Lynch v. Rank

• Decision Date: 18 December 1985
• Docket Number: No. C-83-2340 WHO.,C-83-2340 WHO.
• Citation: 639 F. Supp. 69
• Parties: Raymon and Joann LYNCH, et al., Plaintiffs, v. Peter RANK, et al., Defendants.
• Court: U.S. District Court — Northern District of California

639 F. Supp. 69

Raymon and Joann LYNCH, et al., Plaintiffs, v. Peter RANK, et al., Defendants.

No. C-83-2340 WHO.

United States District Court, N.D. California.

December 18, 1985.

Daniel Brzovic, Bet Tzedek Legal Services, Los Angeles, Cal., Evelyn R. Frank, Legal Aid Soc. of Alameda County, Oakland, Cal., for plaintiffs.

John K. Van De Kamp, Atty. Gen., Charlton G. Holland, Catherine M. Van Aken, San Francisco, Cal., for defendant Rank.

Joseph Russoniello, U.S. Atty., John F. Barg, Asst. U.S. Atty., San Francisco, Cal., for third party defendant Heckler.

OPINION AND ORDER

ORRICK, Senior District Judge.

This case comes before the Court on plaintiffs' motion to have Mr. Keith Putnam, the Assistant Director of the Oregon Department of Human Resources, held in contempt for his failure to take certain action to bring Oregon into compliance with a previous order of this Court. The issue of law presented by the motion is whether the Court has personal jurisdiction over Mr. Putnam. For the reasons stated below, the Court finds it does not have jurisdiction and, therefore, denies the motion.

I

Certain background information is essential to understanding the problem. This case involves the interpretation of and compliance with the Pickle Amendment to the Social Security Act, 42 U.S.C. § 1396a (note) (1983), which was "to insure that an increase intended to benefit the aged and disabled would not have inadvertent harmful effects." S.Rep. No. 94-1265, 94th Cong., 2d Sess. 28 (1976), reprinted in 1976 U.S.Code Cong. & Ad.News 5997, 6022. Plaintiffs herein comprise a nationwide class of social security recipients who argued that the Secretary of Health and Human Services (the "Secretary") and her state administrative counterparts incorrectly applied the Amendment by invoking it only when it appeared that a recipient lost his or her right to Supplemental Security Income ("SSI") benefits "solely" because of a social security cost-of-living increase. Plaintiffs further argued that the Pickle Amendment applies a "but for" test, that is, if one would still be entitled to SSI benefits but for the social security cost-of-living increase, then one would qualify under the Amendment for continued Medicaid benefits. On March 9, 1984, this Court, inter alia, permanently enjoined the Secretary "and all persons acting in concert or participating" with her from "permitting or requiring any state to deny Medicaid benefits to persons otherwise entitled thereto under the Pickle Amendment, on the basis of the `solely' test presently codified at 42 C.F.R. § 435.135." Lynch v. Rank, 604 F.Supp. 30, 40 (N.D.Cal.), aff'd, 747 F.2d 528 (9th Cir.1984). On July 17, 1974, this Court ordered the Secretary to implement a plan for compliance immediately as to new applicants for and current recipients of Medicaid, and to take certain steps to identify other aged and disabled people who should be eligible for benefits under the Pickle Amendment ("Pickle eligible"). On October 16, 1984, the Court ordered the Secretary to require the states to send notices to current Title II recipients who are potentially Pickle-eligible class members. On August 21, 1985, the Court issued an order to show cause why the Secretary; Gerald J. Reilly, Director of the Division of Medical Assistance of the Washington Department of Social and Health Services; and Keith Putnam, Assistant Director of the Oregon Department of Human Resources, should not be held in contempt for disobedience of the above orders. The matter was heard September 20, 1985, at which time plaintiffs' counsel informed the Court that plaintiffs no longer sought to have the Secretary and Reilly adjudged in contempt.¹ Thus, the contempt proceedings continue only as against Putnam.

Plaintiffs allege that Putnam has disobeyed the Court's orders in a number of ways. First, plaintiffs allege that Oregon did not issue instructions to its local offices implementing the "but for" test until June 26, 1985. If this allegation is true, it would mean that Oregon continued to deny benefits to some eligible recipients on the basis of the forbidden "solely" test even through June 6, 1985, more than fifteen months after this Court's March 9, 1984, permanent injunction. Second, plaintiffs allege that as of July 29, 1985, Oregon still had not distributed to its Medicaid staffers the worksheets necessary to determine Pickle eligibility. If this second allegation is true, then there is some question as to whether Oregon is applying the "but for" test even now. Finally, plaintiffs allege that Oregon refused on three occasions to send notices to potential Pickle-eligible residents within the State of Oregon, despite the fact that the state was capable of identifying such eligible persons from a computer tape supplied by the federal government, and from the state's own records.

As mentioned above, plaintiffs no longer seek to have the Secretary adjudged in contempt. However, it is crucial to note that plaintiffs allege concerted disobedience between Putnam and the Secretary. Plaintiffs contend that the Secretary was aware that Oregon would fail to send timely notice to potential Pickle-eligible recipients, yet failed to object. Furthermore, plaintiffs argue, it was not until May 1985, when the Secretary was ordered to produce a status report, that the Secretary performed the investigation necessary to discover that Oregon had decided (wrongly, plaintiffs contend) that it was already in compliance with the Court's orders. Plaintiffs further allege that on June 25, 1985, Putnam wrote to the regional office of the Health Care Financing Administration, Department of Health and Human Services, and again expressly refused to give potential eligible recipients notice. Finally, plaintiffs allege that although the Secretary has threatened to commence compliance proceedings against Oregon, she has never actually done so.

It is against this factual backdrop that the Court must decide whether to adjudge Putnam in contempt. Before the Court can reach the question of whether Putnam actually disobeyed the order, however, two jurisdictional questions must be resolved. The first question is whether this Court has personal jurisdiction over Putnam. The second question is whether this Court has subject matter jurisdiction to proceed against him. Because the Court finds that it does not have personal jurisdiction, it is unnecessary to reach either the subject matter jurisdiction question or the merits.

II

The starting point in any determination of personal jurisdiction, of course, is the "minimum contacts" analysis first enunciated in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In the Ninth Circuit, the "minimum contacts" analysis has been broken down into three requirements that must be met before a nonresident defendant can be subjected to an exercise of jurisdiction. The first requirement is that the defendant have done some act by which he purposefully availed himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of that state's laws. The second requirement is that the cause of action arise out of the defendant's forum-related activities. The third requirement is that the exercise of jurisdiction be "reasonable". Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1287 (9th Cir.1977). Plaintiffs appear not to contest the fact that in Putnam's case, none of these requirements are satisfied. Thus, Putnam is not subject to personal jurisdiction under the "minimum contacts" analysis.

III

Plaintiffs contend, however, that Putnam is subject to personal jurisdiction under the language of both Federal Rule of Civil Procedure 65(d) and the injunction in this case, which parrots Rule 65(d). Specifically, plaintiffs argue that because Putnam "acted in concert" and "participated" with the Secretary in disobeying this Court's orders, he submitted himself to the Court's jurisdiction. This contention must be scrutinized carefully. See Cubbage v. Merchent, 744 F.2d 665, 667 (9th Cir.1984) ("where a defendant challenges the sufficiency of personal jurisdiction, the plaintiff must bear the burden of establishing that the court does have jurisdiction"); Data Disc, supra. Cf. United States v. Greyhound Corp., 363 F.Supp. 525, 569-70 (N.D.Ill.1973), supplemented, 370 F.Supp. 881 (1974), aff'd, 508 F.2d 529 (7th Cir.1974) (violations of injunctive orders must be proved by "clear and convincing evidence").

The seminal pronouncements regarding who may be bound by an injunction can be found in Alemite Manufacturing Corp. v. Staff, 42 F.2d 832 (2d Cir.1930), and in Regal Knitwear Co. v. NLRB, 324 U.S. 9, 65 S.Ct. 478, 89 L.Ed. 661 (1945). In Alemite, Judge Learned Hand stated the general rule on the scope of injunctions:

No court can make a decree which will bind any one but a party; a court of equity is as much so limited as a court of law; it cannot lawfully enjoin the world at large, no matter how broadly it words its decree. If it assumes to do so, the decree is pro tanto brutum fulmen, and the persons enjoined are free to ignore it.

42 F.2d at 832. In order to be subject to the contempt power, Putnam "must either abet the defendant, or must be legally identified with him." Id. at 833. Although Judge Hand wrote his Alemite opinion before the adoption of Rule 65(d), the pronouncements therein continue to be regarded as the classic statement of limitations on a court's equitable powers. Similarly, Justice Jackson's oft-cited opinion for the Court in Regal Knitwear emphasizes the limits on the permissible scope of an injunction:

The courts * * * may not grant an enforcement order or injunction so broad as to make punishable the conduct of persons who act independently and whose rights have not been adjudged according to law.

324 U.S. at 13, 65 S.Ct. at 481.

It is clear from both Alemite and Regal Knitwear that for Putnam to be...