Slaughter v. Levine

• Decision Date: 11 December 1984
• Docket Number: Civ. No. 4-83-579.
• Citation: 598 F. Supp. 1035
• Parties: Sharon SLAUGHTER, Helen Stewart and Kathryn Jenkins, Plaintiffs, v. Leonard LEVINE, in his capacity as Commissioner of the Minnesota Department of Public Welfare, Defendant and Third Party Plaintiff, v. Margaret HECKLER, in her capacity as Secretary, United States Department of Health and Human Services, Third Party Defendant.
• Court: U.S. District Court — District of Minnesota

598 F. Supp. 1035

Sharon SLAUGHTER, Helen Stewart and Kathryn Jenkins, Plaintiffs, v. Leonard LEVINE, in his capacity as Commissioner of the Minnesota Department of Public Welfare, Defendant and Third Party Plaintiff, v. Margaret HECKLER, in her capacity as Secretary, United States Department of Health and Human Services, Third Party Defendant.

Civ. No. 4-83-579.

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

December 11, 1984.

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Mary Grau, Legal Aid Society of Minneapolis, Inc., Minneapolis, Minn., for plaintiffs.

Hubert H. Humphrey, III, Atty. Gen., State of Minn., and Vicki Sleeper, Sp. Asst. Atty. Gen., St. Paul, Minn., for defendant and third party plaintiff.

James M. Rosenbaum, U.S. Atty., and Mary L. Egan, Asst. U.S. Atty., Minneapolis, Minn., and Lewis K. Wise, Wendy Kloner, Civ. Div., Dept. of Justice, Washington, D.C., for third party defendant.

MEMORANDUM AND ORDER

MacLAUGHLIN, District Judge.

This matter is before the Court on plaintiffs' motion for class certification and on the parties' cross motions for summary judgment.

FACTS

Plaintiffs in this case are recipients of Aid to Families with Dependent Children (AFDC) benefits who live in Minnesota. They seek declaratory and injunctive relief on behalf of themselves and others similarly situated in connection with defendant Minnesota Department of Public Welfare's (DPW) policy regarding the receipt of lump sum income by AFDC recipients. Plaintiffs allege that the lump sum policy violates the Social Security Act, 42 U.S.C. § 601 et seq., federal regulations promulgated under the Act, and the due process and equal protection clauses of the U.S. Constitution. Defendant has brought a third party complaint against Margaret Heckler, Secretary, United States Department of Health and Human Services (HHS). The third party complaint contends that the HHS' regulations on lump sum income are partially invalid, but that defendant is forced to carry them out on penalty of losing federal funding.

Defendant defines "lump sum" income as income which comes from a non-recurring source. DPW Instructional Bulletin 82-3, Attachment 13.¹ Defendant's policy requires that AFDC recipients who receive lump sum income be determined ineligible for benefits for a predetermined number of months. The period of ineligibility is determined by a formula which prorates the lump sum for a period of months according to the family's monthly AFDC grant amount. Defendant's policy regarding lump sum ineligibility is compelled by federal regulation, 45 C.F.R. § 233.20(a)(3)(ii)(D). Under this regulation, the formula is applied regardless of whether the lump sum income is actually available for the family's support.

The second named plaintiff² in this action is Helen Stewart.³ Stewart received AFDC benefits through Goodhue County for several years prior to 1982. In November, 1982 she received a workers' compensation settlement in the amount of $5,180. Plaintiff contacted her caseworker by phone on November 8, 1982 and reported the receipt of this lump sum. The caseworker advised plaintiff that she and her 11-year-old child would be declared ineligible for AFDC benefits for a number of months as a result of the workers' compensation settlement. Plaintiff's benefits were subsequently terminated, with her consent, on December 1, 1982. Plaintiff's food stamps and medical assistance benefits were also terminated at this time.⁴ She used the lump sum settlement, which was her only source of income, to support herself and her child until July, 1983, at which point the funds had been exhausted. Plaintiff spent the lump sum funds on ordinary living expenses and on medical expenses. When plaintiff reapplied for AFDC benefits in July, 1983, her application was denied on the basis that her lump sum settlement had rendered her ineligible for a full grant until March of 1984. At the time plaintiff reapplied, she faced $3,400 in hospital bills and almost $400 in utility bills. Plaintiff's administrative appeals were denied. She was reinstated to AFDC in February, 1984, but received no funds for the period July, 1983 to February, 1984.

The third named plaintiff is Kathryn Jenkins.⁵ In November of 1982 Jenkins applied and was found eligible for AFDC benefits in Hennepin County. Plaintiff's husband, who was disabled as a result of a job-related accident, had workers' compensation and social security disability claims pending at the time of the AFDC application. Plaintiff advised the AFDC caseworker of these pending claims, but was not informed of the lump sum formula used by defendant. Plaintiff's husband received a disability check in the amount of $5,752 on October 31, 1983. That same day, he wrote a check in the amount of $3,863.75 to satisfy the arrearage on his home mortgage because his property was about to go into foreclosure. Plaintiff's husband also wrote a check for $1,366 on that day to satisfy an overdue car repair bill. The remaining $500-$600 was spent on other bills and on clothing for plaintiff's children.

When plaintiff reported the receipt of the disability settlement to Hennepin County welfare authorities two days later, on November 2, 1983, she was advised for the first time of the lump sum rule. On November 3, 1983, Hennepin County advised her that her October and November AFDC grants would be considered an overpayment,⁶ that her benefits would be terminated as of December 1, 1983, and that she would remain ineligible until May, 1984. Plaintiff appealed the decision and her benefits were continued pending the outcome. Defendant rejected plaintiff's appeal on August 9, 1984 and notified plaintiff on September 5, 1984 that she would be charged an overpayment of $5,464.

DISCUSSION

I. CLASS CERTIFICATION

Plaintiffs define the class they seek to represent as follows:

those individuals in the state of Minnesota who are otherwise eligible for AFDC benefits and who have been, or will be, found ineligible for AFDC benefits for a predetermined number of months as a consequence of receipt of lump sum income by one of the members of an AFDC assistance unit of which they have been a member.

Fed.R.Civ.P. 23(a) sets forth four prerequisites to the maintenance of a class action:

(1) the class is so numerous that joinder of all members is impracticable,

(2) there are questions of law or fact common to the class,

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and

(4) the representative parties will fairly and adequately protect the interests of the class.

The party seeking to represent the class bears the burden of establishing that all four requirements are satisfied. Smith v. Merchants & Farmers Bank of West Helena, Arkansas, 574 F.2d 982 (8th Cir.1978). Prior to the consideration of the criteria set forth under Rule 23(a), the Court must find that a precisely defined class exists, Roman v. ESB, Inc., 550 F.2d 1343, 1348 (4th Cir.1976) and also that the class representative(s) is a member of the class. East Texas Motor Freight System, Inc. v. Rodriguez, 431 U.S. 395, 403, 97 S.Ct. 1891, 1896, 52 L.Ed.2d 453 (1977) ("class representative must be part of the class and `possess the same interest and suffer the same injury' as the class members"). These requirements are implicit prerequisites to the maintenance of an action under Rule 23.

If plaintiffs satisfy the implicit and explicit requirements of Rule 23(a), they then must demonstrate that the action sought to be certified falls within one of the three categories set forth in Rule 23(b). Plaintiffs contend that this action may be properly maintained as a class action because it is the type of case set forth in Rule 23(b)(2):

The party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.

A. Existence of precisely drawn class

The third party defendant argues that the proposed class is overbroad because it includes persons who have not suffered or may never suffer any injury. These individuals would include families who the third party defendant contends will find it less difficult to rely on their own resources, or who may no longer qualify for or want AFDC as a result of receiving a lump sum. While their numbers would no doubt be few (or perhaps even non-existent), there may be some individuals in the proposed class who will receive a lump sum settlement so large that it enables them to live comfortably. Despite their ineligibility for AFDC benefits, these individuals would not suffer injury from defendant's policy and would therefore lack standing. The definition of a class cannot be so broad that it includes persons without standing to bring the action on their own behalf. Each class member must have standing to bring the suit in his own right. McElhaney v. Eli Lilly & Co., 93 F.R.D. 875, 878 (D.S.D. 1982); Lamb v. Hamblin, 57 F.R.D. 58, 60-61 (D.Minn.1972).

The slight overbreadth in the proposed class definition is not fatal. The Court has the authority to re-define a proposed class in such a way as to allow the class action to be maintained. Lamb, 57 F.R.D. at 60 (limiting the class to those individuals with standing); Metropolitan Area Housing Alliance v. U.S. Department of Housing and Urban Development, 69 F.R.D. 633 (D.Ill.1976). Accordingly, the Court has redefined the class as follows, in order to exclude those individuals who might lack standing to bring an action on their own behalf:

those individuals in the state of Minnesota who are otherwise eligible for AFDC benefits and who have been, or will be, found ineligible for AFDC benefits for a predetermined number of months as a consequence of receipt of lump sum income by one of the members of an AFDC assistance unit of which they have been a member, and

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