Baum v. Madigan

• Decision Date: 16 November 1992
• Docket Number: Nos. 91-3912,91-3913,91-3946 and 91-3947,s. 91-3912
• Citation: 979 F.2d 438
• Parties: Robin BAUM, individually and on behalf of all others similarly situated, Plaintiffs-Appellees/Cross-Appellants (91-3947), Emma Detillion and Sheila Lawson, Intervenor Plaintiffs-Appellees/Cross-Appellants (91-3947), v. Edward R. MADIGAN (91-3913), Terry A. Wallace (91-3946), and John J. Witkosky (91-3912), in their official capacities, Defendants-Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 438

979 F.2d 438

Robin BAUM, individually and on behalf of all others similarly situated Plaintiffs-Appellees/Cross-Appellants (91-3947) Emma Detillion and Sheila Lawson, Intervenor Plaintiffs-Appellees/Cross-Appellants (91-3947), v. Edward R. MADIGAN (91-3913), Terry A. Wallace (91-3946), and John J. Witkosky (91-3912), in their official capacities, Defendants-Appellants/Cross-Appellees.

Nos. 91-3912, 91-3913, 91-3946 and 91-3947.

United States Court of Appeals Sixth Circuit.

Argued Oct. 8, 1992.

Decided Nov. 16, 1992.

Peter M. Iskin (argued and briefed), Robert H. Bonthius, Jr., Legal Aid Society of Cleveland, Cleveland, Ohio, for Robin Baum, Emma Detillion and Sheila Lawson.

Michael Anne Johnson, Alexander A. Rokakis and Kathleen A. Sutula, Asst. U.S. Attys., Cleveland, Ohio, Christine N. Kohl (argued and briefed), Barbara C. Biddle, U.S. Dept. of Justice, Civil Div., Appellate Staff, Washington, D.C., for Edward R. Madigan.

Kent M. Graham, David W. Norris, Roxana R. Lyle (briefed), Pros. Attorney's Office, for the County of Portage, Ravenna, Ohio, for John J. Witkosky.

Alan Schwepe (argued and briefed), Columbus, Ohio, for Terry A. Wallace.

Before: MILBURN and NORRIS, Circuit Judges; and LIVELY, Senior Circuit Judge.

MILBURN, Circuit Judge.

Defendants Edward R. Madigan, Secretary of the United States Department of Agriculture; Terry A. Wallace, Director of the Ohio Department of Human Services; and John J. Witkosky, Administrator of the Portage County Department of Human Services, appeal from the district court's decision granting summary judgment to plaintiffs Robin Baum, Emma Detillion, and Sheila Lawson on their claim that the utility reimbursements paid directly to them by check did not constitute income for purposes of calculating their food stamp benefits under the Food Stamp Act, 7 U.S.C. § 2011 et seq. Plaintiffs cross-appeal from the district court's decision insofar as it denied them summary judgment on their claims for a retroactive award of food stamp benefits and for class certification under Federal Rule of Civil Procedure 23.

The issue presented by defendants' appeal is whether the utility reimbursement payments plaintiffs received through certain federally assisted low income housing programs are excluded from income under 7 U.S.C. § 2014(d)(1) for the purpose of calculating plaintiffs' eligibility for food stamp benefits. The issues presented by plaintiffs' cross-appeal are (1) whether plaintiffs are entitled to retroactive relief under 7 U.S.C. §§ 2020(p) and 2023(b), and (2) whether plaintiffs are entitled to class certification under Fed.R.Civ.P. 23. This is a case of first impression in this circuit. For the reasons that follow, we reverse and remand.

I.

The facts are not in dispute. Plaintiffs are public housing tenants and food stamp recipients. The United States Housing Act ("USHA"), 42 U.S.C. §§ 1437-1437j, provides low income families with rental units in facilities operated by public housing agencies ("PHA"). The Brooke Amendment to the USHA, 42 U.S.C. § 1437a(a)(1), sets the rent for a tenant in a public housing facility at approximately thirty percent of the household's monthly adjusted income.

In many public housing facilities, utility usage is not metered at the individual household level, and the PHA pays the utility charges on behalf of all the tenants. The tenant in such a facility makes only a rent payment to the landlord, and that payment covers both rent and utilities. In other public housing facilities, however, the Department of Housing and Urban Development ("HUD") requires individual metering at each household to encourage the conservation of energy. Where households are individually metered, utilities may be paid for by one of two methods. Under the first method, the PHA pays the supplier for utilities and surcharges the tenant to the extent that the tenant's utility usage exceeds a preset allowance considered reasonable by the PHA. Under the second method, the tenant is responsible for purchasing utility services directly from the supplier. The PHA sets a utility allowance ("UA") by estimating "the monthly cost of a reasonable consumption of such utilities and other services for the [tenant] unit by an energy-conservative household of modest circumstances consistent with the requirements of a safe, sanitary, and healthful living environment." 24 C.F.R. § 913.102.

In the latter case in which the tenant purchases utilities directly, the amount of the UA is credited to the tenant's rent with the result that the tenant actually pays the PHA only the difference between the rent and the UA. For example, under the Brooke Amendment a household with an adjusted monthly income of $500.00 would be charged $150.00 rent (thirty percent of adjusted monthly income). If the UA for that household in that area were $100.00, the tenant would pay the PHA only $50.00 in rent, which is the difference between the rent and the UA.

At times, however, the UA may be greater than the rent. For example, a household with a monthly income of $250.00 would theoretically owe rent of $75.00. If the UA were $100.00, the UA would exceed the rent by $25.00. Under these circumstances, the UA would be credited to the rent, thus extinguishing that obligation, and the tenant would receive a utility reimbursement ("UR") of $25.00 in the form of a check made payable to the tenant. ¹ See 24 C.F.R. § 913.102. Whether or not the UA exceeds a tenant's Brooke Amendment rent, the tenant is responsible for paying the household's utility bills. If the household conserves energy, it may profit to the extent that the UR exceeds the household's actual utility charges because tenants are not legally required to use the UR in payment of utility charges, and they may lawfully spend the money as they please.

The other government program involved in this case is the food stamp program established by the Food Stamp Act, 7 U.S.C. § 2011 et seq. State agencies administer the program on behalf of the Secretary of Agriculture ("Secretary") and are reimbursed approximately fifty percent of their administrative costs. The amount of food stamps to which a household is entitled is determined by the household's income: the lower the income, the greater the benefits. Household income is defined in 7 U.S.C. § 2014(d) to include "all income from whatever source...." There are sixteen exclusions from income under this statute, the first of which provides for the exclusion of "any gain or benefit which is not in the form of money payable directly to a household...." ²

In regulations promulgated to implement the Food Stamp Act, the Secretary of Agriculture has provided that "[a]ny gain or benefit which is not in the form of money payable directly to the household, including nonmonetary or in-kind benefits, such as meals, clothing, public housing, or produce from a garden, and vendor payments," is excluded from income. 7 C.F.R. § 273.9(c)(1). "Vendor payments" are defined as "[m]oney payments that are not payable directly to a household, but are paid to a third party for a household expense...." Id. The regulations also provide, however, that "[p]ayments in money that are not made to a third party, but are made directly to the household, are counted as income and are not excluded as a vendor payment...." 7 C.F.R. § 273.9(c)(1)(iii).

Plaintiffs reside in federally assisted housing in Portage and Pike Counties, Ohio. Their rental units have individual metering for certain utilities which they purchase directly from the supplier. They are therefore entitled to a utility allowance under HUD regulations. The plaintiffs receive monthly utility reimbursements in the form of checks made payable to them because their Brooke Amendment rent (thirty percent of adjusted monthly income) is less than the set UA. Plaintiffs also receive food stamps, but because the Secretary of Agriculture counts plaintiffs' URs as household income, they receive fewer food stamps than they would if the URs were not counted as income.

In their complaints, plaintiffs claimed that this practice violated three different provisions of the Food Stamp Act, 7 U.S.C. §§ 2014(d)(1), 2014(d)(5), and 2014(d)(6). They also alleged violations of the United States Housing Act, the Administrative Procedure Act, and the equal protection guarantees of the Fifth and Fourteenth Amendments to the United States Constitution. On cross-motions for summary judgment, the district court concluded that the Secretary's practice of counting URs as income violated 7 U.S.C. § 2014(d)(1). ³ It prohibited the Secretary from counting as income that portion of a UR allocable to the payment of actual utility expenses, and it ordered the Secretary to estimate the household's utility expenses for the purpose of determining income. The district court did not address any of the other claims raised by plaintiffs, and those are not now before this court.

The district court also ruled that plaintiffs were not entitled to an award of retroactive benefits because the Eleventh Amendment barred such an award against the state and county defendants. As to the Secretary of Agriculture, the district court held that "7 U.S.C. § 2023(b) does not specifically require an award of retroactive benefits but limits the amount of an award if the Court concludes that a retroactive award is appropriate." J.A. 93. The court determined that such an award was not appropriate because the goal of the food stamp program--to enable lower income families to obtain a nutritionally adequate diet--could not be accomplished by a retroactive award that might benefit persons who no longer needed assistance. The court also denied plaintiffs' motion for class certification because no useful purpose could be served by certification, and the putative members of the class would receive the benefits of the court's prospective declaratory and injunctive relief whether they were members of a class or not. These timely...