Kozera v. Spirito

• Decision Date: 16 December 1983
• Docket Number: 83-1251,Nos. 83-1250,s. 83-1250
• Citation: 723 F.2d 1003
• Parties: Carole KOZERA, etc., Plaintiffs, Appellees, v. Thomas S. SPIRITO, et al., Defendants and Third-Party Plaintiffs, Appellants, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Third-Party Defendant, Appellee. Geraldine BISHOP, Plaintiff, Appellee, v. Thomas S. SPIRITO, Defendant and Third-Party Plaintiff, Appellant, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 1003

723 F.2d 1003

Carole KOZERA, etc., Plaintiffs, Appellees, v. Thomas S. SPIRITO, et al., Defendants and Third-Party Plaintiffs, Appellants, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Third-Party

Defendant, Appellee.

Geraldine BISHOP, Plaintiff, Appellee, v. Thomas S. SPIRITO, Defendant and Third-Party Plaintiff, Appellant, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellee.

Nos. 83-1250, 83-1251.

United States Court of Appeals First Circuit.

Argued Oct. 6, 1983.

Decided Dec. 16, 1983.

H. Reed Witherby, Asst. Atty. Gen., Boston, Mass., Government Bureau, with whom Francis X. Bellotti, Atty. Gen., Boston, Mass., was on brief, for Department of Public Welfare, et al.

Edward R. Cohen, Atty., Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., with whom J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., William F. Weld, U.S. Atty., Boston, Mass., and Robert S. Greenspan, Atty., Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., were on brief, for Secretary of Health and Human Services.

Before CAMPBELL, Chief Judge, GIBSON, ^* Senior Judge, and COFFIN, Circuit Judge.

COFFIN, Circuit Judge.

This case presents the question whether the federal district court properly dismissed, on grounds of sovereign immunity, a third-party complaint filed by the Massachusetts Department of Public Welfare and its Commissioner ("Commissioner") against the Secretary of Health and Human Services ("Secretary").

This litigation traces its genesis to a 1981 amendment to a portion of the Social Security Act, 42 U.S.C. Sec. 602(a)(31), which requires states, when determining eligibility for benefits under the Aid to Families with Dependent Children (AFDC) program, to take into account the income (after certain deductions) of a dependent child's stepparent living in the same home as the child. See The Omnibus Budget Reconciliation Act of 1981 (OBRA), Pub.L. No. 97-35, Sec. 2306(a), 95 Stat. 846 (codified at 42 U.S.C. Sec. 602(a)(31)); 45 C.F.R. Sec. 233.20(a)(3)(xiv) (1982) (implementing regulation).

Prior to this amendment, a state could not deem the income of a stepparent to be available to a dependent child unless the state had a law of general applicability holding the stepparent legally responsible for support to the same extent as natural or adoptive parents. The amended federal statute and its implementing regulation now require as a condition for federal financial participation (FFP) in a state's welfare program that states attribute the income of stepparents to recipient children. In March 1982, the Massachusetts Department of Public Welfare promulgated a regulation, 106 C.M.R. Sec. 304.235 (1982), which tracks the provisions of the federal statute and regulation.

Pursuant to the Department of Public Welfare's newly promulgated stepparent income attribution requirement, the Commissioner of Public Welfare terminated the welfare benefits of the children of plaintiffs Carole Kozera and Geraldine Bishop. Plaintiffs filed separate complaints against the Commissioner in the Hampshire County Superior Court, alleging that the Commissioner's decision to terminate benefits for plaintiffs' children violated federal law, state regulations, state law, public policy embodied in the AFDC program, and various federal and state constitutional provisions.

The Commissioner then filed a third-party complaint in state court against the Secretary of Health and Human Services, alleging that the challenged state regulation was promulgated to conform to a federal statute and its implementing federal regulation. The third-party complaint further alleged that if the state regulation violated the federal Constitution or statute, then so did the federal regulation to which the state regulation conformed. The Secretary removed the case to federal district court under 28 U.S.C. Sec. 1442(a) and moved to dismiss the third-party complaint on sovereign immunity grounds. The district court granted the Secretary's motion to dismiss and remanded the case--the AFDC claimants against the state agency and its Commissioner--to state court. The Commissioner appeals the district court's dismissal of the Secretary. ¹

I. Standing

The Secretary argues that this appeal should be barred at the threshold, because the Commissioner lacks standing to assert the claims raised in his third-party complaint. The Secretary does not directly allege that the state has not suffered an injury-in-fact necessary to satisfy the irreducible Article III requirements for standing to sue in federal court. Nor could the Secretary so allege.

The Commissioner's third-party claim against the Secretary is contingent upon the success of the original plaintiffs' action against the Commissioner. If the district court held the Massachusetts stepparent deeming regulation invalid on federal constitutional grounds, the Commissioner would have to eliminate the regulation. The Massachusetts AFDC eligibility regulations would no longer comply with federal requirements. The Secretary would then be obligated to terminate payment of federal financial participation to Massachusetts either entirely or only as regards state outlays made in noncompliance with the federal stepparent deeming regulation. See New Jersey v. Department of Health and Human Services, 670 F.2d 1262, 1269 (3d Cir.1981); 42 U.S.C. Sec. 604(a)(2); 45 C.F.R. Sec. 201.6(a), (e) (1982). The Secretary's action would deprive the state of funds to which it would, but for the court ruling, have been entitled and would diminish Massachusetts' ability to provide welfare assistance to families of its needy children. This result, while necessarily hypothetical--since we must determine the propriety of the dismissal before plaintiffs' lawsuit has ended--constitutes a sufficiently distinct and palpable risk of injury to the Commissioner redressable by the district court. If the Secretary is included in the suit as a third-party defendant, and if the original plaintiffs prevail on their constitutional claims, then the federal statute and regulation will fall along with the Massachusetts regulation, thus freeing the state from the squeeze play caused by a court order irreconcilable with federal statutory and regulatory requirements. Thus, a case or controversy in the constitutional sense exists between the Secretary and the Commissioner. See Craig v. Boren, 429 U.S. 190, 194, 97 S.Ct. 451, 455, 50 L.Ed.2d 397 (1976); Singleton v. Wulff, 428 U.S. 106, 113, 96 S.Ct. 2868, 2873, 49 L.Ed.2d 826 (1976).

The Secretary contends that despite the Commissioner's satisfaction of Article III standing requirements, the Commissioner has nonetheless failed to overcome prudential barriers to standing. The Secretary argues essentially that the third-party complaint merely repeats the allegations of the original complaint filed by claimants against the Commissioner and that the Commissioner has not alleged any independent grounds for relief beyond those alleged by the original plaintiffs. Therefore, the Secretary concludes, prudential standing rules bar the Commissioner's attempt to rest his claim to relief on the legal rights or interests of the original plaintiffs. See Warth v. Seldin, 422 U.S. 490, 499, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975); Friedman v. Harold, 638 F.2d 262, 265 (1st Cir.1981).

Under the circumstances presented by this case, however, invoking prudential limitations on the Commissioner's assertion of jus tertii would "serve no functional purpose". See City of Revere v. Massachusetts General Hospital, --- U.S. ----, ----, 103 S.Ct. 2979, 2982, 77 L.Ed.2d 605 (1983) (quoting Craig v. Boren, 429 U.S. at 194, 97 S.Ct. at 455). This is not a case like Friedman v. Harold, 638 F.2d at 265-66, in which the litigant (Commissioner) seeks to assert the rights of a third party (AFDC recipients) in a manner hostile to the interests of the third party. The Commissioner's third-party complaint is contingent on a finding of invalidity of the state regulation. The third-party complaint alleges that if the state regulation violates the federal statute or Constitution, then so does the federal regulation to which the state regulation conformed. The third-party action would neither attack the original plaintiffs' interests nor force the adjudication of unnecessary constitutional questions. ² Cf. Singleton v. Wulff, 428 U.S. at 113-14, 96 S.Ct. at 2873-74 (plurality opinion). The third-party action would likewise not entail "unwarranted intervention into controversies where the applicable constitutional questions are ill-defined and speculative". Craig v. Boren, 429 U.S. at 193, 97 S.Ct. at 455. The original plaintiffs would have already presented the factual context and the constitutional questions to the court.

The Secretary suggests that the third-party complaint stumbles on another prudential barrier by failing to "fall within 'the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.' " Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 475, 102 S.Ct. 752, 760, 70 L.Ed.2d 700 (1982) (quoting Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970)). The interest that the Commissioner seeks to protect--the state's interest in continued federal financial participation--falls within the zone of interests protected by the statute. See 42 U.S.C. Sec. 601 (purpose of AFDC program to channel federal funds to states to assist them in providing for their needy dependent children); cf. Shea v. Vialpando, 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120 (1974) (quoting King v. Smith, 392 U.S. 309, 316, 88 S.Ct. 2128, 2133, 20 L.Ed.2d 1118 (1968)) (AFDC program "is based on a scheme of cooperative federalism").

Pennsylvania v. Kleppe, 533 F.2d 668 (D.C.Cir.), cert. denied, 429 U.S. 977, 97 S.Ct. 485, 50 L.Ed.2d 584 (1976), provides an...