Grueschow v. Harris, Civ. No. 80-3040.

• Decision Date: 30 June 1980
• Docket Number: Civ. No. 80-3040.
• Citation: 492 F. Supp. 419
• Parties: In re Julie GRUESCHOW, on behalf of herself and all others similarly situated, Plaintiff, v. Patricia HARRIS, Secretary of the U.S. Department of Health and Human Services; Wellington Webb, Denver Principal Regional Official, Department of Health and Human Services; William Janklow, Governor of the State of South Dakota; and the Agents, Employees and Successors of the Above, Defendants.
• Court: U.S. District Court — District of South Dakota

492 F. Supp. 419

In re Julie GRUESCHOW, on behalf of herself and all others similarly situated, Plaintiff, v. Patricia HARRIS, Secretary of the U.S. Department of Health and Human Services; Wellington Webb, Denver Principal Regional Official, Department of Health and Human Services; William Janklow, Governor of the State of South Dakota; and the Agents, Employees and Successors of the Above, Defendants.

Civ. No. 80-3040.

United States District Court, D. South Dakota, C. D.

June 30, 1980.

Mary Ellen McEldowney, Black Hills Legal Services, Inc., Rapid City, S.D., for plaintiff.

Janice C. Godtland, S.D. Dept. of Social Services, Pierre, S.D. for S.D. Department of Social Services.

Steve Zinter, Pierre, S.D., for Governor William Janklow.

Dawn Bowen, Asst. U.S. Atty., Pierre, S.D., for defendant United States.

MEMORANDUM OPINION

DONALD J. PORTER, District Judge.

CASE SUMMARY

Plaintiff filed this action on June 17, 1980, seeking injunctive and declaratory relief from the State of South Dakota and the United States for alleged due process violations in the administration of the 1979-80 South Dakota Energy Assistance Program. Having found that this Court has the equitable authority to halt the June 30, 1980 reversion of federal funds granted to South Dakota under this program, that plaintiff's suit should be certified as a class action, and that the South Dakota administration of this program did, in fact, violate the due process rights of plaintiff's class, the Court grants the relief plaintiff seeks.

BACKGROUND

On November 27, 1979, Congress enacted P. L. 96-126, 93 Stat. 978, granting $1.2 billion to the states for payment of energy grants "to those households experiencing significant increases in heating fuel costs over the levels of the previous year." The statute also provided that "no awards to applicants under this program shall be made after June 30, 1980."

Instructions for the distribution of this money were published, 44 F.R. 69032 (Nov. 30, 1979) giving the states "broad latitude to decide how they will use their allocated funds." 44 F.R. 69032. Four different alternatives were set forth. South Dakota chose Plan D, which entailed the design of its own Plan, with federal approval. The state-developed Plan was subject to certain basic requirements, including one that "eligibility conditions must be based upon reasonable classifications and must not exclude individuals or groups on an arbitrary or unreasonable basis." 44 F.R. 69035.

The state notified possible recipients of the availability of money under this program, which was to involve a $300 one-time payment, by the following letter, dated January 4, 1980:

Dear ADC and/or Food Stamp Recipient:

ADC and food stamp households eligible in December may receive an energy payment check this month. Whether or not you receive this energy payment depends upon the following:

1) ADC and/or food stamp recipients whose case situation in December shows they have no energy costs direct or indirect (such as rent which includes fuel/utilities) will receive no energy payment.

2) ADC recipients whose case situation in December shows their shelter costs include utilities and are equal to or less than $163.00 will receive no energy payment.

Checks will be mailed around January 15. Please allow several days for delivery.

If you do not receive an energy payment and want your case reviewed, please contact your local caseworker no later than February 25, 1980.

Following the issuance of this letter, a letter dated January 16, 1980, from Governor William Janklow to Mr. James W. Ellenbecker, the Secretary of the South Dakota Department of Social Services, set forth the standards under which these payments were to be made. This largely repeated the January 4, 1980, letter quoted above, except that it contained a definition of the term "indirect energy costs."

Indirect energy costs refer to rent which includes fuel and utility expenses. Upon a request for a conference or fair hearing made within thirty (30) days of the energy payment date, an evaluation will be made to determine if heat furnished through an indirect means is inadequate and there is a demonstrated need to protect the health, safety and well-being of the ADC or food stamp recipient by supplementing the heat source with, for example, an appliance such as a space heater.

Plaintiff, whose "shelter costs" were less than $163.00, but who contends that she had indirect energy costs in December, 1979, alleges that she did not learn of this eligibility category until April, 1980, and then made application. According to plaintiff, however, the application was denied because it was not made prior to February 25, 1980.

Of the approximately $5.7 million of this money which was granted to the state, about $1.4 million is left. The state has received permission from the United States to spend the remainder of this money by making a supplemental payment of $100 to 10,000 of the people who received the initial $300 grant. Before the state could do so, however, plaintiff filed this action, and this Court granted a temporary restraining order preventing any disbursal of funds until a hearing on this action could be held.

DISCUSSION

I.

The threshold question to be answered is whether this Court has the power to prevent the reversion of this money to the federal treasury. The statute, cited above, places a June 30, 1980, cut-off on payments, and the instructions also state that funds not spent by June 30 must be returned to the federal government. 44 F.R. 69035, 69039. If the Court, on June 30, 1980, lacks the power to alter this, all other questions become irrelevant.

There is no doubt, however, that the Court has the power to do just this. In the case of National Association of Regional Councils v. Costle, 564 F.2d 583 (D.C. Cir. 1977), the court unequivocally affirmed "the power of the courts to order that funds be held available beyond their statutory lapse date if equity so requires." 564 F.2d at 588. The court said that this power stems from the "equity powers of the courts which allow them to take action to preserve the status quo of a dispute and to protect their ability to decide a case properly before them ... the courts simply suspend the operation of a lapse provision and extend the term of already existing budget authority." 564 F.2d at 588. See also Jacksonville Port Authority v. Adams, 556 F.2d 52 (D.C. Cir. 1977); Los Angeles v. Adams, 556 F.2d 40 (D.C. Cir. 1977); National Association of Neighborhood Health Centers, Inc. v. Mathews, 551 F.2d 321 (D.C. Cir. 1976); Bennett v. Butz, 386 F.Supp. 1059, 1062 (D.Minn. 1974). These cases all require that the action must be filed before the statutory lapse; since this was obviously done in this case, this Court has the discretion to halt any return of these funds to the federal government on June 30, 1980.

II.

Plaintiff seeks to have her action certified as a class action pursuant to Rule 23(a), (b)(1) and (b)(2). This class, argues plaintiff, consists of people who would have otherwise been eligible and would have applied for a payment but for the insufficient notification of eligibility criteria announced by the state in its January 4, 1980, letter to "ADC and/or Food Stamp" recipients.¹ The state argues that no such class could exist, arguing that the notice was adequate and that "merely because some clients may have chosen not to apply for EAP does not mean they were inadequately advised." The state contends that most of the ADC/food stamp recipients who did not apply were living in family arrangements (unwed mothers living with parents, etc.) such that they did not have any energy needs.

While the state's arguments might have some validity if plaintiff was suing to compel the payment of $300 to each member of this class, such is not the case here. Plaintiff merely seeks to compel defendant Ellenbecker to give "plaintiff and members of her class legally and constitutionally sufficient notice of what is considered `indirect energy costs' ... and allowing .. the opportunity to apply for, and be considered under that eligibility criterion. ..."

It is evident that not all the ADC/food stamp recipients who did not receive a $300 payment are eligible for such a payment. The criterion which the state failed to include in its general notice makes this clear, since it states that a payment for indirect energy costs can be made only after "an evaluation" of the adequacy of the applicant's heat source, and there is a "demonstrated need to protect the ... ADC or food stamp recipient by supplementing the heat source." Thus, there must be a case-by-case determination of who is entitled. The state has so far prevented this determination from taking place by failing to make this criterion generally known; and it is not until sufficient notice is given that the true numbers of plaintiff's class will be known. Until that time, then, the class of about 5,000 ADC/food stamp recipients who received the January 4, 1980, letter who did not apply by February 25, 1980, must be presumed to be a class of potentially eligible EAP recipients. A contention that some of these may later turn out not to be eligible does not prevent their certification as a class at this point.

The Court therefore finds that plaintiff's class is so numerous that joinder of all members is impracticable, there are questions of law or fact common to this class, the claim of the representative party will fairly and adequately protect the interests of the class, and that the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making final injunctive and declaratory relief with respect to the class as a whole appropriate. It is therefore certified as a class action pursuant to Rule 23.

III.

Finally, the Court reaches the critical question of whether the notice given was sufficient under either the State Plan or the standards of due process. It...