Asw v. Oregon

• Decision Date: 13 September 2005
• Docket Number: No. 03-35950.,03-35950.
• Citation: 424 F.3d 970
• Parties: ASW, Individually and as Guardian ad litem for MSW and OSW, minors; SSW; ALC, Individually and as Guardian ad litem for SRC and JSC, minors; JKC; JSS, Individually and as Guardian ad litem for BKS, a minor; SDS; CEW, Plaintiffs-Appellants, v. State of OREGON, by and through its Department of Human Services; Jean I. Thorne, in her official capacity as Director, Oregon Department of Human Services, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

424 F.3d 970

ASW, Individually and as Guardian ad litem for MSW and OSW, minors; SSW; ALC, Individually and as Guardian ad litem for SRC and JSC, minors; JKC; JSS, Individually and as Guardian ad litem for BKS, a minor; SDS; CEW, Plaintiffs-Appellants, v. State of OREGON, by and through its Department of Human Services; Jean I. Thorne, in her official capacity as Director, Oregon Department of Human Services, Defendants-Appellees.

No. 03-35950.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 2, 2005.

Filed September 13, 2005.

Maria F. Ramiu (argued) and Alice Bussiere, Youth Law Center, San Francisco, CA, and Arthur C. Johnson and Dennis M. Gerl, Johnson, Clifton, Larson & Corson, PC, Eugene, OR, for the plaintiffs-appellants.

Hardy Myers, Attorney General, Mary H. Williams, Solicitor General and David E. Leith, Assistant Attorney General (argued), State of Oregon, Salem, OR, for the defendants-appellees.

Appeal from the United States District Court for the District of Oregon; Ann L. Aiken, District Judge, Presiding. D.C. No. CV-03-06038-ALA.

Before HUG, TASHIMA, and CLIFTON, Circuit Judges.

CLIFTON, Circuit Judge.

Plaintiffs are parents of adopted children with special needs¹ who receive adoption assistance payments from the State of Oregon. They appeal the district court's dismissal of their class action lawsuit under 42 U.S.C. § 1983, which alleged several violations of their statutory rights under the Adoption Assistance and Child Welfare Act of 1980, 42 U.S.C. §§ 620 et seq. (the "Act"), as well as their right to due process prior to reduction of their adoption assistance payments. Defendants, the State of Oregon and the Director of the Oregon Department of Human Services (together, "Oregon" or the "State"), moved to dismiss the action asserting that Plaintiffs failed to state a claim as a matter of law. The district court granted the State's motion. Because we conclude 42 U.S.C. §§ 671(a)(12) and 673(a)(3) create federal rights enforceable through a § 1983 cause of action, we reverse.

I. BACKGROUND

The Adoption Assistance and Child Welfare Act of 1980 established a program of federal payments to participating states to provide funds for financial assistance to aid families adopting special needs children out of foster care. 42 U.S.C. §§ 670-76. The State of Oregon accepts funds from the federal government under this program and thus obligates itself to abide by the federal requirements.² Accordingly, Oregon must enter into a binding written agreement with each pair of adoptive parents. 42 U.S.C. §§ 673(a)(1) & 675(3). The amount each family receives in adoption assistance payments "shall take into consideration the circumstances of the adopting parents and the needs of the child being adopted, and may be readjusted periodically, with the concurrence of the parents" if the circumstances of the parents or the needs of the child change. § 673(a)(3). Additionally, the federal statute provides that each grant recipient is entitled to a fair hearing before the applicable state agency to challenge any claim for benefits that "is denied or is not acted upon with reasonable promptness." § 671(a)(12).

The State sent a form letter in December 2002 to all families in Oregon receiving adoption assistance payments to inform them that because of budgetary shortfalls their payments would be reduced 7.5%. The form letter asked the families to agree to the reduction or risk having their adoption assistance payments terminated. The families were also informed that they would not be entitled to individual hearings to challenge the reductions. Although the families did not agree to the reductions, their adoption assistance payments were not terminated. The payments were, however, uniformly reduced by 7.5% beginning in February 2003. The State selected 7.5% as the amount of the reduction to coincide with its decision to reduce foster care maintenance payments by that same amount, also effective February 2003.

Plaintiffs brought a 42 U.S.C. § 1983 class action against the State, asserting inter alia, that they have a federal right to have the amount of their adoption assistance payments based on an individualized assessment of their special needs and circumstances, as well as a federal right to have a fair hearing before an administrative agency to contest reductions in their payments. Plaintiffs claimed these rights were violated by the State's unilateral action.³ Plaintiffs sought a declaration of their rights and an injunction to prevent the State from uniformly and unilaterally reducing their adoption assistance payments and denying them the opportunity to challenge the reductions in a "contested case hearing." The district court concluded that the rights Plaintiffs claimed the State violated were not enforceable through a § 1983 cause of action and granted the State's motion to dismiss. Plaintiffs timely appealed.

II. MOOTNESS

Oregon argues that Plaintiffs' claims are moot because a state administrative rule, Or. Admin. R. 413-130-0127, which became effective November 1, 2003, increased monthly adoption assistance payments by 8.108%, thus making the amount of the monthly payments slightly larger than they had been before the reduction nine months earlier. Mootness is a question of law that we review de novo. S. Or. Barter Fair v. Jackson County, 372 F.3d 1128, 1133 (9th Cir.2004). We conclude the case is not moot because, although the increase authorized by rule 413-130-0127 exceeded the 7.5% reduction, it did nothing to alter the provisions of rule 413-130-0125 challenged here.

"A case loses its quality as a `present, live controversy' and becomes moot when there can be no effective relief." San Lazaro Ass'n v. Connell, 286 F.3d 1088, 1095 (9th Cir.2002). Because Plaintiffs brought suit under Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), they cannot seek monetary redress for a past harm and thus their case is moot unless they are in a position to benefit from prospective relief. See Verizon Md., Inc. v. Pub. Serv. Comm'n, 535 U.S. 635, 645, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002); Taylor v. Westly, 402 F.3d 924, 929-930 (9th Cir.2005) (explaining that the Eleventh Amendment generally "shields state governments from money judgments in federal courts, and from declaratory judgments against the state governments that would have the practical effect of requiring the state treasury to pay money to claimants").⁴ The State argues that because there is no ongoing violation of federal law, there is no valid form of relief Plaintiffs can be awarded. The cases Oregon relies on, however, are inapposite. See, e.g., Green, 474 U.S. at 73, 106 S.Ct. 423 (holding that plaintiff's claim was moot where Congress amended the relevant statute clarifying, and thereby resolving, the controversy that had arisen due to ambiguities in the original statute); In re Investigation Pursuant to the Comprehensive Envtl. Response, 820 F.2d 308, 311-12 (9th Cir.1987) (dismissing the case because Congress enacted substantial amendments to the relevant statutory provisions while the case was on appeal, the court reasoned that "[w]here new legislation represents a complete substitution for the law as it existed . . . arguments based upon the superseded part are moot"). By contrast, Or. Admin. R. 413-130-0127 did not repeal, substitute, or even amend the challenged administrative rule in any way. Accordingly, its adoption did not eliminate Plaintiffs' claim for relief.

Moreover, we are "particularly cautious when a case has become moot because the defendant has voluntarily ceased to pursue the challenged course of action." Smith v. Univ. of Wash. Law Sch., 233 F.3d 1188, 1194 (9th Cir.2000). Here, not only was the increase in benefits voluntary, Oregon explicitly left the mechanism in place whereby it can uniformly reduce adoption assistance payments at any time in the future. The posture of this case therefore contrasts sharply with Native Village of Noatak v. Blatchford, 38 F.3d 1505, 1510 (9th Cir.1994), where the relevant statute had been repealed and the plaintiffs simply feared the possibility that the state would continue to discriminate under the new statute. It is not a mere "theoretical possibility" that Oregon could adopt an administrative rule providing for uniform reductions in adoption payments. Oregon already has such a rule, which it purposely chose not to repeal. Indeed, based on its arguments before this Court, it is probable that when faced with a similar budgetary crisis, Oregon would again consider uniformly and unilaterally reducing adoption assistance payments. In light of that very real possibility, Oregon has not met its "heavy burden of persuading" the court that "subsequent events make it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur." Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189-90, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000).

Because Plaintiffs' challenge to Or. Admin. R. 413-130-0125 is not rendered moot by the adoption of Or. Admin. R. 413-130-0127, we proceed to a discussion on the merits.

III. MERITS

We review de novo the district court's decision to grant the State's motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Decker v. Advantage Fund Ltd., 362 F.3d 593, 595-596 (9th Cir.2004). We accept as true all well pleaded facts in the complaint and construe them in the light most favorable to the nonmoving party. See Decker, 362 F.3d at 595; Rodriguez v. Panayiotou, 314 F.3d 979, 983 (9th Cir.2002).

Plaintiffs correctly point out that legislation enacted pursuant to Congress's spending power can give rise to enforceable rights under 42 U.S.C. § 1983. See Gonzaga Univ. v. Doe, 536 U.S. 273, 280-81, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002) (explaining why the two cases in which it had previously found enforceable rights, Wright v. Roanoke Redev....