Minnesota Recipients Alliance v. Noot

• Decision Date: 29 October 1981
• Docket Number: Civ. No. 4-81-658.
• Citation: 527 F. Supp. 140
• Parties: MINNESOTA RECIPIENTS ALLIANCE, et al., Plaintiffs, v. Arthur E. NOOT, et al., Defendants and Third Party Plaintiffs, v. Richard D. SCHWEIKER, et al., Third Party Defendants.
• Court: U.S. District Court — District of Minnesota

527 F. Supp. 140

MINNESOTA RECIPIENTS ALLIANCE, et al., Plaintiffs, v. Arthur E. NOOT, et al., Defendants and Third Party Plaintiffs, v. Richard D. SCHWEIKER, et al., Third Party Defendants.

Civ. No. 4-81-658.

United States District Court, D. Minnesota, Fourth Division.

October 29, 1981.

Legal Aid Society of Minneapolis by Michael R. Fargione, Minneapolis, Minn., for plaintiffs.

Warren Spannaus, Atty. Gen., State of Minn., by Beverly Jones Heydinger, Sp. Asst. Atty. Gen., St. Paul, Minn., for defendants and third party plaintiffs.

Linda L. Cromwell, Atty., Dept. of Justice, Civ. Div., Washington, D. C., for third party defendants.

MEMORANDUM OPINION AND ORDER FOR PRELIMINARY INJUNCTION

MILES W. LORD, Chief Judge.

The plaintiffs brought this action to enjoin the defendant Noot from implementing two provisions of the Omnibus Budget Reconciliation Act, P.L. 97-35 (hereinafter P.L. 97-35) relating to AFDC benefits. The plaintiffs claim that these two provisions conflict with state law and, therefore, by the terms of P.L. 97-35 § 2321 the federal provisions do not become effective until after the state legislature has had an opportunity to meet and consider the federal law changes.¹ The plaintiffs represent a large group of people whose AFDC benefits have been denied, reduced, or terminated as a result of the defendant Noot's October 1, 1981, implementation of these two provisions of P.L. 97-35.

The plaintiffs' cause was begun in state court. The plaintiffs' motion for a preliminary injunction was summarily denied by the state court. Minnesota Recipients Alliance v. Noot, No. 783348 (Henn. County Dist. Court, filed Sept. 29, 1981). The plaintiffs appealed the denial of the injunction to the Minnesota Supreme Court. The Minnesota Supreme Court agreed to hear the arguments for appeal and set the hearing for October 15, 1981. However, the defendant Noot moved to join the defendant Schweiker; the defendant Schweiker agreed to the joinder and on September 28, 1981, the state court granted the motion for joinder. On October 8, 1981, the defendant Schweiker removed the action to this Court pursuant to 28 U.S.C. § 1442 before the Minnesota Supreme Court could hear the appeal.

For the reasons stated below, this Court grants the plaintiffs' motion for a preliminary injunction and certifies the state law questions involved to the Minnesota Supreme Court pursuant to Minn.Stat. § 480.061 (1980).

The plaintiffs' motion for a preliminary injunction is based on state law issues, i. e., the proper interpretation of Minn.Stat. §§ 256.73, Subd. 6, and 256.74, Subd. 1 (1980). Specifically, the plaintiffs claim that these state statutes conflict with P.L. 97-35 § 2301, and therefore, P.L. 97-35 § 2301 is not effective as the law until the state legislature meets to consider changing the state law. (See footnote 1 supra.)

P.L. 97-35 § 2301 relates to the calculation of work expenses for AFDC recipients and the application of the AFDC work incentive. P.L. 97-35 § 2301 provides that work expenses shall not be allowed as disregards from earned income if they exceed $75 per month, and child care expenses shall not be allowed if they exceed $160 per child. (The amount of earned income affects the amount of the AFDC grant.) Further this section provides that the AFDC work incentive (another disregard from earned income) shall be calculated with reference to net rather than gross income. Because the work incentive is basically a "percentage" calculation, the application of the incentive to net income rather than gross produces a smaller disregarded amount.

Prior to October 1, 1981, the defendant Noot allowed actual work expenses and applied the work incentive to gross income. On October 1, 1981, the defendant Noot implemented the changes (noted above) outlined in P.L. 97-35 § 2301. These changes had a substantial impact on AFDC recipients. In Hennepin County alone, approximately 3,900 families had their AFDC benefits either reduced or terminated because of these changes. Affidavits filed with this Court indicate that many women who have been working, raising minor children, will now have inadequate funds to pay for food and shelter. One mother of a six year old whose grant is being terminated because of these changes has no money left after paying her actual work expenses, rent and utilities. Another mother of four whose grant is being reduced will have only $20 of income left after paying her rent.

All families whose grants are being terminated will also automatically lose Medical Assistance benefits for their children. These reductions and terminations do not result from the family having more resources available, but result solely from the changes in the calculations mentioned above. In fact, the affidavits reveal that money which has been spent on work expenses is being counted as though it were available to pay for the subsistence needs of dependent children. The defendant Noot has stated in a newspaper interview that these changes will encourage working AFDC mothers to quit their jobs in order to maximize or retain AFDC benefits.

As stated above, the plaintiffs claim that the state law conflicts with these federal law provisions and thus the federal provisions may not be implemented until after the State Legislature meets. On the merits of their claim concerning work expenses, the plaintiffs make two arguments. First, the plaintiffs rely upon Minn.Stat. § 256.74, Subd. 1 (1980) which provides in part that the amount of an AFDC grant "shall be determined with due regard to the resources and necessary expenditures of the family ..." In analyzing this statute, the plaintiffs rely upon the reasoning in Shea v. Vialpando, 416 U.S. 251, 94 S.Ct. 1746, 40 L.Ed.2d 120 (1974) in which the Supreme Court interpreted a federal statute requiring a state to "take into consideration" income and resources as well as work expenses in calculating AFDC grants. In Shea, the Court held that the phrase "take into consideration" should be read to require the disregard of all reasonable work expenses. By imposing a maximum deduction of $30 per month, the Court held a state would violate the law. The plaintiffs contend that the "due regard" language of the state statute involved here should be interpreted similarly to require consideration of reasonable work expenses and not a flat $75.

In a second legal argument concerning the disregard of work expenses, the plaintiffs rely upon Minn.Stat. § 256.73, Subd. 6 (1980), a 1977 statute which incorporates by reference income disregards of the Social Security Act. At the time of the state law's enactment in 1977, the Social Security Act contained a mandatory disregard of all work expenses as required by Shea v. Vialpando, supra. The plaintiffs contend that as a general rule, a state statute incorporating standards of the Social Security Act by reference does not include subsequent modifications of the federal law, unless the state legislature expressly so declares. See Anno., 169 A.L.R. 627; 73 Am.Jur.2d Statutes, § 29.

The plaintiffs' argument regarding the work incentive is that the state statute, Minn.Stat. § 256.74, Subd. 1(3) contains language which follows that enacted by Congress in 1968 and codified as 42 U.S.C. § 602(a)(8). The plaintiffs argue that for over a decade both the state and federal law have been taken to require that the disregard of "the first $30 plus one-third of the remainder" be calculated with reference to gross income. The plaintiffs contend that the established meaning of state law does not automatically change when a comparable federal law is amended. Rather, they contend, the state law must be similarly amended.

The defendant Noot argues that the "due regard" language of Minn.Stat. § 256.74, Subd. 1 (1980) does not compel any one set of deductions of work expenses from earned income, but allows him to determine allowable deductions (apparently) with reference to federal law. Further, he argues that the reference to federal law in Minn.Stat. § 256.73, Subd. 6 (1980) and the similarity of Minn.Stat. § 256.74, Subd. 1(3) to a specific federal law do not compel him to follow the federal law in effect when these statutes were passed, but rather allow him to follow the federal law in effect at any given time.

The defendant Noot points to Wallace v. Commissioner of Taxation, 289 Minn. 220, 184 N.W.2d 588 (1971) for the proposition that the state legislature may adopt, by reference, federal law as it exists now as well as any future modifications "to achieve uniformity in implementation of national programs and policies." 184 N.W.2d at 592. The defendant Noot argues that since AFDC is a joint federal-state program, it is appropriate for Minnesota to adopt both existing and prospective federal standards. See, State v. Hotel Bar Foods, 18 N.J. 115, 112 A.2d 726 (1955); Peppers v. McKenna, 81 F.R.D. 361 (N.D.Ohio 1977); Ex Parte Lasswell, 1 Cal.App.2d 183, 36 P.2d 678 (1934).

The plaintiffs also point to Wallace, supra, arguing that:

in considering the issue of whether a change in Federal law may alter the force and effect of provisions in a prior state law governing the same subject, it may be said that the principle which controls is that a state legislature may not delegate its legislative powers to any outside agency, including the Congress of the United States.

184 N.W.2d at 591. Thus, the plaintiffs conclude that the defendant Noot's argument that the State Legislature adopted both existing and prospective federal standards is unpersuasive.

While this Court agrees with the defendant Noot that in some instances it may be appropriate for a state to adopt both existing and prospective federal standards, this Court will not assume that a legislature so intended to adopt prospective standards. The guiding principle under Minnesota law is that the legislature may not adopt prospective federal standards. Wallace, supra. If, however, this is a case where Minnesota allows...