehabilitation services principally on the basis of their filed applications; or it may place them in an "extended evaluation" category for up to eighteen months. For applicants in the extended evaluation category, funding is provided for rehabilitation services during the evaluation period, giving VRD a better opportunity to assess whether such services are likely to result in employability.

The Plaintiff and the Intervenors

Swan was a man in his 30's who had suffered residual brain damage following removal of a brain tumor in 1974. In May 1977, Swan began rehabilitation therapy at the Woodstock Learning Clinic in Woodstock, Vermont, and applied to VRD for rehabilitation services. On June 23, 1977, VRD certified Swan for an extended evaluation period of up to eighteen months, and thereafter created an individual rehabilitation program for him and paid for his therapy sessions at Woodstock. In early November 1978, a VRD counselor advised Swan and his guardian, orally and by letter, that while Swan had made considerable progress in the program, his organic impairments were such that employability did not appear to be a reasonable possibility within the near future, and that VRD had therefore decided to discontinue Swan's rehabilitation program as of December 15, 1978. VRD's letter informed Swan that he could appeal from this decision, but did not indicate that he had any right to a hearing prior to the effectiveness of the decision. Funding for Swan was eventually terminated on December 22, 1978.

Swan commenced this action in February 1979 against the Commissioner of the Department, ("Commissioner"), contending that by failing to provide "pretermination hearings", VRD deprived him of rehabilitation benefits without due process of law. 3 The Commissioner has contended, inter alia, that since Swan had never been certified as eligible, his eligibility was never "terminated." Swan's contention, however, appears to be that a hearing is required before termination of any benefits, even benefits provided pursuant to extended evaluation status.

Swan brought the suit as a class action, and on March 1, 1979, he moved pursuant to Fed.R.Civ.P. 23(b), for certification of a class consisting of

All persons who have been declared ineligible for vocational rehabilitation services by defendant or his predecessors in office through the Vermont Vocational Rehabilitation Division since the effective date of the Rehabilitation Act of 1973, as well as all persons who are currently receiving vocational rehabilitation services from the defendant.

The proposed class would thus include all persons who, upon application, had been declared eligible, declared ineligible, or placed in extended evaluation status.

On May 24, 1979, Ambrose, Bowley and Gaudette moved for leave to intervene in the action as plaintiffs pursuant to Fed.R.Civ.P. 24(b), on the grounds that their claims were identical to those of Swan. They also sought to represent the class described by Swan.

Ambrose, in his proposed complaint, alleged that he had sought eligibility under VRD's program four times between 1974 and 1978. In response to his first application, dated January 14, 1974, he was placed in an "eligibility determination" status until June 17, 1974; 4 on the latter date, he was declared ineligible by a VRD rehabilitation assistant. Ambrose alleges that neither he nor his parents were afforded an opportunity for consultation prior to this determination or informed of their rights to a hearing. Ambrose applied for eligibility a second time on December 1, 1974, and on February 20, 1975, was accepted as an "extended evaluation" client. Benefits were discontinued by VRD on August 1, 1976, again allegedly without affording Ambrose or his parents "an opportunity for full consultation" or a hearing prior to termination of the benefits and without explanation as to the grounds for the decision. Ambrose filed his third application on April 6, 1977 and was placed in the "eligibility determination" category until January 10, 1978, when his file was closed. On April 15, 1978, he sought to apply a fourth time, but was told, on May 11, that he would have to demonstrate his initiative by performing volunteer work before VRD would consider reopening his case. On the basis of these facts, Ambrose, like Swan, alleged that the termination and denial of benefits to him without a prior hearing denied him due process. 5

The complaint which Bowley and Gaudette sought to file indicated that they, unlike Swan and Ambrose, had been certified by VRD as eligible for rehabilitation services and were still receiving benefits. Bowley and Gaudette alleged, however, that various VRD procedures conflicted with provisions of the Rehabilitation Act and thus violated the Supremacy Clause of the Constitution.

On May 27, before the court had ruled on Swan's class certification motion, Swan died.

The Motion to Dismiss and the Decision Below

Immediately after Swan's death, the Commissioner moved to dismiss the action on the grounds that Swan's death rendered his action moot and that both Swan and the proposed intervenors had failed to exhaust their administrative remedies. The exhaustion contention was based on provisions of the Vermont statutes which make available to disappointed applicants a hearing before the Vermont Human Services Board (the "Board"). Vt.Stat.Ann. tit. 3, § 3091 (Supp.1979). Section 3091(a) provides as follows:

An applicant for or a recipient of assistance, benefits or social services from the department of rehabilitation ... may file a request for a fair hearing with the human services board. An opportunity for a fair hearing will be granted to any individual requesting a hearing because his claim for assistance, benefits or services is denied, or is not acted upon with reasonable promptness; or because he is aggrieved by any other agency action affecting his receipt of assistance, benefits or services ...; or because he is aggrieved by agency policy...

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