Gilliard v. Craig

• Decision Date: 10 June 1971
• Docket Number: Civ. A. No. 2660.
• Court: U.S. District Court — Western District of North Carolina
• Parties: Beaty Mae GILLIARD et al., Plaintiffs, v. Clifton M. CRAIG, individually and as North Carolina Commissioner of Social Services, et al., Defendants.

331 F. Supp. 587

Beaty Mae GILLIARD et al., Plaintiffs, v. Clifton M. CRAIG, individually and as North Carolina Commissioner of Social Services, et al., Defendants.

Civ. A. No. 2660.

United States District Court, W. D. North Carolina, Charlotte Division.

Heard November 5, 1970.

Decided June 10, 1971.

Gail F. Barber and Thomas W. Pulliam, Jr., Legal Aid Society of Mecklenburg County, Charlotte, N. C., for plaintiffs.

James O. Cobb, Ruff, Perry, Bond, Cobb & Wade, Charlotte, N. C., and L. P. Covington, Staff Atty., Raleigh, N. C., for defendants.

Before CRAVEN, Circuit Judge, JONES, Chief District Judge and McMILLAN, District Judge.

MEMORANDUM OF DECISION AND ORDER

McMILLAN, District Judge:

PRELIMINARY STATEMENT

This case was heard in Charlotte on November 5, 1970, before a three-judge court. The plaintiffs, individually and for the class of themselves and others similarly situated, seek declaratory and injunctive relief from policies and actions of the defendants which reduce benefits available to plaintiffs under the Social Security Act, Title 42, U.S.C., Section 601, et seq., and which policies and actions plaintiffs say violate the Social Security Act and the equal protection clause and the due process clause of the Fourteenth Amendment.

THE CLASS

Plaintiffs sue individually and as members of a class of persons who have been or may be subject to reduction of AFDC (Aid to Families with Dependent Children) benefits based upon unconstitutional or illegal claim of credit by administering agencies for outside income and other resources available to some but not all of a family group. The action is properly maintainable as a class action.

THE FACTS

The plaintiffs are Beaty Mae Gilliard; her seven children including Samuel Davis, Jr.; and Samuel Odell Davis. Samuel Odell Davis is the father of Samuel Davis, Jr., the youngest child, born in November, 1969, but is not the father of any of the other children. On April 6, 1970, Samuel Davis, Jr. was legitimatized in a proceeding conducted under North Carolina General Statutes, Section 49-10, with the result that his father became legally obligated to provide for his support.

Before Samuel Davis, Jr., was born, Beaty Mae Gilliard and her other six children were receiving financial benefits under the AFDC program, which was established by subchapter 4 of the Social Security Act of 1935, as amended, 42 U.S.C., Section 601, et seq. This program is jointly funded by federal, state and local governments. It is administered statewide in North Carolina by the North Carolina Board of Social Services and the North Carolina Commissioner of Social Services and is administered in Mecklenburg County by the Mecklenburg County Department of Social Services.

Before the birth of Samuel Davis, Jr., the amount of benefits the Gilliards were receiving under the AFDC program was about $217 per month. After Samuel Davis, Jr. was born, he was added to the family group of beneficiaries, and the family's allowance was increased from about $217 a month to about $227 a month.

However, Samuel Davis, Sr. began making regular payments of $43.33 per month ($10 per week) to support Samuel Davis, Jr., and when the defendants learned this, they reduced the monthly AFDC payments by $43.33, effective in March, 1970, and since that time the AFDC payments have been only $184 a month instead of the former $227.

Appeal to the State Commissioner produced an affirmance of the decision to reduce the Gilliard's benefits. This exhausts state administrative remedies. Exhaustion of state judicial remedies is not required. Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961); 68 Columbia Law Review, 1201 (1968).

Defendants say that the payments by Samuel Davis, Sr. are a resource available to the family and that the full amount of such payments should be deducted from benefits otherwise payable. Plaintiffs contend that the payments to young Davis are available to him alone; that they are his property, not his mother's and not the property of the family at large; and that the action of the defendants in charging the entire $43.33 against the AFDC allowance is discriminatory against all plaintiffs, both under the due process and equal protection clauses of the Fourteenth Amendment to the Constitution, and as a matter of proper interpretation of the federal statutes and the state regulations.

THE STATUTES AND REGULATIONS

The federal statute which regulates the distribution of benefits is 42 U.S.C., Section 602(a) (7), which reads:

"A State plan for aid and services to needy families with children must * * * (7) * * * provide that the State agency shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid to families with dependent children, or of any other individual (living in the same home as such child and relative) whose needs the State determines should be considered in determining the need of the child or relative claiming such aid, as well as any expenses reasonably attributable to the earning of any such income; * * *." (Emphasis added.)

The statewide regulations on which the defendants based their ruling are Section 301 of the North Carolina Public Assistance Manual, which says that

"In AFDC, the budget is to include all eligible children in the home * * *" (Emphasis added)

and Section 320 of the Manual, providing that

"* * * all income and any other resources immediately and regularly available must be taken into consideration." (Emphasis added.)

A portion of a regulation similar in principle is subsection I(B) (8) of Section 2321 of the North Carolina Department of Social Services Welfare Program Manual:

"Support Payments — In AFDC cases where the parent who has deserted or abandoned the family and has been located, or where the parent is separated from the familly, the monthly amount that the court orders him/her to pay is to be entered in the budget as a resource.

"a. If the payments are not made in accordance with the court order, the amount must be eliminated from the budget as a resource or reduced to the amount actually being contributed by the parent."

In a case (Long v. Commissioner, Case No. 8053) arising in Forsyth County, North Carolina, the Commissioner ruled on October 30, 1970, ostensibly upon the authority of subsection I(B) (8) of Section 2321, that the amount of the support payments received by "one of the children" of an AFDC family pursuant to a court order was properly deducted by the County Department from the family's AFDC grant.

Apparently overlooked by the defendants in the Forsyth County case and in the case at bar was the main or parent paragraph of subsection I(B) of Section 2321 of the Manual, which since July 1, 1969, has provided in pertinent part, as a statewide regulation, that:

"* * * all cash income regularly available to the family must be considered in determining resources. This includes but is not limited to: amounts received from OASDI (verified), V.A., Workmen's Compensation, etc., dividends earned from savings, stocks, bonds, insurance policies, and other investments; cash regularly contributed to the family; and net cash derived from wages; net income from rental of rooms or real estate; net farm income; or net income from other sources * * *." (Emphasis added.)

The natural implication of the emphasized phrase is that for income or contributions to be counted as available in determining resources they should be available to the family and not just to one of its members.

At the time the defendants made their ruling in the Gilliard case in March of 1970, there was apparently no federal regulation which expressly controls this situation. However, on the 25th day of September, 1970, in a nationwide directive (Exhibit P) to affected state agencies, the Department of Health, Education and Welfare ruled that in the future, if one child of a group receiving AFDC payments should become also entitled to other federal aid under the Old Age Survivors and Disability Insurance (OASDI) provisions of the Act, the additional payment to or for the child should be counted as a resource available only to that child. This federal ruling does not decide the issue presented on the particular facts of this case, but it does embrace the principle contended for by the plaintiffs — the principle that assets belonging to one potential member of the group of beneficiaries may not be treated as assets available to the entire group.

JURISDICTION

The complaint alleges a cause of action cognizable under 42 U.S.C., Section 1983¹ and within the jurisdiction of a district court under 28 U.S.C., Section 1343.² Since the complaint also seeks injunction restraining state officials and agencies from enforcing or carrying out statewide statutes and regulations upon grounds of unconstitutionality of the statutes and regulations, the case was heard by a three-judge court under 28 U.S.C., Section 2281.³

The defendants contend, however, citing Stinson v. Finch, 317 F.Supp. 581 (3-J. Court, N.D.Ga., 1970), that because 42 U.S.C., Section 602(a) (7) requires agencies administering state AFDC plans to take into consideration "other income and resources of any child" in the home, in determining the need "of the child," the actions of the defendants are under color of federal rather than state law; that no cause of action is stated under Section 1983; and that this court does not have jurisdiction under Section 1343.

We are unable to agree with this contention. To begin with, as a matter of statutory interpretation, it is highly doubtful that Section 602(a) (7) requires or even contemplates that the independent resources of one child should be made available to the rest of the household; if Section 602(a) (7) provides a "color" of federal law, its hue is not the one visualized by defendants. In the second place, participation by the state in AFDC is not required but voluntary; implementation is left to the...