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. e du/thir dc ir c uit_1998/219Filed September 9, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-1893

EDWIN MALDONADO; MARIA DELORES MALDONADO, individually and as next friends of Ana Maldonado, Pablo Maldonado, Edwin Maldonado, Rey Maldonado, Yesenia Maldonado, and Jose Maldonado, and on behalf of all others similarly situated; MARIA ORTIZ; MICHAEL ORT IZ, individually and as next friends of Julie Ortiz, Mi chael Ortiz, and Angelica Ortiz, and on behalf of all oth er similarly situated; KENSINGTON WELFARE RIGHTS

UNION; PHILADELPHIA WELFARE RIGHTS ORGANIZATION, on behalf of themselves and their members; TRAVELER'S AID SOCIETY OF PHILADELPHIA, individually and on behalf of its clients

v.

FEATHER O. HOUSTOUN, Secretary of the
PENNSYLVANIA DEPARTMENT OF PUBLIC WELFARE; DON JOSE STOVALL, Executive Director of the PHILADELPHIA BOARD OF ASSISTANCE, both in their official capacities, Appellants

Appeal from the United States District Court For the Eastern District of Pennsylvania

D.C. No.: 97-cv-04155

Argued: July 21, 1998

Before: STAPLETON, ROSENN, Circuit Judges,

and RESTANI, Judge, United States Court of

International Trade*

___________________________________________________ ______________

*The Honorable Jane A. Restani, Judge, United State s Court of International Trade, sitting by designation.(Filed September 9, 1998)

John G. Knorr, III (Argued) Office of Attorney General of Pennsylvania Department of Justice Strawberry Square

15th Floor Harrisburg, PA 17120 Counsel for Appellant

Susan Frietsche (Argued) Women's Law Project

125 South 9th Street

Suite 401 Philadelphia, PA 19107 Counsel for Appellee

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal presents a significant constitutional q uestion implicating an aspect of Pennsylvania's recent amen dment to its public assistance benefits legislation. Penn sylvania made the change during a recent wave of federal and state welfare reform legislation which swept the nation c alling for a reduction in overall welfare expenditures. Specif ically, we must decide the constitutionality of S 9(5)(ii) of Pennsylvania's Act 35 of 1996. See Pa. Stat. Ann., tit. 62, S 432(5)(ii). It mandates that an eligible family a rriving in Pennsylvania from another state shall, during itsfi rst twelve months of bona fide residence, receive as ca sh benefits the lesser of: (1) the benefit level avail able to similarly situated Pennsylvania residents of twelve months or more, or (2) the benefit level the family would have been eligible to receive in their prior state had they n ot moved to Pennsylvania.

In 1997, several months after the passage of this legislation, Maria and Edwin Maldonado and their si x minor children migrated to Pennsylvania from Puerto Rico. They became eligible for public assistance benefits but were

2informed that the cash benefits allowance available to them

would be substantially lower than the benefits prov ided to similarly situated long-term Pennsylvania residents .1

Shortly thereafter, the Maldonados and several organizations that represent their interests (colle ctively, the "Maldonados"), instituted a class action against Fe ather O. Houstoun, Pennsylvania's Secretary of Public Welfar e, and Don Jose Stovall, Executive Director of the Philade lphia Board of Assistance, both in their official capacit ies (collectively, the "Commonwealth"), in the United S tates District Court for the Eastern District of Pennsylv ania. The Maldonados sued pursuant to 42 U.S.C. S 1983, seeki ng declaratory and injunctive relief, claiming that Pennsylvania's two-tier welfare scheme violates the ir constitutional rights to travel, to equal protectio n, and to non-discriminatory treatment under the Privileges a nd

Immunities Clause. The district court held that the scheme did not appear to be supported by a rational basis, and thus likely violated the Fourteenth Amendment's Equ al Protection Clause. Therefore, the court preliminari ly enjoined enforcement of the two-tier scheme and cer tified the class, with the Maldonados as class representat ives. The Commonwealth timely appealed the injunction. We affirm, although our analysis differs.

I.

The relevant facts of this case are for the most pa rt undisputed. In May 1996, after several attempts to pass similar measures failed throughout the early 1990s, Pennsylvania, as part of the state's broad-scale we lfare reform, enacted Section 9(5)(ii), governing public assistance benefits to eligible families that have resided in Pennsylvania for less than one year. Section 9(5)(i i) provides that during the first twelve months of residence in Pennsylvania, an eligible family's cash assistance benefits are limited to the lesser of (1) the benefit level that family

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1. Pennsylvanians with a twelve month residence wer e eligible for cash benefits of $836 but the Maldonado family, because of their less than a twelve month residence, was eligible for cash benfi ts of only $304 per month, the amount they would have been allowed in P uerto Rico.

3would have received in its prior state of residence , or (2) the

benefit level available to otherwise similarly situ ated longterm Pennsylvania residents.2 Because Pennsylvania grants larger cash benefits than 40 other states, under th is twotier scheme, a typical eligible family moving to Pe nnsylvania would lose anywhere from over 60%, to as little as 2%, of

their cash benefits for the first twelve months tha t they

reside in the state.

Pennsylvania's legislation received considerable reassurance when several months later, in August 19 96, Congress passed landmark welfare reform legislation known as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ("PRWORA"), 42 U.S.C. SS 601, et seq. The PRWORA dramatically changed the climate fo r welfare programs in this country and encouraged sta tes to adopt restrictive cash benefit programs of the type contained in Pennsylvania's Act 35 for those reloca ting from another state. Among other things, the PRWORA chang ed the basic funding format for state Temporary Assist ance to Needy Families ("TANF ")3 plans to awards of block grants, expressly terminating the prior program's entitleme nt nature. Especially relevant to this appeal is Secti on 604(c) of the PRWORA, which explicitly authorized two-tier cash benefits provisions like that enacted by Pennsylvan ia. Section 604(c) authorized states to treat new resid ents differently than longer-term residents.

Prior to May 1997, Plaintiff Edwin Maldonado worked as a mechanic in Puerto Rico and supported his family with his salary plus government-provided nutritional and medical assistance. In May 1997, Maldonado's job en ded.

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2. Section 9(5)(ii), in its entirety, reads as foll ows:

Cash assistance for applicants and recipient s of aid to families

with dependent children who have resided in this Commonwealth for less

than twelve months shall not exceed the less er of the maximum assistance payment that would have been rece ived from the applicant's or recipient's state of prior re sidence or the maximum assistance payment available to the applican t or recipient in this

Commonwealth.

3. TANF replaced the former federal welfare program popularly known as Aid to Families with Dependent Children ("AFDC").

4He and his wife both had health problems, and there fore in

May 1997, they and their six children moved from Pu erto Rico to Philadelphia, Pennsylvania, where Mr. Maldo nado was born and spent part of his childhood, to seek b etter

health care.

Shortly after establishing residence in Pennsylvani a, the Maldonados applied for TANF benefits. The Pennsylva nia Department of Public Welfare ("DPW") approved their application and also certified that both Mr. and Mr s. Maldonado temporarily were unable to work. Under Pennsylvania's revised welfare scheme, the Maldonad os qualified for monthly cash benefits of $304, the am ount they would have received in their prior place of re sidence, Puerto Rico, $720 in food stamps and medical benefi ts paid by the state of $1,483.60, plus a one-time grant of $213 to defray job-search expenses.4 Had the Maldonados bee n residents of Pennsylvania for at least twelve month s, they would have been eligible for cash benefits of $836 per month instead of the $304 in benefits that they act ually received, a reduction of almost 64%.

As a result of the DPW's benefits decision, the Maldonados sued the Commonwealth on June 19, 1997, seeking a temporary restraining order (TRO) and declaratory and injunctive relief. They claimed tha t Pennsylvania's two-tier durational residency struct ure violated their fundamental right to travel, their r ights under the Equal Protection Clause of the Fourteenth Amend ment, and their rights under the Privileges and Immunitie s Clause

of Article IV and the Fourteenth Amendment.

After denying the plaintiffs' motion for a TRO, the court held a two-day hearing on the application for a pre liminary injunction. On October 6, 1997, after considering t he memoranda, transcripts, exhibits, and other evidenc e contained in the sizeable and well-developed record , the district court certified the class and preliminaril y enjoined enforcement of Pennsylvania's two-tier durational r esidency requirement. The court, applying rational basis Equ al Protection analysis, held the law irrational. It fo und that

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4. The Maldonados returned the $213 grant as both w ere certified temporarily unable to work.

5the class members were likely to succeed on the mer its of

their constitutional claim that the class would suf fer irreparable harm absent the injunction, rejected th e Commonwealth's fiscal harm arguments, and found tha t the public interest would be best served by grantin g the injunction.5

The Commonwealth timely appealed. The district cour t placed the action in civil suspense pending resolut ion of this appeal.6

II.

On appeal, when considering the district court's gr ant of a preliminary injunction, we review the court's leg al conclusions de novo, its findings of fact for clear error, and its ultimate decision to grant or deny the prelimin ary injunction for an abuse of discretion. See, e.g., A nderson v. Davila, 125 F.3d 148, 159 (3d Cir. 1997); New Jerse y Hosp. Ass'n v. Waldman, 73 F.3d 509, 512 (3d Cir. 1995). Because this appeal presents solely legal questions pertaining to the constitutionality of Section 9(5) (ii) of Pennsylvania's welfare act, our review is plenary. Ordinarily, limited review is appropriate at the pr eliminary injunction stage of a constitutional challenge to a state statute, but since the issue is legal and the facts are well established, we "need not abstain from addressing t he constitutional issue." Thornburgh v. American Colle ge of Obst. and Gyn., 476 U.S. 747, 756 (1986).

A.

The Commonwealth succinctly frames the appellate is sue in these words: "Whether Pennsylvania violates the

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5. On October 30, 1997, the court granted in part a nd denied in part the Maldonados' motion to amend their complaint to incl ude two additional families as plaintiffs and class representatives, a llowing one family--the Ortizes--to join and denying the other.

6. The district court had jurisdiction over this ci vil rights action pursuant to 28 U.S.C. SS 1331 and 1343. This Court has jurisdiction over the district court's grant of a preliminary in junction pursuant to 28 U.S.C. S 1292(a)(1).

6Constitution by providing that, for one year after their

arrival in Pennsylvania, applicants for certain wel fare benefits may receive only the amount they would hav e received in their state of prior residence." Thus, we are called upon only to determine the constitutionality of the state statute; the federal statute, PRWORA, is not before us. From a procedural perspective, the district court d ecided the case on the Maldonados' motion for a preliminar y injunction. A district court should grant a prelimi nary injunction only if (1) the plaintiff is likely to s ucceed on the merits; (2) denial will result in irreparable harm to the plaintiff; (3) granting the injunction will not res ult in irreparable harm to the defendant; and (4) granting the injunction is in the public interest. See Merchant & Evans, Inc. v. Roosevelt Bldg. Prods. Co., Inc., 963 F.2d 628, 632- 33 (3d Cir. 1992). After weighing these factors, an d although the district court found that all four wei ghed in the Maldonados' favor, it relied almost exclusively on the first, the likelihood of success on the merits. Thu s, if the court incorrectly determined that the Maldonados we re likely to succeed on the legal merits of their clai m, it erred in granting the injunction. Because the Commonwealt h limits its appeal to the merits issue, we need only address the propriety of the district court's legal conclus ions.

B.

Under the Equal Protection clause, no state shall " deny to any person within its jurisdiction the equal pro tection of the laws." U.S. Const. amend. XIV, S1. Pennsylvania 's twotier act warrants equal protection analysis because it

classifies bona fide residents of the state into tw o groups when determining welfare benefits. In determining t he extent of cash welfare benefits, Pennsylvania creat ed two classes of indigent residents indistinguishable fro m each other except that one is composed of residents who have resided in the state a year or more, and the other of

residents who have resided in the state less than a year.

Even though a state has created a classification, n ot all classifications are per se unconstitutional or auto matically subject to heightened judicial scrutiny. If Pennsyl vania's durational residency classification " `neither burd ens a

7fundamental right nor targets a suspect class, we w ill

uphold [it] so long as it bears a rational relation to some legitimate end.' " See Vacco v. Quill, 117 S. Ct. 2 293, 2297 (1997) (quoting Romer v. Evans, 517 U.S. 620, 631 ( 1996)); see also San Antonio Indep. School Dist. v. Rodrigu ez, 411 U.S. 1, 17 (1973). However, if the two-tier scheme is drawn on suspect lines or does sufficiently burden a fund amental right, it is subject to strict scrutiny and will pa ss constitutional muster only if it is narrowly tailor ed to serve a compelling state interest. See, e.g., Dunn v. Blu mstein, 405 U.S. 330, 335 (1972); Shapiro v. Thompson, 394 U.S. 618, 634 (1969).

The Commonwealth argues that the district court correctly held that Pennsylvania's two-tier duratio nal residence requirement does not penalize the plainti ffs' fundamental right to travel or their right to equal protection, and thus is not subject to strict scrut iny. Instead, it argues that the court erred in holding that the

scheme was unconstitutional under rational basis re view when it found that it was not related to a legitima te governmental interest. The Commonwealth contends th at the statute is rationally related to furthering the Commonwealth's legitimate interest in fostering the selfsufficiency and work ethic of its citizens, includi ng its newest citizens. By leaving recent interstate migra nts with the same benefit level as they were in their former place of residence, the statute encourages them to seek work , rather than increased benefits. The Maldonados, not surpri singly, argue that although the court was correct in holdin g that the statute did not pass rational basis review, tha t the twotier scheme penalizes the plaintiffs' fundamental r ight to travel, and thus should be subject to strict scruti ny. Neither party claims that the scheme classifies on suspect

lines.

C.

The constitutional right to travel is not contained in the text of the Constitution, and a majority of the Sup reme Court of the United States has never agreed upon it s textual source. Analytically, the Court has recogni zed that the historical foundation upon which this Republic was

8structured was that we are all citizens of the Unit ed States,

one people, and, as such, we "must have the right t o pass and repass through every part of [the country] with out interruption, as freely as in our own States." See The Passenger Cases, 48 U.S. (7 How.) 283 (1849). This right to pass freely from one state to another was one of th e attractive features that persuaded the colonists to unite into a nation. The Supreme Court repeatedly and consistently has recognized a fundamental right to interstate travel, see e.g., United States v. Guest , 383 U.S. 745 (1966); Crandall v. Nevada, 73 U.S. (6 Wall.) 3 5 (1867); The Passenger Cases, 48 U.S. 283, and that inextric ably implicated therein is the right to migrate to and s ettle in another state. See, e.g., Jones v. Helms, 452 U.S. 412, 417- 19 (1981); Memorial Hosp. v. Maricopa County, 415 U .S. 250 (1974); Dunn v. Blumstein, 405 U.S. 330, 338; S hapiro,

394 U.S. 618.

Regrettably, however, the law with respect to the constitutional implications of the right to travel is unsettled

and in need of clarification. The Court has at time s subjected durational residence laws that impinge on the right to travel to strict scrutiny, see Maricopa Co unty, 415 U.S. 250; Dunn v. Blumstein, 405 U.S. 330; Shapiro, 394 U.S. 618, and at other times to what appears to be some form of a heightened rational basis test.7 Further more, although never formally recognized by the Court, we have previously noted that Shapiro and its progeny argua bly were analyzed, at least in part, as if the classifi cations at issue were somewhat suspect, in that they "penalize d a

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7. See Attorney General of New York v. Soto-Lopez, 476 U.S. 898 (1986); Hooper v. Bernalillo County Assessor, 472 U.S. 612 (1985); Zobel v. Williams, 457 U.S. 55 (1982); see also Coburn v. Ag ustin, 627 F. Supp. 983, 988-94 (D. Kan. 1985) (discussing the Supreme Court's use of "heightened rational basis scrutiny"); Alvarez v. C havez, 886 P.2d 461, 466-67 (N.M. Ct. App. 1994) (same); Laurence H. Tri be, American Constitutional Law, S 16-3 (2d ed. 1988) (discussin g the "new, more penetrating character" of the rational basis test, which he lables "covertly heightened scrutiny"); Gayle Lynn Pettinga, Note, R ational Basis with Bite: Intermediate Scrutiny by Any Other Name, 62 I nd. L.J. 779, 787-92 (1987) (discussing "rational basis with bite in the right-to-travel
context").

9group of people on the basis of their having exerci sed a

constitutionally protected right to travel." See Lu tz v. City of York, Pennsylvania, 899 F.2d 255, 265 (3d Cir. 1990 ); see also Thomas R. McCoy, Recent Equal Protection Decis ions-- Fundamental Right to Travel or "Newcomers" as a Sus pect Class?, 28 Vand. L. Rev. 987 (1975); Todd Zubler, T he Right to Migrate and Welfare Reform: Time for Shapiro v. Thompson to Take a Hike, 31 Val. U. L. Rev. 893, 90 4-05 (1997).

In the seminal right to travel case of Shapiro, 394 U.S. 618, the Court subjected to strict scrutiny several state laws that created one-year durational residence requirements as a prerequisite to eligibility for a ny welfare benefits. In construing a strikingly similar Pennsy lvania statute, the Court in Shapiro expressly held that " any classification which serves to penalize the exercis e of th[e] right [to travel], unless shown to be necessary to promote a compelling governmental interest, is unconstitution al." Id. at 634. The Shapiro Court reasoned that the one-yea r residence requirement imposed on recent migrants as a condition of welfare eligibility, which resulted in a complete denial of benefits for those persons residing in th e state for less than one year, was unconstitutional, because i t discriminated based solely on length of residency i n the state and thus unconstitutionally burdened the plai ntiffs' fundamental right to interstate travel and migratio n.

Five years later, in Maricopa County, the Court, ap plying Shapiro, similarly subjected to strict scrutiny an Arizona law that required one-year residency in a county as a prerequisite to receiving free nonemergency hospita l or medical care. 415 U.S. 250. The Maricopa County Cou rt acknowledged that "any durational residence require ment impinges to some extent on the right to travel" and thus not all durational residency requirements are per se unconstitutional. Maricopa County, 415 U.S. at 256. The Court further stressed, however, that "the right of interstate travel must be seen as insuring new residents the s ame right to vital government benefits and privileges i n the States to which they migrate as are enjoyed by othe r residents." Id. at 261. Thus, because it found that "medical care is as much `a basic necessity of life' to an i ndigent as

10[the] welfare assistance" at issue in Shapiro, and that the

classification penalized those persons who had"exer cised their constitutional right of interstate migration, [the statute] must be justified by a compelling state in terest." Id. at 258-59 (citation omitted). The Court then struck down the law, finding that the Arizona statute created"a n `invidious classification' that impinges on the rig ht of interstate travel by denying newcomers `basic neces sities of life,' " and was not supported by compelling justif ications or narrowly drawn. 415 U.S. at 269.

Since Shapiro and Maricopa County, a majority of th e Court has never subjected a durational residency requirement to strict scrutiny. Instead, the Court sometimes employs some form of rational basis revie w, and, occasionally, analyzes such laws without even impli cating the fundamental right to travel. See, e.g., Attorne y General of New York v. Soto-Lopez, 476 U.S. 898 (1986) (fou r of the justices applied strict scrutiny in an opinion whic h did not command a majority); Hooper v. Bernalillo County As sessor, 472 U.S. 612 (1985); Zobel v. Williams, 457 U.S. 55 (1982). This tendency, however, does not establish that rat ional basis is now the appropriate test when evaluating durational residency requirements as applied to wel fare benefits. The Court in those cases merely employed its version of rational basis analysis because the chal lenged

laws could not even survive rational basis review. Thus, the Court found it unnecessary to subject the laws to heightened scrutiny. See, e.g., Soto-Lopez, 476 U.S . at 904 (explaining that because the "contested classificat ions [in Zobel and Hooper] did not survive even rational bas is, [the Court] had no occasion to inquire whether enhanced scrutiny was appropriate"). The holdings of Shapiro and Maricopa County subjecting durational residency requirements that impinge on the right to travel to strict scrutiny, however, have never been overturned and t hus are binding precedent to which we adhere in decidin g this factually and legally similar case.

In deciding whether a durational residency requirem ent sufficiently impinges upon the right to travel or m igrate to trigger strict scrutiny, the Court looks to see whe ther the challenged law's "primary objective" is to impede i nterstate

11travel; whether it "penalize[s] the exercise of tha t right;" or

whether it "actually deters such travel." Soto-Lope z, 476 U.S. at 903 (plurality opinion) (internal quotation s and citations omitted); see also Shapiro, 394 U.S. at 6 28-34. Here, relying on the legislature's express intent " to promote the self-sufficiency of all the people of the Commo nwealth," Pa. Stat. Ann., tit. 62, S 401(a), the district cou rt, in a very thoroughly drafted opinion, agreed with the Commonw ealth that the statute's primary objective was not to det er interstate travel and migration. The court also fou nd that the plaintiffs offered no conclusive evidence that the durational residency requirement actually deters th e right. Even accepting the district court's conclusions of law that travel deterrence was not the statute's primary obj ective and the court's finding that the plaintiffs' failur e to establish that the duration requirement actually de terred,

we are still left with the formidable task of deter mining whether having exercised the Constitutional right t o travel, the plaintiffs were penalized because of the durati on of

their residence.

The district court ultimately employed rational bas is

review because it found that the Maldonados could n ot "demonstrate that Section 9(5)(ii)'s durational res idence requirement results in a `penalty' on the right to interstate migration." The court distinguished this case from Shapiro on the ground that scheme at issue in Shapiro resul ted in a total deprivation of welfare benefits needed to o btain "life's basic necessities," whereas here the Pennsy lvania statute amounted only to a reduction in cash benefi ts. The law did not deny the Maldonados other welfare benef its. The court compared the Maldonados' position before and after exercising the right, and found it significan t that the Maldonados continued to be eligible for TANF benefi ts at the same level they would have received in Puerto R ico (plus food stamps, medical benefits, and other assi stance). Accordingly, the court concluded that

the lower benefits do not make new residents any worse off because [they] receive exactly wha t they were receiving or would have received in their st ate of prior residence. Thus, the `penalty' that plaintif fs allege is imposed on them for exercising their right t o migrate

12interstate is not a `penalty' in the traditi onal sense of

the word--a lost benefit that the person wou ld have

received had he not exercised some constitut ional right. Indeed, the plaintiffs here have lost no benefit that they would have received had they not e xercised their right to migrate. . . . Thus, . . . [t his court] finds that Section 9(5)(ii)'s multi-tier durationa l residency does not act as a penalty on plaintiffs' rig ht to interstate migration.

Maldonado v. Houstoun, 177 F.R.D. 311, 331-32 (E.D. Pa. 1997).

Although the Supreme Court has never made clear the "amount of impact required to give rise to the comp ellingstate-interest test," Maricopa County, 415 U.S. at 256-57, we are persuaded that the district court's "penalty " analysis in this case misconstrued the import of the relevan t case law and used an improper comparison. Thus it errone ously concluded that Pennsylvania's two-tier welfare sche me does not amount to a penalty. First, similar to the Penn sylvania scheme under review here, two of the three state la ws that the Court struck down in Shapiro offered "partial a ssistance

. . . to some new residents and full assistance . . . to other new residents." See Shapiro, 394 U.S. at 695; see a lso Zobel, 457 U.S. at 60-66 (holding unconstitutional state distribution of benefits to citizens on a sliding s cale based on how long they have lived in the state); Erwin Chemerinsky, Constitutional Law: Principles and Pol icies, S10.7, at 703-04 (1997) ("The Supreme Court . . . h as ruled that laws that do not totally deny benefits, but pr ovide less to new arrivals are unconstitutional."). Thus, that Pennsylvania's scheme does not amount to a complete denial of cash benefits and that it provides recent immigrants with some amount of welfare benefits oth er than cash assistance is not dispositive.

Second, and more importantly, as demonstrated by Shapiro, Maricopa County, and every equal protectio n case, the appropriate comparison is between those persons subject to the classification and those persons who are similarly situated but for the classification. Here , whether Pennsylvania's two-tier scheme amounts to a penalty must be determined by comparing new residents of Pennsyl vania

13and other similarly situated longer-term Pennsylvan ia

residents, and not by comparing new residents of Pennsylvania and those of their former state. Once the Maldonados established bona fide residency in Pennsylvania, a comparison of residents of Puerto R ico with long-term Pennsylvania residents for equal protecti on purposes is neither sound nor logical; it is not a comparison between analogues. Residents of Puerto R ico have no claim to Pennsylvania welfare benefits or t o equal protection under Pennsylvania's welfare laws until they

move from Puerto Rico and establish a bona fide res idence in Pennsylvania. Only once those persons reside in Pennsylvania is the classification applicable to th em.

Although the level of scrutiny to which durational residence requirements are subject may not be appli ed similarly in all contexts, that the appropriate com parison is between short- and longer-term Pennsylvania residen ts is well-established by the foregoing body of Supreme C ourt precedent. Moreover, our conclusion that the approp riate penalty analysis must compare shorter-term with lon gerterm Pennsylvania residents has been reached by

numerous other federal and state courts that have considered this precise, or substantially similar, issue.8

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8. See Roe v. Anderson, 966 F. Supp. 977, 984-85 (E .D. Cal. 1997), aff 'd, 134 F.3d 1400, 1404-05 (9th Cir. 1998), pet ition for cert. filed, (U.S. July 9,1998) (No. 98-97); Green v. Anderson, 811 F. Supp. 516, 521 (E.D. Cal. 1993), aff'd, 26 F.3d 95 (9th Cir. 1 994), judgment vacated as unripe, 513 U.S. 557 (1995) (per curiam); Westen felder v. Ferguson, 998 F. Supp. 146, 154 (D.R.I. 1998); Mitchell v. St effen, 504 N.W.2d 198, 201-02 (Minn. 1993); Sanchez v. Department of Human Services, ___ A.2d ___, A-466-97T1F, 1998 WL 391584, at *5 (N.J. Super. Ct. App. Div. July 8, 1998); Brown v. Wing, 649 N.Y.S.2d 988 , 995 (N.Y. Sup. Ct. 1996), aff 'd, 241 A.D.2d 956 (1997); see also Aumi ck v. Bane, 612 N.Y.S.2d 766 (N.Y. Sup. Ct. 1994); Robert C. Farrel l, Classifications That Disadvantage Newcomers and the Problem of Equality, 28 U. Rich. L. Rev. 547, 609 (1994) (arguing that the "relevant co mparison . . . [is]

between newcomers and the established residents of the new state"); cf. Hicks v. Peters, ___ F. Supp. ___, No. 98C3247, 199 8 WL 424176 (N.D. Ill. July 17, 1998) (declining to reach the issue o f whether the Illinois durational residence statute imposes a penalty beca use it failed rational basis review). But cf. Jones v. Milwaukee County, 4 85 N.W.2d 21 (Wisc. 1992) (finding that a 60 day durational residency r equirement for general relief benefits is "substantially less onerous than the one year waiting period of Shapiro, . . . does not operate to penali ze an individual's right to travel," and passes rational basis review).

14From a constitutional standpoint, it is of no conse quence

that the Maldonados receive the same benefits that they would have received in Puerto Rico. Pennsylvania's two-tier welfare scheme penalizes the Maldonados for having exercised their right to travel by treating them si gnificantly less favorably than other similarly situated longer -term Pennsylvania residents solely because they exercise d that right more recently.

It is well-established "that a State may not impose a penalty upon those who exercise a right guaranteed by the Constitution." Harman v. Forssenius, 380 U.S. 528, 540 (1965); accord Dunn v. Blumstein, 405 U.S. at 341. This, however, is exactly what Pennsylvania's two-tier du rational residence scheme does. The $532 monthly reduction i n the Maldonados' Pennsylvania benefits, based solely on their newly arrived status amounts to a 64% reduction in cash benefits and plainly penalizes them for having exer cised their right to migrate into the state.

This point is further reinforced by the holdings in Zobel, Hooper, and Soto-Lopez, where the Court held

unconstitutional state benefit schemes that were un ique to

the states involved and which did not even exist in the plaintiffs' prior state of residence. See, e.g., So to-Lopez, U.S. 476 at 907, 911-12 ("Once [out-of-staters] establis h bona fide residence in a State, they become the State's `own' and may not be discriminated against solely on the basi s of [the date of] their arrival in the State. . . . For as l ong as [the State] chooses to offer [a benefit to its residents ,] the Constitution requires that it do so without regard to [time of] residence.") (citations and internal quotations omitted); Hooper, 472 U.S. at 623 ("The State may not favor

established residents over new residents based on t he view that the State may take care of `its own,' if such is defined by prior residence."). Thus, from a constitutional viewpoint,

the level of benefits available to the claimants in the state of their prior residence is irrelevant. What the Co urt found significant, however, was the difference in benefit s provided

to the claimants in the state of their new residenc e based solely on residential duration. Here too, newer res idents, such as the Maldonados, plainly are "penalized" for having exercised their right to travel and migrate.

15Thus, because Pennsylvania's durational residency

requirement discriminates against newly arrived res idents and penalizes their fundamental right to travel and migrate, we hold that Pennsylvania's welfare durational requ irement is subject to strict scrutiny. Accordingly, to pass constitutional muster, the Commonwealth must show t hat the residential requirement is necessary to promote a compelling state interest and is narrowly drawn to meet that end. Partly because the Commonwealth argues th at

the law should be reviewed under rational basis ana lysis, it has not presented anything even remotely resembling a compelling interest which would justify the law or shown that it is narrowly tailored to meet its asserted e nds.

First, one of the purposes of the statute articulat ed by the Commonwealth in the district court is to preven t Pennsylvania from becoming a "welfare magnet." The district court found this purpose clearly unconstit utional under Shapiro and its progeny. We agree, and it doe s not warrant additional discussion. See, e.g., Shapiro, 394 U.S. at 629. Second, the Commonwealth's argument that th e purpose of the durational residency requirement,"an d indeed of Pennsylvania's entire assistance program, is to encourage work and self-sufficiency over dependency ," is unconvincing. Although unquestionably the encourage ment of self-sufficiency and work is a laudable and legi timate state goal, the Commonwealth has not demonstrated t hat this is a compelling interest or that a two-tier sc heme is necessary to achieve that end. Even assuming arguen do that the interest is compelling, the scheme clearly is not narrowly drawn to achieve that goal and arguably, a s the district court found and as applied by the Supreme Court, is not even rationally related to that purpose.

For instance, the Commonwealth has not demonstrated why newly arrived residents are more in need of "encouragement" to join the work force than longer- term residents. If encouraging work truly were the goal, and reduced benefits during a waiting period accomplish ed this goal, all residents should be subject to a waiting period, not just new residents. See Shapiro, 394 U.S. at 637 (" A state purpose to encourage employment provides no rationa l basis for imposing a one-year waiting-period restri ction on

16new residents only."). Furthermore, the scheme does not

encourage all new residents but only "encourages" t hose new residents who arrive from states that provide l ower benefits than Pennsylvania. Moreover, and significa ntly, immigrants from abroad receive no encouragement for under Pennsylvania law they are eligible for the sa me benefits as long-term residents. Additionally, the scheme's irrationality is demonstrated by its application to persons who migrated to Pennsylvania while employed, but du e to no fault of their own, such as layoffs or plant clo sings, became unemployed within their first twelve months in the state. The law's irrationality is further highlight ed as the scheme applies even to those certified by the Commonwealth as being temporarily or permanently physically disabled or otherwise incapable of worki ng, such as the Maldonados. There simply is no rational reas on, let alone a compelling reason, to assume that only new

residents from states that offer lesser benefits th an Pennsylvania need "encouragement" to seek work and selfsufficiency.

Amici curiae's proffered reason, that the scheme is justified by differing expectation and reliance int erests--i.e., newcomers can more easily adjust to cuts in welfare benefits through their choice of communities and li festyles than longer-term residents who expect to have, and rely on, the safety net of higher benefits--is not sufficien tly compelling. Even if we assume that many newer resid ents can more easily adjust their lifestyles to reduced benefits than those with longstanding ties to a particular a rea, an assumption that is highly speculative, the Commonwe alth again has not demonstrated a compelling interest th at justifies what may amount to a greater than 60% red uction in an indigent family's cash benefits required to p urchase many of life's necessities.

Furthermore, the legislative scheme is not narrowly tailored to meet this purpose, as it does not take into account the myriad of differences in individual per sonal and financial situations. For example, most people who own homes, those who have fixed residential lease oblig ations, or those who have countless other longer-term finan cial obligations can less easily adjust to reduced benef its

17compared to those persons without similar obligatio ns. The

Commonwealth could use means, need-based, or other testing to determine if a particular applicant actu ally can adjust to reduced welfare benefits. Under any of nu merous scenarios, it is likely that an eleven-month reside nt of Pennsylvania who unexpectedly finds herself in need of welfare benefits will find it just as difficult to survive on

reduced benefits as will a twelve-month resident. A mici curiae have presented no compelling reason to assum e that all newer residents, and only newer residents, are more able to easily adjust to and survive on reduced wel fare benefits, nor have they demonstrated that the schem e is narrowly tailored to affect only those able to adju st to and survive on reduced welfare benefits. Thus, it is ob vious that the Commonwealth (and Amici) has failed to demonstr ate that its twelve-month durational residency requirem ent is necessary to promote a compelling state interest, o r that the legislation is narrowly drawn to meet its state d objections.

We agree with the district court that there is no constitutional right to welfare benefits, Dandridge v. Williams, 98 U.S. 471, 485 (1970), and none is clai med. We are also aware of a state's legitimate interest in preserving public funds. When, however, a state makes welfare benefits available for its indigent, Shapiro and Ma ricopa County make it clear that the preservation of the p ublic fisc may not be achieved by an invidious distinction bet ween classes of its citizens.

We are mindful, however, as explained by the distri ct court, that the opinions in several Supreme Court c ases decided since Shapiro and Maricopa County may call into question the vitality of strict scrutiny review of laws that burden the fundamental right to interstate travel a nd migration. Nevertheless, the Supreme Court has periodically admonished lower federal courts, and h as recently "reaffirm[ed] its rule that `if a preceden t of th[e Supreme] Court has direct application in a case, ye t appears to rest on reasons rejected in some other l ine of decisions, the Court of Appeals should follow the c ase which directly controls, leaving to th[e Supreme] C ourt the prerogative of overruling its own decisions.' " See Agostini v.

18Felton, 117 S. Ct. 1997, 2017 (1997) (quoting Rodri guez de

Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484 (1989)). Because Shapiro and Maricopa County ha ve never been overruled by the Court, we follow the Co urt's directive and conclude that they dictate the result of this case.9 We note, however, that our opinion is in no way meant to pass judgment on the wisdom or desirabilit y of the Pennsylvania legislature's attempt at welfare r eform.

III.

In conclusion, we affirm the district court's order that the Maldonados have shown that they were likely to succ eed in proving that Commonwealth's twelve-month durational residence requirement is unconstitutional. Thus, th e court's grant of a preliminary injunction was not an abuse of discretion. We conclude, however, that the court erroneously subjected the law to rational basis ana lysis instead of the requisite strict scrutiny. The Commo nwealth has not demonstrated that the scheme is necessary t o promote a compelling state interest, or that it is narrowly

___________________________________________________ ______________

9. On appeal, the Maldonados once again argue that Section 9(5)(ii) violates the Privileges and Immunities Clauses of A rticle IV and the Fourteenth Amendment. As shown by the almost comple te lack of citation to authority in their brief, this argument is almost completely without merit. But see Zobel, 457 U.S. at 71-81 (O' Connor, J. concurring) (finding the right to travel rooted in the Privileges and Immunities Clause). The Supreme Court has consisten tly interpreted Article IV, S2--the Privileges and Immunities Claus e--to be a limit on the ability of a state to discriminate against out-of-s tate residents. The Clause, "in effect, prevents a State from discrimin ating against citizens of other States in favor of its own." Hague v. Comm ittee for Indus. Org., 307 U.S. 496, 511 (1939). As a necessary prerequisi te for the Privileges and Immunities Clause to apply, it must be shown th at a state discriminated against a citizen of another state. S ee, e.g, United Bldg. & Constr. Trades Council v. Mayor and Council of Camd en, 465 U.S. 208, 218 (1984); Zobel, 457 U.S. at 59 n.5. Here, by con trast, the Pennsylvania statute is applicable only to bonafide Pennsylvania-state residents and does not discriminate against nonresi dents in any way. The only way to fall under the challenged scheme is to first become a resident of the Commonwealth of Pennsylvania. Accor dingly, the Privileges and Immunities Clause has no application to the issues presented by this appeal.

19tailored to accomplish its stated goal. Accordingly , we hold

that Pennsylvania's two-tier durational residency requirement for welfare benefits is unconstitutiona l as it is based solely on a citizen's length of residing in t he state; the scheme impermissibly penalizes citizens who hav e exercised their fundamental right to travel and mig rate interstate, and thus violates the Equal Protection Clause of

the Fourteenth Amendment.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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