Opinion ID: 196992
Heading Depth: 1
Heading Rank: 2

Heading: the course of litigation

Text: 5 Mr. and Mrs. Strickland operate a construction business in Belgrade, Maine (where they reside). When their business faltered, they applied for admission to the Program and began receiving benefits. In 1993 the DHS determined that the Stricklands' average monthly income was more than double the Program's eligibility limit. Had they been permitted to deduct depreciation on business equipment as a cost of producing self-employment income, they would have remained eligible for food stamp assistance. Consequently, they challenged the regulation that excluded depreciation, 7 C.F.R. § 273.11(a)(4)(ii)(D), arguing that it had been promulgated in derogation of 7 U.S.C. § 2014(d)(9). See Strickland I, 48 F.3d at 15-16. In due season the appellants asserted claims against both the DHS and the Secretary, and the district court certified the Stricklands as representatives of a class of all Maine food stamp applicants or recipients adversely affected by the [ ] regulation on or after July 1, 1992. Id. at 16. 6 The appellants enjoyed some initial success. After the parties submitted the case on a stipulated record, the trial court invalidated the Secretary's no depreciation regulation. See Strickland v. Commissioner, Me. DHS, 849 F.Supp. 818 (D.Me.1994). We reversed, finding ambiguity in the term cost as used in the statutory phrase cost of producing self-employment income. See Strickland I, 48 F.3d at 19. Stressing that ambiguity made deference appropriate, we upheld the Secretary's right to exclude depreciation from cost as a permissible rendition of the statute. See id. at 21. In what may now be viewed as an overabundance of caution, we noted that the parties' arguments in Strickland I did not require us to decide whether self-employed food stamp recipients must be given some alternative deduction, such as a deduction for replacement costs, in recognition of either the cost of acquiring capital goods or their consumption in the course of producing income. Id. at 21 n. 6. 1 7 Apparently convinced that a judicial footnote is a terrible thing to waste, the Stricklands promptly reformulated their suit to challenge that portion of 7 C.F.R. § 273.11(a)(4)(ii) in which the Secretary purposed to exclude payments on the principal of the purchase price of capital assets, averring that a favorable finding would entitle them to continued eligibility for food stamp assistance. 8 This about-face proved unproductive. The district court granted summary judgment in favor of the state and federal defendants, holding that the Secretary permissibly excluded principal payments in determining the cost of producing self-employment income. See Strickland v. Commissioner, Me. DHS, 921 F.Supp. 21, 24 (D.Me.1996) (Strickland II ) (concluding that if the Secretary is not required to recognize even depreciation, he certainly cannot be required to recognize cash principal payments). This appeal followed.