Green v. Obledo, S.F. 24121

Citation624 P.2d 256,172 Cal.Rptr. 206,29 Cal.3d 126
Decision Date05 March 1981
Docket NumberS.F. 24121
CourtUnited States State Supreme Court (California)
Parties, 624 P.2d 256 Elizabeth GREEN et al., Plaintiffs and Appellants, v. Mario OBLEDO, as Secretary, etc., et al., Defendants and Appellants.

Andrea J. Saltzman, Thomas W. Pulliam, Jr., San Francisco, David J. Rapport, Oakland, and Lester J. Marston, Escondido, for plaintiffs and appellants.

Mark N. Aaronson, San Francisco, Steven A. Lewis, Los Angeles, Diane A. King, San Francisco, Long & Levit, John E. McDermott, Marilyn Katz, Los Angeles, and Ralph Santiago Abascal, Sacramento, as amici curiae on behalf of plaintiffs and appellants.

Evelle J. Younger and George Deukmejian, Attys. Gen., Thomas E. Warriner, Asst. Atty. Gen., Richard M. Skinner and Floyd D. Shimomura, Deputy Attys. Gen., for defendants and appellants.

MOSK, Justice.

The Secretary of the Health and Welfare Agency and the Director of the Department of Benefit Payments 1 (hereinafter defendants) appeal from a judgment granting writs of mandate and declaratory relief invalidating a portion of a welfare regulation because of conflict with federal and state law. Plaintiffs cross-appeal from certain restrictions placed on the scope of the relief.

Plaintiffs are recipients of benefits under the program for aid to families with dependent children (AFDC). Established by the federal Social Security Act (42 U.S.C. § 601 et seq.), the AFDC program is intended to provide financial assistance to needy dependent children and the parents or other relatives with whom they reside. The program is financed in substantial part by the federal government and is administered by the states, under a scheme of "cooperative federalism." (King v. Smith (1967) 392 U.S. 309, 316, 88 S.Ct. 2128, 2132-2133, 20 L.Ed.2d 1118.) State participation is elective, but the receipt of federal funds is conditioned on compliance with the Social Security Act and applicable federal regulations. (45 C.F.R. pt. 233 (1979).) California participates in the AFDC program under the provisions of the Burton-Miller Act. (Welf. & Inst. Code, § 11200 et seq.) The State Department of Social Services (see fn. 1, ante ) is charged with administering the program to "secure full compliance with the applicable provisions of state and federal laws" (Welf. & Inst. Code, § 10600), and is required to promulgate regulations "not in conflict with the law" (id., § 10604).

The operation of the program is well known. As we explained in Conover v. Hall (1974) 11 Cal.3d 842, 847, 114 Cal.Rptr. 642, 523 P.2d 682, "California has adopted a 'flat grant' system for determining the actual payments to be made to AFDC recipients. Section 11450 of the Welfare and Institutions Code establishes a schedule of 'maximum aid' payments, with maximum payments varying according to the number of eligible needy persons in the same home. The amount of a recipient's actual aid payment is computed by subtracting from the appropriate maximum aid figure all nonexempt income of the aid recipient. (Citation.) (P) In determining the amount of nonexempt income of a recipient to be subtracted from the maximum figure, federal law requires that the state consider not only the recipient's gross income but also the off-setting expenses which a recipient incurs in earning that income. In particular, the specific federal requirement at issue in this case provides that 'the State agency shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid ... as well as any expenses reasonably attributable to the earning of any such income.' (Italics added.) (Social Security Act, § 402(a)(7), 42 U.S.C. § 602(a)(7).)" (Fn. omitted.)

Plaintiffs filed this action primarily to challenge the compliance of a state welfare regulation with the foregoing emphasized language of the Social Security Act. The regulation in issue is EAS 44-113.24. 2 It enumerates certain work-related expenses allowable as deductions from earned income to determine eligibility for and amount of AFDC assistance. The listed expenses are: (a) mandatory withholding deductions for income taxes, social security, retirement and similar contributions; (b) child care costs; (c) costs of food and clothing required for employment; (d) work-related transportation costs; (e) nonpersonal expenses such as tools, licenses, and union dues; and (f) business expenses incurred by self-employed persons.

In particular, the portion of the regulation prescribing travel expenses (EAS 44-113.241(d)) declares that the recipient's "necessary costs of transportation to and from work" shall be allowed; but in the case of a recipient who is compelled to use his or her own automobile for that purpose because public transportation is either unavailable or inappropriate, the regulation limits those costs to a flat rate of 15 cents per mile. 3

Plaintiff Green alleged that she owned an automobile required for transportation to and from work, and that defendants should have taken into consideration the actual costs of operating that vehicle in determining her AFDC grant. She was permitted only a mileage-based deduction of $10.08 for the month of October 1974 when, in fact, her actual costs included $105 for transmission repair. Defendants refused to allow the latter deduction, and her monthly grant was reduced accordingly.

Plaintiff Fingers similarly alleged that she required the use of the family automobile in her employment as a visiting nurse. In July and August 1975 her actual cost of owning and operating that vehicle far exceeded her mileage-based deduction, and as a result her monthly grant was reduced below the amount to which she was otherwise entitled.

The gravamen of the complaint, comprising three causes of action, was that EAS 44-113.24 imposes an impermissible limitation on the recognition of expenses reasonably attributable to the earning of income. In the first cause of action, plaintiff Green sought individual relief by writ of administrative mandate (Code Civ.Proc., § 1094.5; Welf. & Inst. Code, § 10962) to review defendants' decision to deny her transportation expenses under this regulation. In the second cause of action, plaintiffs Green and Fingers applied for an ordinary writ of mandate (Code Civ.Proc. § 1085) on behalf of themselves and all persons similarly situated to compel defendants to allow all work-related expenses in determining eligibility and benefit levels, and to obtain retroactive relief for benefits wrongfully withheld. In the third cause of action, also framed as a class action, plaintiffs prayed for a declaration that the regulation is invalid on the foregoing ground, i. e., because it does not allow deduction of all expenses reasonably attributable to the earning of income.

Plaintiffs moved for class certification and for summary judgment. The court granted the motion and made an order certifying the action as a class action; declaring EAS 44-113.24 invalid in its entirety; granting a writ of administrative mandate to Green; and issuing a peremptory writ of mandate, the terms of which were to be determined after an evidentiary hearing, against enforcement of the regulation. On defendants' subsequent motion for decertification, however, the court limited the class to present and future AFDC recipients, thereby denying retroactive relief. Additionally, after hearing argument as to the proper scope of its decision, the court ruled that only the portion of the challenged regulation relating to transportation expenses was in issue; it limited the evidentiary hearing accordingly, and in the final judgment awarded plaintiffs relief only as to EAS 44-113.241(d), the transportation-expense limitation.

Defendants' Appeal

In its declaratory judgment the trial court ruled that EAS 44-113.241(d) is invalid because "by establishing a per mile standard allowance for expenses of driving a motor vehicle to and from work and on the job, (the regulation) imposes a maximum limit on the recognition of these expenses in violation of section 602(a)(7) of Title 42 of the United States Code."

Defendants contend, as the "major issue" in the case, that the federal statute permits a state to impose a maximum limit of "reasonableness" on the amount of work-related transportation expense it must recognize in calculating AFDC grants. They then urge that the mileage allowance provided in EAS 44-113.241(d) is such a limit: it was assertedly fixed after statistical studies demonstrated that the average cost of owning and operating a private automobile for work-related purposes was 15 cents per mile. Defendants offered to prove the reasonableness of that figure, and now claim the court erred in ruling such evidence irrelevant to the legal question presented.

The contention is refuted by our unanimous decision in County of Alameda v. Carleson (1971) 5 Cal.3d 730, 97 Cal.Rptr. 385, 488 P.2d 953. There, certain county welfare authorities complained that state welfare regulations "improperly permitted AFDC applicants to deduct from their earned income all work-related expenses actually incurred, without regard to the reasonableness of the amount expended." (Id. at p. 747, 97 Cal.Rptr. 385, 488 P.2d 953.) The trial court agreed, and ordered that the regulations be amended "to provide for the deduction of only a reasonable amount of work-related expenses actually incurred in producing income, up to certain maximum levels" (ibid.). We reversed the judgment, squarely holding such a limitation to be a violation of section 602(a)(7). We reasoned that "The legislative history underlying the work-related expenses deduction provision indicates that it was the intent of Congress to permit the exclusion of all such expenses, without regard to the amount expended, provided that such expenses were reasonably related to employment. 'The committee (Senate Committee on Finance) believes that it is only reasonable for the States to take these expenses...

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