Mothers and Childrens Rights Org., Inc. v. Stanton

• Decision Date: 29 August 1973
• Docket Number: Civ. No. 72 F 69.
• Citation: 371 F. Supp. 298
• Parties: MOTHERS AND CHILDRENS RIGHTS ORGANIZATION, INC., an Indiana not-for-profit corporation, et al., Plaintiffs, v. Wayne A. STANTON, Individually and in his capacity as Administrator of the Indiana State Department of Public Welfare, et al., Defendants.
• Court: U.S. District Court — Northern District of Indiana

371 F. Supp. 298

MOTHERS AND CHILDRENS RIGHTS ORGANIZATION, INC., an Indiana not-for-profit corporation, et al., Plaintiffs, v. Wayne A. STANTON, Individually and in his capacity as Administrator of the Indiana State Department of Public Welfare, et al., Defendants.

Civ. No. 72 F 69.

United States District Court, N. D. Indiana, Fort Wayne Division.

August 29, 1973.

Ivan E. Bodensteiner and William Rastetter, Legal Services Program, Fort Wayne, Ind., Seymour H. Moskowitz and Linda D. Moskowitz, Project Justice & Equality, Gary, Ind., for plaintiffs.

Gary L. Thompson and Elizabeth H. Hamacher, Deputy Attys. Gen., Indianapolis, Ind., for State Welfare Dept., defendants.

Philip H. Larmore and Robert H. Berning, Fort Wayne, Ind., for defendant John E. Heiny.

C. Jerome Smith, Hammond, Ind., for defendant John D. Kelley.

MEMORANDUM OF DECISION AND ORDER

ESCHBACH, District Judge.

Plaintiffs bring this class action to challenge certain forms, regulations, and procedures of the Indiana State Department of Public Welfare governing the administration of Indiana's public assistance program on the grounds that they are in conflict with the equal protection and due process clauses of the Fourteenth Amendment to the United States Constitution and that they are in contravention of the Social Security Act, §§ 601-644, and regulations promulgated thereunder by the Department of Health, Education, and Welfare, 45 C.F. R. 233.20(a)(1), 223.20(a)(3)(ii), 233.90(a). Specifically, plaintiffs challenge the method and the supposedly supporting regulations and computation form, DPW 5A, by which defendants establish the costs of Basic Needs (food, clothing, personal needs, utilities, household supplies) and of shelter of Indiana residents who, for purposes of this case, receive benefits under the Aid to Families with Dependent Children program (AFDC) and who live in a household with one or more nonrecipients. Plaintiffs are members of, or purport to represent, a class of persons eligible for benefits under AFDC who have been harmed by the challenged practices. Defendants include the members of the Indiana State Board of Public Welfare and the Administrator of that department. Also named as defendants are the Directors of the Allen and Lake County, Indiana, Departments of Welfare. Plaintiffs seek a preliminary and permanent injunction restraining the enforcement of the challenged regulations and procedures and requiring defendants to pay retroactive benefits to members of the class denied benefits by the allegedly illegal activity of defendants.

This action is founded upon 42 U.S.C. § 1983, and jurisdiction is established under 28 U.S.C. § 1343(3). Gaither v. Sterrett, 346 F.Supp. 1095 (N.D.Ind.) (three-judge court), aff'd, 409 U.S. 1070, 93 S.Ct. 688, 34 L.Ed.2d 660 (1972). See King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968). Because the constitutional questions were not insubstantial and because plaintiffs sought an injunction restraining the enforcement of statewide regulations, a three-judge court was convened pursuant to 28 U.S.C. 2281 and 2284. Id. On November 1, 1972, this cause was remanded, on plaintiffs' motion, to the undersigned single judge for a determination of the statutory questions presented by the plaintiffs' complaint. Rosado v. Wyman, 397 U.S. 397, 402-403, 90 S.Ct. 1207, 1212-1213, 25 L. Ed.2d 442 (1970). A hearing on the statutory claims was had in this court on February 23, 1973, at which time, pursuant to Rule 65(a)(2), Fed.R.Civ.P., and to the agreement of the parties, trial on the merits was advanced and consolidated with the hearing on plaintiffs' motion for a preliminary injunction. This court concludes that the challenged portions of DPW Form 5A and of the underlying regulations are facially valid but that in the application of the form and regulations, defendants conflict with the Social Security Act, §§ 601-644.

As an initial matter, certain preliminary rulings are necessary. First, the court finds that the prerequisites to a valid class action have been met pursuant to Rule 23(a) and (b)(2), Fed.R.Civ.P. Cf. Owens v. Parham, 350 F.Supp. 598 (N.D.Ga.1972) (three-judge court); Gaither, supra. The class consists of all Indiana residents otherwise eligible for AFDC whose benefits were denied, terminated, or reduced or so threatened because of the mere presence in the household of one or more individuals not eligible for AFDC benefits and not legally obligated to support members of the household eligible for benefits.¹ Secondly, the court finds defendants' motions to dismiss or transfer to be without merit. Defendants' Eleventh Amendment argument that this cause is in fact a suit against the State of Indiana and therefore barred has been considered and rejected by the United States Court of Appeals for the Seventh Circuit. Jordan v. Weaver, 472 F.2d 985 (7th Cir. 1973). Equally without merit are defendants' claims that the State has absolute, unreviewable discretion as to the definition and determination of "need," see King, supra; Owens, supra, and that this court is without jurisdiction because plaintiffs have not alleged the $10,000 minimum amount required for establishing jurisdiction under 28 U.S.C. § 1331. This section, as above-noted, is not the jurisdictional basis of this action. Defendants next argue that venue in the Northern District of Indiana is improper under 28 U.S.C. § 1391. However, venue in this district is proper since all defendants reside in Indiana and several reside in the Northern District. 28 U.S.C. § 1392. Moreover, at least the claim of the Smith family arose in the Northern District. Jimenez v. Pierce, 315 F.Supp. 365 (S.D.N.Y.1970). Defendants also may be arguing that even if venue is proper in this district, the proper division is the Hammond Division. One of the named defendants, however, resides and works in his official capacity in this division and, as the alleged harm occurs statewide and involves that defendant's duties directly, he is a proper party and his presence herein supports venue in this division. 28 U.S.C. § 1393. Defendants finally argue that HEW has not been named a defendant and is an indispensable party. Since plaintiffs do not question the facial validity of any HEW regulation and since disposition of this case will not require any declaration of invalidity of such regulations, HEW is not indispensable. See Green v. Stanton, 364 F.Supp. 123, at p. 128 (N.D. Ind.1973) (appeal pending). At the same time, as defendants suggest, it is helpful to have before this court the position of HEW on the issues in dispute. This assistance has been provided through the filing with this court of an amicus brief on behalf of HEW. In this regard HEW's position should be given careful consideration, as this court has done, but that position is not conclusive on the questions raised. See Townsend v. Swank, 404 U.S. 282, 286, 92 S.Ct. 502, 505, 30 L.Ed.2d 448 (1971).

Under the Indiana plan, generally, the determination of the amount of the welfare payment for a particular assistance unit is a two-step process. First, there is determined the cost of basic needs and certain special needs and of a limited level of shelter. Then, income available to the unit is subtracted from this amount, with the difference constituting the amount of the welfare payment. The costs of basic needs and of shelter, the matters at issue in this case, are computed as follows: For basic needs a standardized table is used, with the proper amount being in part a function of the number of individuals in the assistance group and the number in the household. The latter number includes those living in the household who are not eligible for AFDC benefits, and it is only the effect given this factor which plaintiffs attack. As the number of individuals in the assistance group increases, the cost attributed to satisfying the unit's basic needs increases. This increase, however, is in less than proportional amounts, i. e., the amount established for each larger group is less than the amount obtained by multiplying the amount for one recipient living alone by the number of recipients. For instance, the increase in the cost of needs of an assistance group of five in a household of five over a group of four in a household of four is $53.05, while the increase in cost for a like group of six over a like group of five is only $44.65. The economic theory behind these less than proportional increases is that as the number of persons in a household increases, what the Supreme Court and plaintiffs' expert at the hearing identify as "economies of scale" come into play. See Dandridge v. Williams, 397 U.S. 471, 479-480, 90 S.Ct. 1153, 1159, 25 L.Ed.2d 491 (1970). These economies may include increased efficiency in the use of goods such as heating and electricity which permit joint consumption, more thorough consumption, and consequent decreased wastage of perishable goods such as certain foods, and decreased per unit costs for goods purchased in bulk.

Plaintiffs' dissatisfaction, so far as the basic needs computation is concerned, is with defendants' attempt to adapt economies of scale concepts to the case where the assistance group has living in the same household one or more nonrecipients. In such a case, first the costs of basic needs are estimated for all living in the household, including an adjustment for economies of scale. Then, to obtain the costs of needs for the assistance unit, the total cost is divided by the number of persons in the household and the resulting amount is multiplied by the number of persons in the assistance unit. For instance, in the case of the plaintiff Smith family, the total cost to satisfy the basic needs for the household of six, as taken from DPW Form 5A, is $360.90. Since, however, Sharon Smith is eighteen, she is ineligible, under regulations unchallenged by plaintiffs, to receive AFDC benefits even though she remains in the household. The cost of...