Court Opinion

ID: 8893715
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:36:26.35391+00
Date Added: 2024-06-11T17:07:21.241990
License: Public Domain

OAKES, Circuit Judge
(dissenting):
The majority decision today reverses two distinguished federal trial judges and reaches a conclusion quite contrary to that of an Appellate Division of the New York Supreme Court, and antithetical to decisions of the Supreme Court of New Jersey, and of federal district courts in Massachusetts, Indiana and Georgia.1 It also disregards the mandates of Supreme Court decisions from King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968), to Shea v. Vialpando, - U.S. -, 94 S.Ct. 1746, 40 L.Ed.2d 120 (1974). As such, today’s majority opinion stands nakedly —and thankfully — alone, for the majority permits a state to deprive the *1217dependent children of a needy family of a portion of their allowances for shelter because some person — whether an unemployed adult child, a disabled (but ineligible) sister, or a male “friend” —resides in the same household. The result I think flies in the teeth of the federal law and Supreme Court decisions, disregards economic realities and is quite unjust to the needy children otherwise entitled to assistance.
The majority today finds two challenged New York regulations in conformity with the federal statute, 42 U.S.C. § 602(a) (7),1a and regulation, 45 C.F.R. § 233.90(a) (1973).2 The first challenged regulation, 18 NYCRR § 352.31(a) (3) (iv),3 is New York’s administrative soft shoe around King v. Smith, swpra. New York defines a man who lives with a woman to whom he is not married and for whom he does not assume financial responsibility as a “lodger.” In King, Alabama had defined a man who engaged in the same conduct a “parent.” In King the result of that definition was to disqualify the AFDC child from receiving any benefits; in the present case the result of New York’s definition of the man as a “lodger” is also to disqualify the AFDC child, although only from a portion of his benefits. Thus by New York’s cleverness in changing a “parent” to a “lodger,” it has managed, with the aid of today’s decision, to accomplish what a number of other states have not — the reduction in the AFDC child’s benefits on the basis of the' mother’s living arrangements. See, e. g., Lewis v. Martin, 397 U.S. 552, 90 S.Ct. 1282, 25 L.Ed.2d 561 (1970); King v. Smith, supra; Rosen v. Hursh, 464 F.2d 731 (8th Cir. 1972); Reyna v. Vowell, 470 F.2d 494 (5th Cir. 1972); Boucher v. Minter, 349 F.Supp. 1240 (D.Mass.1972) (three-judge court); Owens v. Parham, 350 F.Supp. 598 (N.D.Ga.1972) (three-judge court); Gaither *1218v. 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). At least one state has been frustrated twice, see X v. McCorkle, 333 F.Supp. 1109 (D.N.J.1970), aff’d sub nom. Engleman v. Amos, 404 U.S. 23, 92 S.Ct. 181, 30 L.Ed.2d 143 (1971); Hausman v. Department of Institutions and Agencies, 64 N.J. 203, 314 A.2d 362 (1974). And, interestingly, the majority, by not striking down this regulation, runs directly counter to its own assessment of what King stands for — “that Congress did not intend [AFDC] to be a lever in the hands of state legislators to compel compliance with local standards of moral conduct.”
This determination may not be so harsh as it sounds, however, for it seems plain enough that the three-judge court should find this regulation unconstitutional. The definition of a “lodger” as a man who lives with a woman to whom he is not married, while not defining a woman who lives with a man as such, is so patently a violation of equal protection on the basis of sex, see Frontiero v. Richardson, 411 U.S. 677, 93 S.Ct. 1764, 36 L.Ed.2d 583 (1973); Reed v. Reed, 404 U.S. 71, 92 S.Ct. 251, 30 L.Ed.2d 225 (1971), that, whether sex is regarded as a “suspect” classification or not, the State is unlikely to be able to find a justification for the classification here.
The other regulation under challenge here, 18 NYCRR § 352.30(d),4 is the more significant — both because its cleverness makes it more insidious and because, even absent the other regulation defining “lodger,” this regulation also permits the reduction of recipient children’s benefits as a result of whom the mother allows to live in the house, the apartment or tenement as the case may be. This regulation provides that if a lodger pays $15 a month or more, that amount will be considered income to the recipient family.5 If, however, the lodger pays nothing, or less than $15, then a pro rata share of the shelter allowance, including fuel for heating, will be deducted from the family’s benefits.6 This is the regulation which resulted in plaintiff Taylor and her six-year-old child receiving an eviction notice because a reduced shelter allowance made it impossible to meet the rent. Plaintiff Taylor’s “lodger”? Her disabled sister. This is the regulation which requires plaintiff Otey to throw her unemployed, ineligible-for-welfare, 23-year old son out on the street, because if he lives in the home their shelter allowance will not *1219be sufficient to pay the rent, while if he moves out the State will pay the full amount.7
The majority concedes that if this regulation conclusively presumed the availability of income from the lodger and reduced the AFDC child’s benefits on that basis, then the regulation would be unlawful under the HEW regulation. Rather than find such a presumption inherent in the regulation, however, the majority advances two independent bases or objectives of the regulation as compatible with the federal law and regulation. Each of them is in my view wholly lacking in sufficiency.
The first allowable “basis” for the regulation found by the majority is “the fair inference from the presence of the lodger in the household that the AFDC-recipient family actually needs less space for its own use than it is paying rent for.” While “it is clear” to the majority that this inference is the basis of the regulation, this was not the basis claimed by the State either in the court below or in this court.8 Rather this “basis” for the regulation lies in my colleagues’ fertile imagination. If this case were here now upon an equal protection challenge, then the majority might properly try to find a reasonable basis for the classification. Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970). But this is not an equal protection challenge. It is a challenge under a federal statute and regulation which through several years and many cases of judicial scrutiny have taken on substantive requirements well beyond those of the Equal Protection Clause. Primary among those requirements is that a child’s resources are to be measured in actuality, not on the basis of a presumption. See, e. g., Shea v. Vialpando, - U.S. -, -, 94 S.Ct. 1746, 40 L.Ed.2d 120 (1974). The majority acknowledges the federal prohibition of a presumption of support. Support, however, is just one type of resource affecting a family’s need; the amount of available living space is another. Yet in place of a presumption of support, the majority substitutes a conclusive presumption that whenever there is a “lodger” the family has more space than it needs. As such, it may well be contrary to fact: the older brother may be sharing a single bed with a younger one; the disabled sister may be sleeping on the couch.
Labeling the New York regulation a “fair inference” does not change its conclusive nature where a showing contrary to the inference will not affect the shelter allowance reduction; here the only fact considered by the State in the fair hearing is the presence or absence of a lodger, not the amount of space in the apartment. If the regulation provided only for a rebuttable presumption, whether of payments by the lodger or of excess space, there might well be a different question.9 Thus, the majority, in *1220upholding the regulation on this basis, creates a conclusive presumption regarding the child’s needs which has the effect of reducing the AFDC child’s benefits. This directly contravenes the HEW regulation which provides:
[A state plan must] [p]rovide that the determination of need and amount of assistance for all applicants and recipients will be made on an objective and equitable basis ....
45 C.F.R. § 233.20(a)(1) (emphasis added). The majority’s conclusive presumption of the child’s need, or lack of it, also violates what seems to me the clear import of Shea v. Vialpando, supra; King v. Smith, supra; Lewis v. Martin, supra; and HEW regulation, 45 C.F.R. § 233.90(a), that a family’s resources (be they income or amount of living space) be determined by what it actually has or receives, not by presumptions or inferences.10 If such a presumption be the basis for the New York regulation,11 it is in violation of federal law, and the regulation must fall.12
An “objective” of the New York regulation, according to the majority, “is to insure that all of the beneficiaries of an AFDC grant are entitled to enjoy it.” Clearly the State is not required, or for that matter allowed, to extend AFDC benefits to ineligible persons. The question, however, is whether this regulation serves to keep AFDC benefits from the ineligible, or whether instead it unlawfully withholds benefits from those rightfully entitled to it — dependent children in need and their responsible families. The fallacy underlying the majority’s view, and the argument of the State on this issue, is that the lodger is not a *1221“beneficiary” of the AFDC grant either in law or fact. The lodger is rather the beneficiary of the AFDC family’s generosity, and more likely that of the AFDC children’s mother. If a lodger is not present in the household, the family receives a rent allowance determined by the State to be proper for the family. If a lodger then is invited into the household, he would not receive any benefit from the AFDC grant, the entire amount of which the family is entitled to without him; he is rather a recipient of that charity which the family wishes to extend from its own resources.13 He is there at the family’s forbearance or pleasure and he has no right to remain. He receives nothing from the State, and when the family’s shelter allowance is reduced, nothing is taken from him. He continues to live in the household at the pleasure of the family.
Clearly what the State is doing is not keeping welfare funds from the ineligible by this regulation.14 Rather it seeks to punish the welfare family for using its own resources in a manner of which the Commissioner disapproves in advance in every case. Whether the Commissioner is attempting to enforce the “middle class morality” mentioned by the majority, or just trying to save money any way he can, the federal statute and regulations, and the unanimous case law forbid the State from enforcing its predilections which are irrelevant to the welfare of the child15 by depriving the eligible child of its needs. See, e. g., Carleson v. Remillard, 406 U.S. 598, 92 S.Ct. 1932, 32 L.Ed.2d 352 (1972); Townsend v. Swank, 404 U.S. 282, 92 S.Ct. 502, 30 L.Ed.2d 448 (1971); Lewis v. Martin, supra; King v. Smith, supra; Doe v. Ellis, 350 F.Supp. 375 (D.S.C. *12221972) (three-judge court); Saddler v. Winstead, 332 F.Supp. 130 (N.D.Miss.1971); Doe v. Schmidt, 330 F.Supp. 159 (E.D.Wis.1971) (three-judge court); Doe v. Shapiro, 302 F.Supp. 761 (D.Conn.1969) (three-judge court), appeal dismissed, 396 U.S. 488, 90 S.Ct. 991, 25 L.Ed.2d 264 (1970). And that is exactly what is being done here.
To repeat, to reduce the shelter allowance of an AFDC family by virtue of the presence in the home of a non-paying lodger does not deprive the lodger of any benefits — only the family which allows him to stay can do that — but rather deprives the needy family, and especially the needy child who is the object of the AFDC program, of them.
If the State believes that the non-paying lodger should not get a “free ride,” the State may legislate or proceed against the lodger, but should it be permitted to deprive the needy child? The State may attempt to obtain reimbursement from the lodger for the use of the family’s resources,16 but should it be able to punish the child because the head-of-household does not require the lodger to pay for his shelter? Cf. Doe v. Schmidt, supra,; Doe v. Shapiro, supra.
There are only two other points made by the majority requiring passing mention. • First, there is a suggestion that an “economy of scale” operates in the sense that the per capita housing cost decreases when there is a lodger. It is nonsense, however, to say that the cost of housing to the recipient family decreases when there is a non-paying lodger. Moreover, an economy of scale does not reduce the total cost of anything, and yet here, where the recipient family is legally and factually responsible for the total rent bill, the State is providing a smaller total allowance although the lodger contributes nothing. An economy of scale would operate only if the lodger were presumed to pay his pro rata share. But such a presumption would be clearly unlawful, as the majority concedes and 45 C.F.R. § 233.90(a) provides. The presence of a lodger is, finally, irrelevant to the rent the family pays. A certain rent is due and payable; if the State reduces the rent allowance, the difference will either be made up out of food budget — literally out of the needy child’s mouth — or it will not be made up, resulting in a notice of eviction. Plaintiff Taylor with her eviction notice would surely laugh, although perhaps a little bitterly, at the majority’s suggestion that by housing her destitute and disabled sister the family’s “actual cost of housing” was reduced.
Finally, in a footnote, the majority quotes from a letter from HEW in response to questions from the State. The suggestion of the footnote is that HEW has taken a position on the question before us. To the contrary, however, in that same letter HEW acknowledged that it' approves both plans like New York’s and those which grant full shelter allowance despite the presence of non-recipients in the household. In other words, HEW here, just as it did prior to King v. Smith, supra, has not resisted a state’s attempt to evade its own regulations and the federal statutes. See also Shea v. Vialpando,-U.S. at-, n. 11, 94 S.Ct. 1746.
I would affirm the judgments below, because, as Judge Bauman, said,
the inevitable result of these regulations is to reduce, perhaps drastically, the stipend for those who are eligible. This devastating reduction means in practice that rental payments must be met out of that portion of the welfare stipend allotted for food and clothing.
Hurley v. Van Lare, 365 F.Supp. 186, 195 (S.D.N.Y.1973). Because the regu*1223lation denies the eligible child his basic needs for no reason related to the purpose of the federal statute, it violates that statute and the implementing regulations.17

. Battle v. Lavine, App.Div., 354 N.Y.S.2d 680 (2d Dep’t 1974). Contrary to the majority’s suggestion, at note 5, the New York court’s decision was not merely based on the authority of Hurley v. Van Lare. One would be surprised were a high court of the sovereign state of New York to determine the purpose of a state regulation “[s]olely on the authority of [a federal] court’s decision.” Majority opinion at note 5. Rather Hurley v. Van Lare was simply cited for the proposition that the federal district court had reached one of the same conclusions as the Appellate Division — that “notwithstanding the [State’s] protestations that their concern is that ineligibles not receive a rental stipend, the inevitable result of the State regulation under attack is to reduce, perhaps drastically, the stipend for those who are eligible.” App.Div., 354 N.Y.S.2d at 683. Other shelter allowance cases contrary to the majority decision include Hausman v. Department of Institutions and Agencies, 64 N.J. 202, 314 A.2d 362 (1974). See also Mothers and Childrens Rights Organization, Inc. v. Stanton, 371 F.Supp. 298 (N.D.Ind.1973); Owens v. Parham, 350 F.Supp. 598 (N.D.Ga.1972) (three-judge court); Boucher v. Minter, 349 F.Supp. 1240 (D.Mass.1972) (three-judge court), all of which are unmentioned by the majority opinion.

. 42 U.S.C. § 602 reads, in pertinent part: (a) A State plan for aid and services to needy families with children must . . .
(7) except as may be otherwise provided in clause (8), provide that the State agency shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid to families with dependent children, or of any other individual (living in the same home as such child and relative) whose needs the State determines should be considered in determining the need of the child or relative claiming such aid, as well as any expenses reasonably attributable to the earning of any such income.

. 45 C.F.R. § 233.90 Factors specific to AFDC.
(a) State plan requirement. A State plan under title IV-A of the Social Security Act must provide that the determination whether a child has been deprived of parental support or care by reason of the death, continued absence from the home, or physical or mental incapacity of a parent, or (if the State plan includes such cases) the unemployment of his father, will be made only in relation to the child’s natural or adoptive parent, or in relation to the child’s stepparent who is ceremonially married to the child’s natural or adoptive parent and is legally obligated to support the child under State law of general applicability which requires stepparents to support stepchildren to the same extend [sic] that natural or adoptive parents are required to support their children. Under this requirement, the inclusion in the family, or the presence in the home, of a “substitute parent” or “man-in-the-house” or any individual other than one described in this paragraph is not an acceptable basis for a finding of ineligibility or for assuming the availability of income by the State. In establishing financial eligibility and the amount of the assistance payment, only such net income as is actually available for current use on a regular basis will be considered, and the income only of the parent described in the first sentence of this paragraph will be considered available for children in the household in the absence of proof of actual contributions.

. 18 NYCRR § 352.31(a) . . .
(3) When a female applicant or recipient is living with a man to whom she is not married, other than on an occasional or transient basis, his available income and resources shall be applied in accordance with the following:
(iv) When the man is unwilling to assume responsibility for the woman or her children, and there are no children of which he is the acknowledged or adjudicated father, he shall be treated as a lodger in accordance with section 352.30(d).

. 18 NYCRR § 352.30(d) :
A non-legally responsible relative or unrelated person in the household, who is not applying for nor receiving public assistance shall not be included in the budget and shall be deemed to be a lodger or boarding lodger. The amount which the lodger or boarding lodger pays shall be verified and treated as income to the family. For the lodger, the amount in excess of $15 per month shall be considered as income; for such boarding lodgers, the amount in excess of $60 per month shall be considered as income. In the event a lodger does not contribute at least $15 per month, the family’s shelter allowance including fuel for heating, shall be a pro rata share of the regular shelter allowance.

. This actual contribution, like all other income, will result in a reduction of the family’s benefits under the theory that welfare will only provide that money necessary to bring a family up to its level of need. This section of the regulation is unchallenged and, in my view, comports entirely with the intent of the federal statute and regulations.

. Those on welfare are sure to learn quickly that they will maximize their benefits by claiming that they receive $15 a month from their lodger, resulting in only a $15 diminution of their shelter allowance. In this way they will lose only $15 of benefits, rather than a pro rata share, which normally would be more. Thus, in Hurley’s case the pro rata reduction was $30, although she received no contribution from her male friend. In Taylor’s case the pro rata reduction was $55, although she received no contribution from her sister. In Otey’s case the pro rata reduction was $48.35 although she received no contribution from her son. One may wonder about the rationality of a system which deducts $55 from someone receiving no contribution, but only $15 from someone receiving a $15 contribution.

. Compare this result with the federal purpose “to help maintain and strengthen family life,” 42 U.S.C. § 601, and the federal requirement that states provide services “for the purpose of preserving . . . the family . . . 42 U.S.C. §§ 602(a) (13), 602(a) (14), 606(d). See Shea v. Vialpando, -U.S. -, -, 94 S.Ct. 1746, 40 L.Ed.2d 120 (1974). See also Rodriguez v. Vowell, 472 F.2d 622, 626 (5th Cir.), cert. denied, 412 U.S. 944, 93 S.Ct. 2777, 37 L.Ed.2d 404 (1973).

. It would indeed be hard to maintain that this is the basis for the rule, because as soon as the “lodger” moves out, the full shelter allowance is restored. If the presence of the lodger demonstrated excess space, as maintained by the majority, then his moving out would not be a reason to resume full shelter payments.

. In Mothers and Childrens Rights Organization, Inc. v. Stanton, 371 F.Supp. 298 (N.D.Ind.1973), the court found regulations almost identical to New York State’s in conflict with the federal law and regulations as applied. The court found that making a presumption of support, if rebuttable, was lawful, but if the presumption was irrebuttable in practice, then it was unlawful. Accord, Hausman v. Department of Institutions and Agencies, 64 N.J. 203, 314 A.2d 362 (1974). In Owens v. Parham, 350 F.Supp. 598 (N.D.Ga.1972) (three-judge court), the court also found a presumption in analytically identical regulations, upheld the regulations on their face, but found them un*1220constitutional as applied, because recipients whose shelter allowances were reduced as a result of non-eligibles residing in the household were not given an opportunity to rebut the presumption. The Supreme Court in Shea v. Vialpando, - U.S. at -, 94 S.Ct. 1746, suggested a similar solution in finding a uniform allowance for work-related expenses unlawful under the Act. The Court said that if there were provided an opportunity for individualized consideration where the allowance was not sufficient, then the allowance would not be unlawful.

. In Shea v. Vialpando, supra, the Court declared a Colorado uniform allowance for work-related expenses incompatible with the Social Security Act, saying:
From the inception of the Act, Congress has sought to ensure that AFDC assistance is provided only to needy families, and that the amount of assistance actually paid is based on the amount needed in the individual case after other income and resources are considered.
- U.S. at -, 94 S.Ct. at 1754 (emphasis original).

. New York’s regulations requiring initial and continuing investigations into need and eligibility demonstrate both its general adherence to the rule of determining actual, individual needs and resources and the lack of necessity for a presumption regarding excess living space. The New York regulations deal in some detail with the investigations to be made both initially, 18 NYCRR §§ 351.-1-.6, and on a continuing basis, 18 NYCRR §§ 351.20-.21. The actual resources are investigated in depth. 18 NYCRR § 351.2(e). Among the facts to be determined by documents, personal observation, personal and collateral interviews and other means are the residence and family composition. Each member of the household is investigated as to age, relationship to other members, marital status, employment, and the like. 18 NYCRR § 351.2(c). The place of residence must itself be specifically investigated and approved. 18 NYCRR § 351.3. Every six months all variable factors of need must be reconsidered, re-evaluated, and verified. 18 NYCRR § 351.21(b)(2). In short, it is absurd to create an administrative presumption concerning resources of income or space, when the actual information is on file and subject to immediate verification. Let it be remembered that New York justified its “home visits” in Wyman v. James, 400 U.S. 309, 91 S.Ct. 381, 27 L.Ed.2d 408 (1971), by its claimed need to gather this very type of information.

. This conclusive presumption, which the majority styles a fair inference, is in any (tase in violation of due process. See Owens v. Parham, supra. See also United States Department of Agriculture v. Murry, 413 U.S. 508, 93 S.Ct. 2832, 37 L.Ed.2d 767 (1973); Vlandis v. Kline, 412 U.S. 441, 93 S.Ct. 2230, 37 L.Ed.2d 63 (1973); Stanley v. Illinois, 405 U.S. 645, 92 S.Ct. 1208, 31 L.Ed.2d 551 (1972); Heiner v. Donnan, 285 U.S. 312, 52 S.Ct. 358, 76 L.Ed. 772 (1932).

. To carry out the majority’s analysis, when the welfare mother puts a dollar bill in the collection plate on Sunday, the church is “sharing in AFDC benefits,” and presumably the majority would uphold a state regulation which provided for withholding from the AFDC grant a sum equal to any donations to charity. The supposed justification remains the same — the State provides AFDC grants for the support of the dependent child and not for the benefit of ineligibles, and the fallacy is the same. Rather the State provides the family with what it determines to be the necessary resources, but then the resources belong to the family to utilize as it best sees fit. Absent this element of choice a welfare state would be a police state.
If the State believes that the resources are being misused to the detriment of the child, it has a vast battery of provisions which it may use to protect the child. Initially and primarily there are counseling services for the family. 18 NYCRR §§ 386.1-,10. This may range from simple caseworker counseling to specialized psychiatric help. Where a recipient has demonstrated an inability to handle the cash resources provided, restricted payments may be made rather than the normal unrestricted payments. Soc. Services Law § 350-a; 18 NYCCR § 381.3(a). For instance, if the head of the household wastes money so that rent payments cannot be met, the State may undertake to pay the shelter allowance directly to the landlord. Soc. Services Law § 143-b; 18 NYCCR § 381.3(c). The overall payments may be made to a person other than the head of household or to an agency on behalf of the eligible child. 18 NYCCR § 381.8. A homemaker may be provided in the house for the family. 18 NYCCR § 387.2. Intensive family casework services are available, 18 NYCRR §§ 456.1.7. In extreme cases the children may be removed from the home and placed in foster care. Soc. Services Law § 358-a; 18 NYCRR § 450.3. And, of course, the whole gamut of procedures relating to neglected children is available to the State. Soc. Service Law §§ 374, 397, 398; Penal Law §§ 260.05, 260.10; Family Court Act §§ 1011-1074.

. If the lodger were receiving welfare funds for which he was ineligible, he could be prosecuted for welfare fraud. Soc. Services Law § 145.

. Neither the State nor the majority has asserted that the regulation in question in any way safeguards the welfare of the eligible child. Nor does it appear how by reducing the child’s benefits, which in one of the cases before us resulted in a notice of evication, the child’s welfare would be enhanced.

. The State already requires the applicant for welfare to assign certain assets and to utilize all resources for the production of income. See 18 NYCRR §§ 352.15(d), 352.23, 352.25, 352.27, 352.28.

. The majority’s decision in its own words is premised upon what the majority concludes the New York regulations to “imply” or to be “based on,” or their “objective.” The Appellate Division in Battle v. Lavine, supra, the highest state court to have spoken on the issue, has explicitly rejected the interpretation of the majority here. Whether tliis court should be bound by the interpretation of state law made by Battle is a question not argued or briefed to us as Battle was decided after argument before this court. Nevertheless, it is clear that the majority decision, based as it is on an interpretation of state law, does not preclude New York courts from reaching an opposite conclusion, as the Battle court did, as to the conformity of the state regulations with the federal statute and regulations.