Anderson v. Graham

Citation492 F.2d 986
Decision Date20 December 1973
Docket NumberNo. 73-1441,73-1466.,73-1441
PartiesFred ANDERSON, for himself and his minor children, et al., Appellants, v. Lawrence L. GRAHAM, Director of Public Welfare, Individually and in his official capacity, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Robert S. Catz, Legal Aid Society, Omaha, Neb., for appellants.

Richard K. Spencer, Lincoln, Neb., and E. D. Warnsholz, Asst. Atty. Gen., Lincoln, Neb., for appellee.

Before VAN OOSTERHOUT and MOORE*, Senior Circuit Judges, and WEBSTER, Circuit Judge.

VAN OOSTERHOUT, Senior Circuit Judge.

This action is brought by plaintiff Fred Anderson, a Nebraska Aid for Dependent Children (AFDC) recipient for himself, his minor children, and all others similarly situated, against Lawrence L. Graham, Nebraska Director of Public Welfare, individually and in his official capacity. Plaintiff's attack is directed at the Nebraska $25.00 standard business expense allowance for employed AFDC recipients who have incurred employment-related expenses exceeding $25.00. Jurisdiction is based on 42 U. S.C. § 1983.

Plaintiff seeks to enjoin the application of the Nebraska standard business expense allowance as being in violation of 42 U.S.C. § 602(a) (7) and the regulations promulgated thereunder. Plaintiff also seeks retroactive payment of AFDC benefits based upon a consideration of all reasonable work-related expenses actually incurred.

The Nebraska plan determines net income by the following method:

A. Determine gross earned income;
B. Subtract $30.00, plus one-third of the remainder as work incentive disregard, pursuant to 42 U.S.C. § 602(a)(8);
C. Subtract state income tax, federal income tax, and social security tax withholding;
D. Subtract actual necessary child care costs;
E. Subtract a work expense standard of $25.00 per employed person.

The result of this computation is the net income of the welfare recipient used to determine eligibility and the amount of AFDC payments due if any. The only item included in the foregoing computation in dispute is item "E", the standard work expense allowance of $25.00 given to each employed recipient. The deduction is standard throughout the State of Nebraska and includes the following categories:

1. Transportation to and from work and to and from a child care center or baby sitter;
2. union dues;
3. employee\'s fund, retirement, insurance, pensions, charity;
4. extra or special clothing, uniforms;
5. cost of materials, cosmetic supplies, booth rental;
6. cost of tools and equipment;
7. overhead business expenses;
8. licenses;
9. required contributions for employees benefits; and
10. special lunches while working.

This case was tried before Judge Urbom on motions for summary judgment filed by both parties. The record consists of pleadings, defendant's answer to plaintiff's request for admission of facts, plaintiff's answer to interrogatories affidavits and facts determined in an order based upon pretrial conference. Both parties state that there is no dispute as to material facts.

At a pretrial conference on November 24, 1972, counsel stipulated that the work-related expenses of the plaintiff Fred Anderson exceed $25.00 per month. Counsel agreed that the sole issue on the plaintiff's motion for a summary judgment is whether a state may standardize work-related expense in determining the amount of net income of employed AFDC recipients, without regard to the validity or the invalidity of any studies made by the state in formulating the standard.1

Anderson, an AFDC recipient, was employed at the Offutt Air Force Base. Prior to 1972 Anderson was receiving AFDC payments based upon his family's budgetary need. Anderson was a widower. His family consisted of four minor children, one of whom became eighteen years of age in 1972 and left home and became self-sustaining. On February 24, 1972, it was determined that the budgetary need no longer exceeded Anderson's income. Such determination was brought about by limiting Anderson's deductible work expense deduction to the standard $25.00 allowance. While some of Anderson's work-related expense items may be in dispute, defendant admits work-related expenses exceeded $25.00. It is undisputed that the following monthly work-related expenses were paid through payroll deductions:

                  Retirement                   - $40.41
                  Union Dues                   -   5.42
                  Health and Disability
                    Benefits                   -  39.04
                  Life Insurance               -   5.95
                

In addition, Anderson testified by deposition that he drives a distance of 350 to 400 miles per month to and from his work station and that the reasonable expense for such travel is ten cents per mile, and that he incurs expenses for uniforms and food purchases while at work. These categories are recognized as work expenses by HEW as specified in Handbook of Public Assistance Administration, § 3410.

Anderson in his deposition taken on December 22, 1972, testified that he employed his sister-in-law, Ruth B. Delsee, to care for his minor children at a cost of $100.00 per month. After defendant produced a certified copy of certificate showing marriage of Anderson and Ruth B. Delsee on the 26th of August, 1972, plaintiff filed a response admitting such marriage and further conceded that as a result of such change in circumstances, he became ineligible for future AFDC payments. Anderson states that he intends to proceed with this action for declaratory relief and retroactive benefits for himself and on behalf of the class he represents.

On December 13, 1972, Shirley Von Dorn filed motion to intervene as party plaintiff, stating that she was a member of the class represented by Anderson. Such leave was granted by the trial court. Mrs. Von Dorn was an AFDC recipient who incurred work-related expenses exceeding $25.00 per month. The court permitted the action to proceed as a class action. No attack has been made upon such ruling.

A final judgment was filed on June 12, 1973, adjudicating as follows:

1. The standard $25.00 per month allowance for expenses reasonably attributable to the earning of income for welfare recipients, as set forth in the Plan and Manual of the Nebraska Department of Public Welfare, violates § 402(a) (7) of the Social Security Act, 42 U.S.C. § 602(a) (7), insofar as the standard does not take into consideration all expenses reasonably attributable to the earning of income for those welfare recipients who may have expenses in excess of the $25.00 per month standard, and is declared void pursuant to 28 U.S.C. § 2201 and Rule 47 of the Federal Rules of Civil Procedure.
2. The defendant, Lawrence L. Graham, individually and in his official capacity, his officers, employees, agents and successors in office are restrained from failing to consider, in accordance with § 402(a) (7) of the Social Security Act, 42 U.S.C. § 602(a) (7), any and all expenses reasonably attributable to the earning of income in establishing financial eligibility and the amount of assistance payments of employed applicants and recipients of Aid to Families with Dependent Children (AFDC). Under this order, the defendant, his officers, employees, agents and successors in office are restrained from failing to consider, by reason of the $25.00 per month standard work-expense allowance, as contained in the Nebraska State Plan and Manual, any and all expenses reasonably attributable to the earning of income which are in excess of said $25.00 per month standard allowance or in any other way limiting the consideration of expenses reasonbly attributable to the earning of income. Nothing herein shall preclude the defendant, his officers, employees, agents and successors, from using a $25.00 per month work-expense allowance as a standard deduction for work-related expenses (covering all such expenses, except child care, income tax withholding, and Social Security tax withholding, which expenses shall be considered separately), provided that employed AFDC applicants and recipients are informed of their right to have considered any and all expenses reasonably attributable to the earning of income which are in excess of the $25.00 per month standard allowance.
3. This judgment confers no right on the plaintiffs to retroactive payments.

A well-reasoned memorandum opinion was filed by Judge Urbom setting out the facts, the issues and the basis of decision.

Plaintiff has taken a timely appeal from paragraph "3" of the judgment which determines plaintiffs have no right to retroactive payment of AFDC payments wrongfully withheld. Defendant has cross-appealed from paragraphs "1" and "2" of the judgment invalidating the standard $25.00 work expense allowance with respect to welfare recipients who can establish work-related expenses in excess of $25.00 per month, and the portion of the judgment restraining the defendant from refusing to consider all expenses reasonably attributable to the earning of income and determining eligibility and amount of assistance payments due employed applicants for AFDC payments.

We affirm on plaintiff's appeal and on defendant's cross-appeal for reasons hereinafter set out. The cross-appeal will be considered first as the retroactive issue only arises if we affirm on the cross-appeal.

Defendant's Cross-Appeal.

Plaintiff's contention, upheld by the trial court, is that defendant's action in limiting business expenses related to earnings to $25.00 in situations where such expense exceeds $25.002 is a violation of 42 U.S.C. § 602(a) (7) which provides that states which participate in the AFDC program must have a plan which takes into consideration in determining a need the income of any child or relative claiming aid "as well as any expenses attributable to the earning of such income."

The judicial construction of § 602 (a)(7) properly begins by looking at the text of the statute itself. United States v. Bass, 404 U.S. 336, 339, 92 S. Ct....

To continue reading

Request your trial
9 cases
  • Blue v. Craig, 73-2183
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • October 18, 1974
    ...392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118; Damico v. California (1967), 389 U.S. 416, 88 S.Ct. 526, 19 L.Ed.2d 647; Anderson v. Graham (8th Cir. 1973), 492 F.2d 986; Gilliard v. Craig (D.C.N.C.1971), 331 F.Supp. 587, aff'd 409 U.S. 807, 93 S.Ct. 39, 34 L.Ed.2d 66; Roselli v. Affleck (D.C......
  • Standing Rock Sioux Indian Tribe v. Dorgan, 74-1119
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • November 1, 1974
    ...v. Jordan, supra; Ford Motor Co. v. Department of Treasury, supra; Great Northern Life Insurance Co. v. Read, supra; see Anderson v. Graham, 492 F.2d 986 (8th Cir. 1973); Like v. Carter, 486 F.2d 552 (8th Cir. 1973). Such consent to be sued in federal court is not alleged in the complaint n......
  • Simpson v. Miller, 81 C 2985.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • March 17, 1982
    ...of the standardized cap. See Shea v. Vialpando, 416 U.S. 251, 264-65, 94 S.Ct. 1746, 1755, 40 L.Ed.2d 120 (1974); Anderson v. Graham, 492 F.2d 986, 989-91 (8th Cir. 1973); Schachter v. Percy, No. 80-C-223, slip op. at 10-13 (W.D.Wis. Nov. 12, 1980); Chambly v. Freeman, 478 F.Supp. 1221, 122......
  • Shea v. Vialpando 8212 1513
    • United States
    • United States Supreme Court
    • April 23, 1974
    ...it provided for individualized consideration of expenses in excess of the standard amount. See 475 F.2d, at 735. See also Anderson v. Graham, 492 F.2d 986 (CA8 1973); Adams v. Parham, Civ. No. 16041 (N.D.Ga. Apr. 14, 1972) (unpublished); and Campagnuolo v. White, Civ. No. 13968 (Conn. June ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT