Ro Ane v. Mathews

• Decision Date: 16 May 1977
• Docket Number: No. C-76-1960-CBR.,C-76-1960-CBR.
• Court: U.S. District Court — Northern District of California
• Parties: Susan RO ANE, Barbara Ann Brown, Christine Elgin, Maurice M. Kovash, Edward J. Cassilagio, Stephen Negoesco, Jr., for themselves and on behalf of a class composed of those teachers employed by the San Francisco Unified School District who became members of the State Teachers' Retirement System as of July 1, 1972, who make contributions to Social Security and who have initiated their administrative remedies with respect to their claims that their Social Security coverage ceased as of July 1, 1972 and that their contributions since July 1, 1972 should be refunded, Plaintiffs, v. F. David MATHEWS, in his official capacity as Secretary of Health, Education and Welfare, William E. Simon, in his official capacity as Secretary of the Treasury, Board of Administration of the Public Employees' Retirement System of the State of California, Robert F. Carlson, Malvern W. Aust, Arthur J. Wiedel, Prescott Reed, Bartlett T. Grimes, Carl Verhoye, Roy Bell, and Frank M. Woods, in their official capacities as members of said Board of Administration, Carl J. Blechinger, in his official capacity as Executive Officer of the Public Employees' Retirement System, San Francisco Unified School District, Board of Education of the San Francisco Unified School District, Lee S. Dolson, Samuel Martinez, Lucille Abrahamson, Z. L. Goospy, Eugene S. Hopp, John A. Kidder, and Thomas A. Reed, in their official capacities as members of said Board of Education, Robert F. Alioto, in his official capacity as Superintendent of Schools of the San Francisco Unified School District, Defendants.

476 F. Supp. 1089

Susan RO ANE, Barbara Ann Brown, Christine Elgin, Maurice M. Kovash, Edward J. Cassilagio, Stephen Negoesco, Jr., for themselves and on behalf of a class composed of those teachers employed by the San Francisco Unified School District who became members of the State Teachers' Retirement System as of July 1, 1972, who make contributions to Social Security and who have initiated their administrative remedies with respect to their claims that their Social Security coverage ceased as of July 1, 1972 and that their contributions since July 1, 1972 should be refunded, Plaintiffs, v. F. David MATHEWS, in his official capacity as Secretary of Health, Education and Welfare, William E. Simon, in his official capacity as Secretary of the Treasury, Board of Administration of the Public Employees' Retirement System of the State of California, Robert F. Carlson, Malvern W. Aust, Arthur J. Wiedel, Prescott Reed, Bartlett T. Grimes, Carl Verhoye, Roy Bell, and Frank M. Woods, in their official capacities as members of said Board of Administration, Carl J. Blechinger, in his official capacity as Executive Officer of the Public Employees' Retirement System, San Francisco Unified School District, Board of Education of the San Francisco Unified School District, Lee S. Dolson, Samuel Martinez, Lucille Abrahamson, Z. L. Goospy, Eugene S. Hopp, John A. Kidder, and Thomas A. Reed, in their official capacities as members of said Board of Education, Robert F. Alioto, in his official capacity as Superintendent of Schools of the San Francisco Unified School District, Defendants.

No. C-76-1960-CBR.

United States District Court, N. D. California.

May 16, 1977.

COPYRIGHT MATERIAL OMITTED

Patmont & Myers, F. Bradford Niebling, San Francisco, Cal., for plaintiffs.

James L. Browning, Jr., U. S. Atty., John M. Youngquist, Asst. U. S. Atty., San Francisco, Cal., for defendant David F. Mathews.

Thomas M. O'Connor, City Atty., Donald J. Garibaldi, Deputy City Atty., San Francisco, Cal., for defendant City and County of San Francisco.

Evelle J. Younger, Atty. Gen. of the State of Cal., Gordon Zane, Deputy Atty. Gen., San Francisco, Cal., for defendants of State of Cal.

MEMORANDUM OF OPINION

RENFREW, District Judge.

Plaintiffs, teachers employed by the San Francisco Unified School District, brought this action pursuant to Section 205(g) of the Social Security Act ("Act"), as amended (42 U.S.C. § 405(g)), to obtain judicial review of a final decision of the Secretary of Health, Education and Welfare ("Secretary"), denying their respective claims for revision of their earnings records.¹ They have joined as defendants the Secretary and the Secretary of the Treasury ("federal defendants"), the Board of Administration of the Public Employees' Retirement System of the State of California and its members and executive officer ("state defendants"), and the San Francisco Unified School District, its Board of Education and the individual Board members, and its Superintendent of Schools ("local defendants").

On August 8, 1974, plaintiffs simultaneously filed requests for correction of their earnings records and for reconsideration, alleging that they ceased to be covered by social security as of July 1, 1972. On October 31, 1974, the Social Security Administration issued combined initial and reconsidered determinations denying each request on the grounds that plaintiffs remained covered by social security. On November 22, 1974, the plaintiffs through their attorney filed a request for hearing, waiving their rights to appear and give evidence and requesting a decision on the evidence on file. The administrative law judge considered the case de novo and, on February 19, 1975, found that the plaintiffs' social security coverage ("coverage") continued on and after July 1, 1972. The administrative law judge's decision became the final decision of the Secretary when the Appeals Council approved it in June, 1975. Upon plaintiffs' request, the Secretary extended the time in which plaintiffs might file a civil action to obtain judicial review of the decision to September 15, 1976.

Seeking declaratory, injunctive, and monetary relief, plaintiffs filed this action on September 13, 1976,² and a motion for summary judgment on October 28, 1976, which the local defendants opposed in a memorandum filed December 21, 1976. The federal defendants filed a motion to dismiss or, in the alternative, for summary judgment on January 11, 1977, which the plaintiffs opposed in a memorandum filed January 14, 1977. The motions were argued to the Court at a hearing held on January 19, 1977.

The material facts of this controversy are undisputed. Each of the plaintiffs was formerly a member of Group B of the San Francisco City and County Employees' Retirement System ("SFRS"), a retirement group which has enjoyed coverage since October, 1959. Effective July 1, 1972, each of the plaintiffs elected to terminate his or her membership in the SFRS and to become a member of the State Teacher's Retirement System ("STRS") as allowed by California Education Code § 14116.4. Members of the STRS do not, as such, enjoy coverage. Since the plaintiffs elected STRS membership, each has continued his or her employment with the defendant school district in the same capacity. In addition, since the election, the local defendants have continued to make social security deductions from plaintiffs' salaries that are forwarded to the State which, in turn, pays them to the Secretary of the Treasury. Thus, while plaintiffs are no longer members of SFRS, the coverage which they received by virtue of their former membership continues.

I. PROPER PARTIES DEFENDANT

Plaintiffs rely exclusively upon § 205(g) of the Act as the jurisdictional basis for this action.³ Section 205(g)⁴ allows, and dictates the procedures for, review of a final decision of the Secretary in federal district court. As plaintiffs have exhausted their administrative remedies and otherwise complied with § 205(g), it is clear that their suit properly lies against the Secretary.

However, the language of § 205(g) does not indicate that Congress intended to authorize suit against any other person under this subsection. Certainly the Secretary of the Treasury, sued in his official capacity, is not a proper party to this action. Section 205(g)'s consent to suit against the Secretary constitutes a limited waiver of sovereign immunity and must be strictly construed. E.g., Zeller v. Folsom, 150 F.Supp. 615, 617 (N.D.N.Y.1956). Nor does it appear that the state and local officials are proper defendants. Plaintiffs have cited no case authority, and the Court can discern neither law nor logic, which supports joining these parties in an action seeking review of a decision of a federal administrative agency to which they were not and could not have been parties. Courts have repeatedly held, although in different factual contexts than the instant case presents, that the Secretary is the only proper defendant in a § 205(g) action. See, e.g., Sandridge v. Folsom, 200 F.Supp. 25 (M.D. Tenn.1959) (plaintiff sued former rather than present Secretary); Hall v. Department of Health, Education and Welfare, 199 F.Supp. 833 (S.D.Tex.1960) (plaintiff sued agency rather than Secretary). Therefore, the Court will dismiss all defendants except the Secretary for lack of jurisdiction.⁵

II. DURATION OF COVERAGE UNDER § 218 OF THE ACT

The pivotal issue in this litigation is whether § 218 of the Act, as amended (42 U.S.C. § 418), authorizes the continuing coverage of plaintiffs, despite their transfer to a state retirement system not covered by social security.

A. Background

As originally enacted in 1935, § 218 of the Act expressly excluded service performed in the employ of a state or political subdivision from coverage due to the constitutional limitations on federal taxation of the states. See Social Security Act of 1935, ch. 531, Title II, § 218. See also Secretary of Health, Education and Welfare v. Snell, 416 F.2d 840, 841 (5 Cir. 1969). In 1950, Congress amended § 218 to allow coverage for state and local employees not covered by state retirement systems through voluntary agreements between a state and the Federal Security Administrator, the predecessor of the Secretary. Social Security Amendments of 1950, ch. 809, Title I, § 106, 64 Stat. 514 (codified at 42 U.S.C. § 418, as amended). These amendments enable a state to agree to coverage for services performed by individuals as employees of a state or of any political subdivision thereof. 42 U.S.C. § 418(a)(1). The unit of coverage is the "coverage group."⁶ Although the state may in its discretion designate one or more coverage groups subject to an agreement, 42 U.S.C. § 418(c)(1), it must agree to coverage for all services performed by individuals as members of such a group. 42 U.S.C. § 418(c)(2).⁷

Since that time, a series of amendments has further broadened the Act's potential coverage of state and local employees. A 1954 amendment to § 218 permits state and local employees covered by state retirement plans to acquire coverage under a federal-state agreement after an affirmative referendum vote of the employees involved. Social Security Amendments of 1954, ch. 1206, Title I, § 101, h(1)-(8), 68 Stat. 1055, 1059 (codified at 42 U.S.C. § 418(c), (d), (f), (m), (n), as amended). A 1956 amendment allows certain states to divide their retirement systems into two parts—one composed of positions of members desiring coverage and the other of those opposed to coverage, to treat each part as a separate retirement system for purposes of extending coverage, and to agree to coverage for only the part which favors it. The ability to divide the state system in this way is conditioned upon the state's agreeing that the positions of individuals who join the state system after coverage is extended will thereafter be included in the retirement system coverage group. Social Security Amendments of 1956, ...