Luyando v. Sullivan, 87 CV 5779 (KMW).

• Decision Date: 03 November 1992
• Docket Number: No. 87 CV 5779 (KMW).,87 CV 5779 (KMW).
• Parties: Carmen LUYANDO, individually and on behalf of all others similarly situated, Plaintiff, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human Services, William J. Grinker, Commissioner of the City of New York Human Resources Administration and on behalf of all others similarly situated, and Cesar A. Perales, Commissioner of the State of New York Department of Social Services, Defendants.
• Court: U.S. District Court — Southern District of New York

808 F. Supp. 283

Carmen LUYANDO, individually and on behalf of all others similarly situated, Plaintiff, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human Services, William J. Grinker, Commissioner of the City of New York Human Resources Administration and on behalf of all others similarly situated, and Cesar A. Perales, Commissioner of the State of New York Department of Social Services, Defendants.

No. 87 CV 5779 (KMW).

United States District Court, S.D. New York.

November 3, 1992.

Marshall Green, Bronx, N.Y., for plaintiff; Steven Godeski, Ian F. Feldman, Legal Aid Soc., Bronx, N.Y., of counsel.

Susan D. Baird, Otto G. Obermaier, U.S. Atty., New York City, for Sullivan.

Isaac Klepfish, Corp. Counsel's Office, New York City, for Grinker.

Angela Cartmill, Atty. General's Office, New York City, for Perales.

OPINION

KIMBA M. WOOD, District Judge.

This court previously issued an order granting plaintiffs' motion for summary judgment and denying defendants' motion for summary judgment. This opinion states the reasons for that order.

BACKGROUND

The named plaintiff represents a class consisting of recipients of Aid to Families with Dependent Children ("AFDC"), on whose behalf the state collects child support payments. Defendant Louis W. Sullivan, M.D. is the Secretary of the United States Department of Health and Human Services; defendant William J. Grinker is the Commissioner of the New York City Human Resources Administration and represents the class of all commissioners of New York State social services districts; and defendant Cesar A. Perales is the Commissioner of the New York State Department of Social Services.

The AFDC program encourages the care of dependent children in their own homes or in the homes of relatives by helping parents or relatives to become financially able to provide for those children. See 42 U.S.C. § 601. The program is a federal-state cooperative effort. In 1984, the program was altered by the Deficit Reduction Act of 1984 (DEFRA), Pub.L. 98-369, 98 Stat. 494. From that point until amended, effective January 1, 1989, 42 U.S.C. § 657(b)(1) provided:

The first $50 of such amounts as are collected periodically which represent monthly support payments shall be paid to the family without affecting its eligibility for assistance or decreasing any amount otherwise payable as assistance to such family during such month.

Viewed on its own, this amendment had the effect of increasing many families' total income, but viewed from a broader perspective, it was a slight, legislative quid pro quo for certain other features of DEFRA, which had "the practical effect that many families' total income was reduced." Bowen v. Gilliard, 483 U.S. 587, 594, 107 S.Ct. 3008, 3013, 97 L.Ed.2d 485 (1987).

Section 657(b)(1) is referred to as a "pass-through" provision. Prior to the enactment of this section, all child support payments to AFDC recipients were assigned to the state or local government entity distributing AFDC benefits, as a condition of eligibility for those benefits. The pass-through provision altered the statutory scheme so that, although all child support payments still went first to the state or local entity, a certain portion of a parent's monthly child support payments would (in effect) be turned back to the child, and would not diminish the AFDC benefits. That is, a certain portion of these payments would "pass through" the government's hands into the hands of the child for whose benefit the payments were made (such payments often are made through a circuitous route — e.g., a payment may occur by means of a garnishment of the parent's wages by the parent's employer who, in turn, remits the payment to the government).

The Secretary of Health and Human Services promulgated a regulation, codified at 45 C.F.R. § 302.51(b)(1), interpreting § 657(b)(1) to require the state to distribute the first $50 of child support collected only when the state or local entity receives that payment in the month in which it is due. That regulation, as it existed from 1984 until 1989, provided:

Of any amount that is collected in a month which represents payment on the required support obligation for that month, the first $50 of such amount shall be paid to the family.... If the amount collected includes payment on the required support obligation for a previous month or months, the family shall only receive the first $50 of the amount which represents the required support obligation for the month in which support was collected.

Defendant Perales in turn promulgated 18 N.Y.C.R.R. § 352.15(a), which in pertinent part mirrored the federal regulation. Each social service district commissioner was bound to follow both regulations. See Social Services law (SSL) §§ 20 and 65.¹

Plaintiffs contend that the federal and state regulations were inconsistent with the statute and thus violated their rights under 42 U.S.C. § 657(b)(1), the Equal Protection Clause of the Fourteenth Amendment, and the Fifth Amendment of the United States Constitution. They seek a declaratory judgment, injunctive relief, and retroactive benefits.² Defendants, in contrast, assert that the regulation is consistent with the statutory scheme, and consequently, that I must defer to their judgment that the regulation is permissible.

DISCUSSION

I.

Pursuant to Rule 56, summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Citizens Bank of Clearwater v. Hunt, 927 F.2d 707, 710 (2d Cir. 1991) (citations omitted). Summary judgment is appropriate in this case because the parties neither dispute the material facts, nor argue that issues of material fact preclude deciding this case by summary judgment. Instead, the parties disagree about the legal significance of the undisputed facts.

II.

The Secretary's regulation is rooted in a particular interpretation of § 657(b)(1)'s reference to "the first $50 of such amounts as are collected periodically which represent monthly support payments." According to the Secretary's regulation, this provision allows for a prohibition on multiple pass-throughs in a given month. The central question before this court is whether the Secretary was within his authority in promulgating and enforcing § 302.51(b)(1), the regulation that enforces this prohibition on multiple pass-throughs.

In resolving this question, I follow the framework established in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), for reviewing administrative interpretations of Congressional mandates. The Chevron Court directed courts to conduct a two-part inquiry when addressing such issues:

First, always, is the question whether Congress has directly spoken to the precise question at issue.... If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.

Id., 467 U.S. at 842-43, 104 S.Ct. at 2781-82 (citations and footnotes omitted). Thus, it is only when Congress has not spoken directly to the matter at hand, that issues of judicial deference to administrative agencies arise, and, even then, the fact that a court finds a statute susceptible to differing interpretations does not require it to terminate its inquiry. Instead, courts should ask whether the agency's interpretation "is permissible," that is, whether the regulation is "manifestly contrary to the statute," id., 467 U.S. at 844, 104 S.Ct. at 2782, or "a reasonable policy choice for the agency to make," id., 467 U.S. at 845, 104 S.Ct. at 2783.

I first note that Congress does not seem to have "directly spoken to the question at issue" in this case — whether one lump sum support payment for multiple months may yield only one $50 pass-through. Nevertheless, I grant summary judgment to plaintiffs because I find the Secretary's interpretation to be contrary to the statute's meaning and intent.³

The Second Circuit has not addressed § 657(b)(1)'s purpose and meaning, but several other courts have examined the issue thoroughly. The majority, including the First Circuit and the Sixth Circuit, as well as a number of district courts and state courts, have explained why 45 C.F.R. § 302.51(b)(1) impermissibly contradicts § 657(b)(1). See, e.g., Wilcox v. Ives, 864 F.2d 915, 918 (1st Cir.1988); Lawyer v. Valdez, 763 F.Supp. 1562, 1565 (D.N.M., 1990); Brown v. Angus, No. 88-C-787J (D.Utah, May 22, 1989); Beasley v. Harris, 671 F.Supp. 911, 919 (D.Conn.1987); Humble v. Dept. of Pub. Aid, 116 Ill.Dec. 509, 512, 519 N.E.2d 99, 102, 165 Ill.App.3d 624 (2d Dist.1988). But see Vanscoter v. Sullivan, 920 F.2d 1441, 1445 (9th Cir.1990) (Section 302.51(b)(1) entitled to deference, because of statute's ambiguity).

I accept the majority position for the reasons stated in the First Circuit's extensive analysis in Wilcox. As the First Circuit explained, the Secretary's interpretation does not comport with the plain language of § 657(b)(1). "A cardinal rule of statutory construction is that words in a statute must be given their plain, ordinarily understood meaning. For the Secretary's position to be valid, `periodically' would have to be synonymous with `monthly,' which is contrary to the plain meaning of the word." Wilcox, 864 F.2d at 915 (citations omitted). See also, INS v. Cardoza-Fonseca, 480 U.S. 421, 431, 107 S.Ct. 1207, 1213, 94 L.Ed.2d 434 (1987) (the "ordinary and obvious meaning of a statute's phrase is not to be lightly...