Davis v. Coler

• Decision Date: 26 December 1984
• Docket Number: No. 83 C 6885.,83 C 6885.
• Parties: Dorothy DAVIS, on behalf of herself, her grandchildren, Marvelle and Pirre Harris; Valeria Lewis, on behalf of herself, her minor children, Layton, Dennis, and Monyon Lewis; and, on behalf of all others similarly situated, Plaintiffs, v. Gregory COLER, Director, Illinois Department of Public Aid, in his official capacity; and, Margaret Heckler, Secretary, United States Department of Health and Human Services, in her official capacity, Defendants.
• Court: U.S. District Court — Northern District of Illinois

601 F. Supp. 444

Dorothy DAVIS, on behalf of herself, her grandchildren, Marvelle and Pirre Harris; Valeria Lewis, on behalf of herself, her minor children, Layton, Dennis, and Monyon Lewis; and, on behalf of all others similarly situated, Plaintiffs, v. Gregory COLER, Director, Illinois Department of Public Aid, in his official capacity; and, Margaret Heckler, Secretary, United States Department of Health and Human Services, in her official capacity, Defendants.

No. 83 C 6885.

United States District Court, N.D. Illinois, E.D.

December 26, 1984.

Beverly Groudine, Legal Assistance Foundation, Barbara Stob, Legal Assistance Foundation, Thomas Johnson, Uptown Peoples Law Center, Chicago, Ill., for plaintiffs.

Linda Wawzenski, Asst. U.S. Atty., Steven Hogroian, James O'Connell, Owen Field, Sp. Asst. Atty. Gens., Chicago, Ill., for defendants.

MEMORANDUM OPINION

KOCORAS, District Judge:

This case is before the court for rulings on several pending motions. The motions addressed today concern only Counts I and III of the amended complaint. By agreement of the court and the parties, any motions concerning Count II will be addressed only after Count I has been resolved. Because of the number of motions involved, the court will address each motion in the following sequence: (1) plaintiffs' motion to amend their complaint to add Count III; (2) motions addressed to Count I: defendants' motion for summary judgment, plaintiffs' motions for injunctive relief, a class action, and notice to class members of their right to retroactive AFDC benefits; (3) motions addressed to Count III: defendants' motion for summary judgment on Count III, plaintiffs' motion for a preliminary injunction and to maintain Count III as a class action.

(1) Motion to File an Amended Complaint

The plaintiffs filed the original complaint in this case in September 1983. Count I sought declaratory and injunctive relief to secure plaintiffs' rights under Title IV-A of the Social Security Act. Plaintiffs asserted that defendants promulgated regulations which violated 42 U.S.C. section 602(a)(17). Section 602(a)(17), the lump sum rule, states that "person(s) specified in paragraph 8(A)(i) or (ii) of the statute" become disqualified for benefits as a result of receiving lump sum payments of money.¹ This lump sum disqualification rule requires that when an Aid to Families with Dependent Children (AFDC) recipient receives a non-recurring lump sum payment, that payment renders the person ineligible for monthly benefits for a length of time calculated by the benefits usually received and the amount of the lump sum payment. The plaintiffs alleged that the defendants promulgated regulations, 45 C.F.R. section 233.30(a)(3)(ii)(D) and Illinois Department of Public Aid (IDPA) AFDC Manual §§ PO and PR 510.2(g) and 615.6, which violate section 602(a)(17) by applying the lump sum disqualification to persons outside the specified scope of paragraph 8(A)(i) or (ii).² Count I and the briefs surrounding it focused squarely upon the proper interpretation of who is a person specified in those paragraphs and what type of income does that person receive. Plaintiffs interpreted the persons in the paragraphs to be those who receive earned income in the same month in which they receive the lump sum payment. Defendants asserted that persons who receive any income, earned or unearned, in that same month are subject to the lump sum disqualification.

On June 22, 1984, Congress amended this disputed provision. Deficit Reduction Act of 1984, § 2632(b)(1) H.R.Rep. No. 98-861, 98th Cir. Cong.2d Sess. 678-679, U.S.Code Cong. & Admin.News 1984, ____, 130 Cong. Rec. H6369, H6554. hereinafter DRA. The amendment removed the language of section 602(a)(17) which had formed the focus for the dispute in Count I. Originally, the lump sum disqualification applied to "a person specified in paragraph 8(A)d (i) or (ii)." New language was substituted for that phrase, which now reads that the lump sum disqualification applies to: "a child or relative applying for or receiving aid to families with dependent children, or any other person whose need the state considers when determining the income of a family." This new language took effect on October 1, 1984. The plaintiffs contend that this amendment is not a mere clarification, but a change in the previously existing law. The defendants assert that the amendment is a clarification of what was previously ambiguous statutory language.

After Congress acted in June, the plaintiffs moved this court, on August 9, 1984, for leave to file an amended complaint. This motion came eleven months after the original filing, and seeks to add a new party plaintiff, the Velez family, and to add an additional claim, Count III. Count III alleges that plaintiffs' recovery of money damages from a personal injury claim is properly characterized as a "resource" and, therefore, not subject to the lump sum disqualification. Defendants oppose the amendment and argue that all lump sum payments of any type are subject to lump sum disqualification.

The motion to amend the complaint is made pursuant to Federal Rules of Civil Procedure 15, 18(a), and 20. Rule 15 provides that pleadings may be amended "once as a matter of course" when the opposing party has not yet served a responsive pleading. Where a responsive pleading has been served, the party seeking to amend must obtain the written consent of the opposing party or leave of court. In this case, the State defendant filed an answer to the complaint November 21, 1983 and the federal defendant answered on November 30, 1983. Therefore, leave to amend the complaint is squarely within the discretion of this court.

Rule 15(a) further provides that leave to amend "shall be freely given when justice so requires." In examining a motion for leave to amend the pleadings, the court considers the controlling facts of each particular case. The factors generally used include: evidence of bad faith or an effort to create undue delay; substantial prejudice to the opposing party; the amount of time expired since the original pleadings; and whether the amendment alters the nature and scope of the action and accompanying discovery. Murphy v. White Hen Pantry Co., 691 F.2d 350 (7th Cir.1982); Gregg Communications Systems, Inc. v. American Tel. & Tel. Co., 98 F.R.D. 715 (N.D.Ill.1983). Considerations under Rule 18(a) and 20 are similar, but also require that the new claim arise out of the same subject matter and facts as the original and that joinder of a claim or a party will avoid a multiplicity of suits on similar issues. Resnick v. American Dental Ass'n, 90 F.R.D. 530 (N.D.Ill.1981); Goodman v. H. Hentz & Co., 265 F.Supp. 440 (N.D.Ill.1967).

In this case, plaintiffs seek to join an additional party plaintiff and an additional count. The defendants do not appear to oppose the additional party, but focus upon the third count. The defendants argue that (1) plaintiffs have not justified their delay in bringing the third count; (2) plaintiffs' position under Count III is "erroneous;" and (3) "no legitimate purpose" will be served by allowing plaintiffs to amend the complaint. Defendants' arguments do not persuade the court that the motion to amend should not be granted. To do so, the defendants would need to show substantial prejudice to themselves or bad faith and undue delay on the plaintiffs' part. First, plaintiffs' delay in filing the third count is not, in itself, determinative where there is no evidence of bad faith in that delay. Gregg Communications Systems, Inc. v. American Tel. & Tel. Co., 98 F.R.D. at 721. Second, the merits of the plaintiffs' amended claim is not under consideration unless the claim is frivolous, meritless, or futile. At this time, plaintiffs' claim is legally sufficient. Hale v. Morgan Packing Co., 91 F.Supp. 11 (N.D.Ill.1950). Third, the defendants assert that no legitimate purpose will be served by allowing the third count to stand. However, at least one legitimate purpose, to avoid a separate action on this single statutory provision, will be served.

Therefore, the court finds plaintiffs' motion to amend its complaint should be granted because it is brought in good faith, will not unduly prejudice the defendants, is legally sufficient, and is related in law and fact to the earlier counts.

(2) Count I Motions

The court has before it both defendants' motions for summary judgment on Count I of the amended complaint. Summary judgment is appropriate where there are no material disputed issues of fact and one party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Collins v. American Optometric Ass'n, 693 F.2d 636 (7th Cir.1982). In this case, there are no issues of material fact in dispute. The question before the court is one of law— the proper legal interpretation of the application of the lump sum provision, 42 U.S.C. § 602(a)(17). In essence, however, this issue creates two inquiries: the Congressional intent and proper reading of section 602(a)(17) when created in 1981 and the effect of the 1984 amendment to the provision's original meaning.

The parties integrate these two aspects to fortify their opposing interpretations. First, the plaintiffs urge the court to disregard district court and Courts of Appeals decisions which have already addressed the proper interpretation of the 1981 lump sum rule.³ Plaintiffs assert these decisions are not persuasive because they were made without the benefit and insight of the 1984 amendments, which plaintiffs argue affirm their original interpretation. Second, plaintiffs argue that the 1984 amendment creates a clear change in the law, not a mere clarification of the earlier provision. Under the plaintiffs' view, the original provision applied only to those AFDC recipients who also worked or received earned income. These individuals comprise seven per cent of all AFDC recipients. Both parties agree that after the 1984 amendments, the lump sum rule...