Foggs v. Block, s. 83-1270

• Decision Date: 07 December 1983
• Docket Number: 83-1320,Nos. 83-1270,s. 83-1270
• Parties: Karen FOGGS, et al., Plaintiffs, Appellees, v. John R. BLOCK, Defendant, Appellee. Thomas Spirito, etc., Defendant, Appellant. Karen FOGGS, et al., Plaintiffs, Appellees, v. John R. BLOCK, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 933

722 F.2d 933

Karen FOGGS, et al., Plaintiffs, Appellees, v. John R. BLOCK, Defendant, Appellee.

Thomas Spirito, etc., Defendant, Appellant.

Karen FOGGS, et al., Plaintiffs, Appellees, v. John R. BLOCK, Defendant, Appellant.

Nos. 83-1270, 83-1320.

United States Court of Appeals First Circuit.

Argued Sept. 7, 1983.

Decided Dec. 7, 1983.

Ellen L. Janos, Asst. Atty. Gen., Government Bureau, Boston, Mass., with whom Francis X. Bellotti, Atty. Gen., and James A. Aloisi, Jr., Asst. Atty. Gen., Government Bureau, Boston, Mass., were on brief, for Massachusetts Com'r of Public Welfare.

Bruce G. Forrest, Appellate Staff, Dept. of Justice, with whom J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., William F. Weld, U.S. Atty., Nancy Serventi, Asst. U.S. Atty., Boston, Mass., Leonard Schaitman, Appellate Staff, Dept. of Justice, and Edward J. Barron, U.S. Dept. of Agr., Washington, D.C., were on brief, for appellant, United States of America.

J. Paterson Rae, Worcester, Mass., with whom Steven A. Hitov, New Rochelle, N.Y., was on brief, for Karen Foggs, et al.

Before COFFIN, Circuit Judge, FAIRCHILD, ^* Senior Circuit Judge, and BOWNES, Circuit Judge.

COFFIN, Circuit Judge.

Defendants, the United States Secretary of Agriculture and the Massachusetts Commissioner of Public Welfare, appeal a judgment of the district court for the District of Massachusetts. The district court held that the defendants deprived the plaintiffs of property without due process of law when they reduced plaintiffs' food stamp benefits without first providing them with constitutionally adequate notice. The district court ordered restoration of benefits pending provision of adequate notice or recertification of the recipients' files. The court also ordered extensive prospective relief, including the promulgation of new state regulations governing the form of future food stamp notices. We affirm the district court's conclusion that the notice provided by defendants was unconstitutional, but finding that the district court exceeded its authority with regard to remedy, we remand.

In August, 1981, Congress amended the Food Stamp Program, 7 U.S.C. Secs. 2011-2029, reducing the earned income deduction from twenty to eighteen percent. Omnibus Budget Reconciliation Act of 1981, P.L. 97-35, 95 Stat. 257 (1981). This change required state agencies to include a greater portion of recipients' earned income when calculating benefits, which had the effect of reducing the food stamp entitlement of these recipients. Plaintiffs represent over 16,000 Massachusetts food stamp recipients whose benefits were reduced or terminated in accord with this across-the-board change in federal law.

In late November, 1981, the Massachusetts Department of Public Welfare sent a notice to all food stamp recipients with earned income advising them that their benefits would be reduced or terminated in accord with the statutory change in the earned income deduction. The notice did not indicate the specific amount of reduction, nor did it indicate the recipient's new benefit amount. The notice, which was dated merely "11/81", also advised recipients that they had a right to request a hearing "if you disagree with this action[,]" and that their benefits would be reinstated if they requested a hearing within ten days. The notice indicated that recipients could appeal by signing and returning a card that was enclosed, or by notifying the Department by phone or in person. The notice was printed in small type across the length of a standard size computer card (approx. 3"' X 7"'). The notice was printed in English on one side of the card and in Spanish on the other.

Plaintiffs initiated this action in early December, 1981. They challenged the form of the November notice, alleging that it was incomprehensible to many recipients, that it contained too little information to allow a recipient to determine if a calculation error had been made, and that there was no way for a recipient to know the date by which he had to file an appeal. Contending that any benefit reduction prior to the delivery of constitutionally adequate notice would constitute deprivation of property without due process of law, plaintiffs sought restoration of benefits and other equitable relief. The district court issued a temporary restraining order on December 16, 1981 prohibiting the reduction or termination of benefits based upon the November notice. The Department of Public Welfare subsequently restored December benefits to prior levels for all recipients with earned income.

In late December the Department sent out a second notice. That notice was printed on two computer cards. One card explained that the November notice was invalid because it had not been properly dated and that benefits had therefore been temporarily restored. That card also discussed recipients' appeal rights. The second card contained a notice virtually identical to that mailed in November, except that it was dated "December 26, 1981". ¹ Again, the cards were printed in English and Spanish. Plaintiffs then filed a supplemental complaint challenging the adequacy of the December notice and sought a second temporary restraining order enjoining any benefit reductions or terminations based upon the notice. The court rejected the motion for a temporary restraining order on December 31, 1981.

In March, 1983, following a two day trial the district court concluded that the December notice was constitutionally inadequate because it failed to provide the recipients with sufficient notice of the benefit reduction, was untimely, was incomprehensible to many of the recipients, and did not include financial data for each individual recipient. The district court ordered the Department to restore benefits lost due to the change in earned income deduction. Specifically, the court ordered the Department to restore benefits lost between January 1, 1982 and the date the recipient received adequate notice, had his benefits terminated for a reason unrelated to the change in the earned income deduction, or had his file recertified. ² The district court also ordered that all future food stamp notices issued by the Department include various data, including the old and new benefit amount, and that the Department issue regulations, subject to court approval, governing the form of future food stamp notices.

On appeal defendants contend that the notice issued by the Department satisfied constitutional requirements and that the district court abused its discretion in ordering the restoration of benefits and the promulgation of new notice regulations.

I. Adequacy of Notice

Before applying due process analysis a court must find that there has been a deprivation of life, liberty, or property. Board of Regents v. Roth, 408 U.S. 564, 570-71, 92 S.Ct. 2701, 2705-2706, 33 L.Ed.2d 548 (1972). The government defendants argue that these food stamp recipients were not deprived of property because they were entitled only to that level of benefits authorized by statute. Since the December reductions merely reduced benefit levels in accord with a statutory mandate, the government argues that food stamp recipients had no further entitlement to the original higher level of benefits. Observing that recipients had no entitlement to or property interest in the original benefit level after the statutory change, the government concludes that recipients were not deprived of any property when their benefits were reduced and that, therefore, due process analysis is inapplicable to the reduction and termination of these recipients' food stamp benefits.

This argument has some surface appeal but its limitations may best be illustrated by imagining the consequences of its adoption. If no one could claim a property interest or entitlement that in any way exceeded statutory authorization, then very few public assistance recipients would be entitled to the protections of due process. Whenever the government moves to reduce or terminate benefits it does so because it believes that the recipient has received more than the statute authorizes. Under the government's rationale these recipients would not be entitled to due process because they could claim no property interest in any benefits exceeding those authorized by statute. This situation would, of course, place recipients in an untenable position: the only recipients with a property interest would be those whose reductions exceeded those required by statute, but no one could know who these were if there was no opportunity for notice, objection, and redetermination.

Our own view, placing the argument of the government in proper perspective, is as follows. Public distributive programs are subject to majority action, i.e., Congress, which can increase, decrease, and terminate benefits. So long as the programs exist, people have the right to participate in accordance with the established ground rules. When it can be said that there is no further right because there is nothing in which to participate, then it must also follow that at that point there is no property interest. To the extent, however, that an individual's right to participate in accordance with preestablished ground rules still exists and that government action may possibly have adversely affected that right to participate, it must follow that there remains a property interest.

Although no other court has explicitly so addressed this question, the notion that statutory reductions infringe a protected property interest appears to have been uniformly accepted by courts considering statutory modifications in federal public assistance programs. E.g., Garrett v. Puett, 707 F.2d 930 at 931 (6th Cir.1983) (due process analysis applied to notice announcing statutorily mandated reduction in A.F.D.C. benefits); LeBeau v. Spirito, 703 F.2d 639, 643-44 (1st Cir.1983) (due process analysis applied to notice announcing statutorily mandated reduction in A.F.D.C. benefits); Banks...