Ward v. Clark

207 F.3d 114, 2000 WL 306630

• Court: Court of Appeals for the Second Circuit
• Decided: March 24, 2000
• Docket: No. 98-6193
• Status: Published

Opinions

Judge STRAUB dissents in a separate opinion.

JACOBS, Circuit Judge:

In 1995, Connecticut General Statute § 17b-104 was amended to reduce benefits payable under the former Aid to Families with Dependent Children (“AFDC”) program for those beneficiaries who also received housing subsidies. See 1995 Conn. Acts 95-351, § 2(d) (Reg.Sess.) (codified at Conn. Gen.Stat. § 17b-104 (1996)). The amendment was challenged under 42 U.S.C. § 1983 by a class of AFDC beneficiaries seeking declaratory and injunctive relief against defendant-appellant Joyce Thomas, Commissioner of the Connecticut Department of Social Services (“Commissioner”). The claims of the original class of plaintiffs have been resolved. The present appeal concerns the claims asserted by intervenor Avery Fitzpatrick, a minor child whose benefits were reduced under the amendment because he lived with an adult caretaker who received a housing subsidy. He challenges the reduction on the ground that he was not a beneficiary of the subsidy because the caretaker owed him no legal duty of support. The district court certified a subclass of all children similarly situated (the “Fitzpatrick subclass”).

The Commissioner now appeals from a final order of the United States District Court for the District of Connecticut (Janet Bond Arterton, /.), granting summary judgment in favor of the Fitzpatrick subclass. See Ward v. Thomas, 9 F.Supp.2d 109 (D.Conn.1998). The Commissioner contends that the district court erred because: (1) under the Eleventh Amendment, pursuit of these claims in federal court is barred by state sovereign immunity, (2) the challenged state policy is consistent with federal law, and (3) the claims are barred because appellees failed to pursue their state administrative remedies in a timely fashion.

We hold that the Eleventh Amendment bars the Fitzpatrick subclass’s action, and reach no other issue.

BACKGROUND

This appeal arises from the administration of the now-terminated AFDC program by the State of Connecticut. The program was intended to encourage “the care of dependent children in their own homes or in the homes of relatives by enabling each State to furnish financial assistance and rehabilitation and other services ... to needy dependent children and the parents or relatives with whom they are living.” 42 U.S.C. § 601 (1994). States were not required to participate in the AFDC program, but those that did received federal matching funds and partial reimbursement of expenses. See Mont v. Heintz, 849 F.2d 704, 706 (2d Cir.1988). Participating states were required in turn to submit an AFDC plan meeting the requirements of 42 U.S.C. § 602 for the approval of the Secretary of the Department of Health and Human Services and to “administer their plans in conformity with applicable federal law.” Id. (citing Rosado v. Wyman, 397 U.S. 397, 408, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970)).

Broadly speaking, the AFDC entitlement was a function of two factors established by each participating state: (1) the standard of need, and (2) the level of benefits. See id. (citing 45 C.F.R. § 233.20(a)(2)). The standard of need was “a dollar figure set by each State reflecting the amount deemed necessary to provide for essential needs, such as food, clothing, and shelter.” Quern v. Mandley, 436 U.S. 725, 737, 98 S.Ct. 2068, 56 L.Ed.2d 658 (1978). The level of benefits determined the amount of assistance that was provided and was “not necessarily a function of the standard of need.” Id. “On both scores Congress has always left to the States a great deal of discretion.” Rosado v. Wyman, 397 U.S. 397, 408, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970).

By legislation enacted in 1995, Connecticut reduced the level of AFDC benefits provided to families living in subsidized housing, by an amount equal to eight percent of the state’s standard of need. See Ward v. Thomas, 895 F.Supp. 406, 410 (D.Conn.1995). This amount was intended to account for the financial benefit attributable to the housing subsidy. See Conn. Gen.Stat. § 17b-104(d) (1996).¹

In June 1995, the original class of plaintiffs filed suit challenging this planned reduction in AFDC benefits. See Ward, 895 F.Supp. at 408, 410. The original complaint, later amended, alleged that the planned reduction was enacted without timely and adequate notice and in violation of federal statutory and constitutional provisions. See id. at 408. The class sought to enjoin the Commissioner from carrying out the planned reduction policy.

In March 1996, Avery Fitzpatrick, a minor acting through his caretaker and great-aunt, Annie Dykes, intervened and filed a complaint of his own. Although Dykes had no legal responsibility to care for Fitzpatrick, she cared for him in her federally-subsidized apartment. Fitzpatrick was an AFDC recipient; Dykes was not. After the effective date of the 1995 amendment, the Commissioner reduced Fitzpatrick’s monthly AFDC benefits from $356 to $300 based on his residence in subsidized housing. Fitzpatrick alleged that the benefits reduction ran afoul of a federal regulation prohibiting the Commissioner from assuming that an AFDC recipient receives support from any person who lives in the household but has no legal responsibility to furnish support.

The AFDC program was terminated effective October 1, 1996, by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (“PRWORA”), Pub.L. No. 104-193, 110 Stat. 2105 (1996), which replaced AFDC with a program called Temporary Assistance to Needy Families (“TANF”). See 42 U.S.C. § 601 et seq.; see also Ward, 9 F.Supp.2d at 111 n. 1. PRWORA contains a provision, § 116(b)(2)(A), 110 Stat. at 2184, called “the Savings Clause” by the parties, which, according to Fitzpatrick (and the original plaintiffs), preserved the validity of AFDC statutes and regulations with respect to their claims. Thus, after the effective date of PRWORA, the original plaintiffs filed a Third Amended Complaint, which restated the essence of the initial Amended Complaint, with the addition of Fitzpatrick’s claim, and sought correction of past underpayments pursuant to the requirements of the former AFDC program as preserved by the Savings Clause.

In September 1997, the district court certified a plaintiff subclass of “all children who received [AFDC] benefits at any point between August 1, 1995 and October 1, 1996, while living in subsidized housing with a non-legally liable caretaker relative who was not a member of the child’s assistance unit.” Ward, 9 F.Supp.2d at 111. With the exception of the claim pressed by the Fitzpatrick subclass, all claims were eventually resolved and are not the subject of this appeal.

The Fitzpatrick subclass and the Commissioner cross-moved for partial summary judgment. On March 31, 1998, the district court denied the Commissioner’s motion and granted summary judgment in favor of the subclass.

The district court read PRWORA’s Savings Clause to preserve the requirements of the AFDC program with respect to the subclass’s claim, see id. at 119, and concluded that under those requirements, the Commissioner could not impute to the Fitzpatrick subclass the housing subsidies received by the children’s non-legally responsible caretakers, see id. at 111-13. The district court based its holding in part on 45 C.F.R. § 233.20(a)(2)(viii), an AFDC regulation which prohibited the Commissioner from assuming that a non-legally responsible adult who shares a household with an AFDC child recipient contributes to the support of the child. See Ward, 9 F.Supp.2d at 112 (citing Van Lare v. Hurley, 421 U.S. 338, 347, 95 S.Ct. 1741, 44 L.Ed.2d 208 (1975)). The district court gave consideration to 42 U.S.C. § 602(a)(7)(C), which allowed an offset of AFDC benefits to the extent that the AFDC benefits duplicated the value of the housing subsidy, but concluded that this subsection was inapplicable because the Fitzpatrick subclass children did not themselves receive the housing subsidies. See Ward, 9 F.Supp.2d at 112-13. In addition, the district court concluded that the housing subsidies were not otherwise available to the subclass members as defined by 45 C.F.R. § 233.20(a)(3)(ii)(D). See Ward, 9 F.Supp.2d at 112-13 (citing Anderson v. Edwards, 514 U.S. 143, 154, 115 S.Ct. 1291, 131 L.Ed.2d 178 (1995)). Thus, with respect to the legality of the Commissioner’s policy, the district court held that:

[i]n view of the statutes, regulations and case law, it is hard to discern how the laudable purpose of providing public housing to low-income individuals[ ] translates to a quantifiable benefit to a child receiving assistance, when only the non-legally liable caretaker, and not the child or other household member, is the recipient of the public housing subsidy. Rather, the subsidy to the non-legally liable caretaker can be considered to be an income resource which, under federal law, the State is prohibited from attributing to a child’s assistance unit.

Id. at 113.

As to the timely exhaustion of administrative remedies, the court concluded that the subclass was not required to appeal the Commissioner’s action to a state administrative forum within the 60 days required under Connecticut law because the suit challenged the Commissioner’s policy on its face rather than as applied. See id. at 113-14. The district court also noted that there was no administrative exhaustion requirement under § 1983; therefore, the subclass’s action was properly filed within the three-year statute of limitations period for § 1983 suits in Connecticut. See id. at 114 (citing Patsy v. Board of Regents, 457 U.S. 496, 516, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982)).

Finally, the district court concluded that the Eleventh Amendment did not bar the Fitzpatrick subclass’s action. See id. at 114-19. The court acknowledged that states are immune from private actions seeking damages for past injuries, but concluded that by virtue of PRWORA’s Savings Clause, which preserved duties existing prior to the effective date of the. statute, the Commissioner was engaged in an ongoing violation of federal law that was amenable to relief under the Supreme Court’s decision in Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). See Ward, 9 F.Supp.2d at 116-19.

By way of relief, the district court (i) declared that the Commissioner had violated federal law by reducing AFDC benefits to the subclass, and (ii) directed that notice be sent to the subclass children and their caretakers, pursuant to Quern v. Jordan, 440 U.S. 332, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979), informing them of the declaration and referring them to a state forum for a ruling as to whether they were entitled to further relief.² See Ward, 9 F.Supp.2d at 116, 119.

DISCUSSION

We review a grant of summary judgment de novo. See Bogan v. Hodgkins, 166 F.3d 509, 511 (2d Cir.1999). Although we view facts in the light most favorable to the non-moving party, see Cellular Tel. Co. v. Town of Oyster Bay, 166 F.3d 490, 492 (2d Cir.1999), no material facts are in dispute for the purpose of this appeal.

I

This case is controlled by Green v. Mansour, 474 U.S. 64, 106 S.Ct. 423, 88 L.Ed.2d 371 (1985), in which AFDC recipients challenged Michigan’s calculation of benefits as violative of federal law. Before the merits of the recipients’ claims were decided, Congress amended the law (and Michigan’s policies were conformed) in such a way that the plaintiffs had no remaining claim based on the calculation of present or future benefits. The plaintiffs were left with a claim for a declaration that the state’s past conduct violated federal law and a claim for “notice relief.” In these salient respects, the circumstances in Green mirror the facts presented on this appeal.

The Supreme Court held that the Green plaintiffs’ claims were barred by the Eleventh Amendment. On this appeal, we come to the same conclusion.

Green begins with Ex Parte Young, which “held that the Eleventh Amendment does not prevent federal courts from granting prospective injunctive relief to prevent a continuing violation of federal law.” Green, 474 U.S. at 68, 106 S.Ct. 423 (citing Ex Parte Young, 209 U.S. 123, 155-56, 159, 28 S.Ct. 441, 52 L.Ed. 714 (1908)). At the same time, Green emphasizes that the Supreme Court has declined to extend the reasoning of Ex PaHe Young to claims for retrospective relief. See id. (citing Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 102-03, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984); Quern v. Jordan, 440 U.S. 332, 337, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979); Edelman v. Jordan, 415 U.S. 651, 668, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974)). The line between prospective and retrospective relief is drawn because “[rjemedies designed to end a continuing violation of federal law are necessary to vindicate the federal interest in assuring the supremacy of that law,” whereas “compensatory or deterrence interests are insufficient to overcome the dictates of the Eleventh Amendment.” Id. Accordingly, suits against states and their officials seeking damages for past injuries are firmly foreclosed by the Eleventh Amendment. See Edelman v. Jordan, 415 U.S. 651, 663, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974); Hans v. Louisiana, 134 U.S. 1, 10, 15, 10 S.Ct. 504, 33 L.Ed. 842 (1890).

The class in Green, like the Fitzpatrick subclass, endeavored to blur the distinction between prospective and retrospective relief by seeking both a declaratory judgment that the state had violated federal law in the past and “notice relief’ like that provided in Quern. At the risk of being obvious, a party armed with such relief from the federal court and the doctrine of res judicata would have little left to do but appear in state court, and employ the state court as “a form of accounting proceeding” for a retrospective (federal) award of damages against the state. Green, 474 U.S. at 73, 106 S.Ct. 423.

The Green Court held that the Eleventh Amendment barred the federal courts from issuing declaratory relief or notice relief because, though the recipients framed their prayer for relief in prospective terms, the effect of what they sought would be entirely retrospective because the state was no longer violating federal law. See id. at 71-73, 106 S.Ct. 423. We conclude that the Fitzpatrick subclass’s claims are barred by the Eleventh Amendment for the same reasons stated in Green.

Declaratory Relief. The declaratory judgment sought by the Fitzpatrick subclass is unavailable in federal court because there is no “claimed continuing violation of federal law” or “threat of state officials violating the repealed law in the future.” Id. at 73, 106 S.Ct. 423. Any declaration could say no more than that Connecticut had violated federal law in the past.

As Green emphasized, the Declaratory Judgment Act of 1934 “is an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant.” Id. at 72, 106 S.Ct. 423 (quoting Public Serv. Comm’n v. Wycoff Co., 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952)) (internal quotation marks omitted). “The propriety of issuing a declaratory judgment may depend upon equitable considerations, and is also informed by the teachings and experience concerning the functions and extent of federal judicial power.” Id. (citations and internal quotation marks omitted). Of course, a declaration that Connecticut’s AFDC policy violated federal law would have its use if it was “offered in state-court proceedings as res judicata on the issue of liability, leaving to the state courts only a form of accounting proceeding whereby damages or restitution would be computed.” Id. at 73, 106 S.Ct. 423. But such a declaration “would have much the same effect as a full-fledged award of damages or restitution by the federal court, the latter kinds of relief being of course prohibited by the Eleventh Amendment.” Id. “[A] declaratory judgment is not available when the result would be a partial ‘end run’ around” the Eleventh Amendment’s bar on retrospective awards of monetary relief. Id.

Notice Relief. In Quern, the Supreme Court affirmed an order requiring state officials “to send a mere explanatory notice to members of the plaintiff class advising them that there are state administrative procedures available by which they may receive a determination of whether they are entitled to past benefits.” Quern v. Jordan, 440 U.S. 332, 334, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979). Such notice was permissible under the Eleventh Amendment, however, only because it was “ancillary to the prospective relief already ordered by the court.” Id. at 349, 99 S.Ct. 1139. As the Green Court explained, Quern “notice relief’ is simply unavailable when there is no continuing violation of federal law to enjoin. See Green, 474 U.S. at 71, 106 S.Ct. 423.

Here, there is no prospective relief to which the notice can be ancillary. As in Green, we cannot order an injunction or any other form of prospective relief because, with the termination of the AFDC program, Connecticut’s policy is now con-cededly in accord with federal law. The notice requested by the Fitzpatrick subclass is therefore an independent, retrospective form of relief barred by the Eleventh Amendment. “Because ‘notice relief is not the type of remedy designed to prevent ongoing violations of federal law, the Eleventh Amendment limitation on the Art. Ill power of federal courts prevents them from ordering it as an independent form of relief.” Id.

II

The district court relied on PRWORA’s Savings Clause to create a prospective obligation that could be declared and become the subject of notice relief. See Ward, 9 F.Supp.2d at 116-19. The Savings Clause does not change our analysis. That clause provides:

(2) CLAIMS, ACTIONS, AND PROCEEDINGS.^ — -The amendments made by this title shall not apply with respect to—

(A) powers, duties, functions, rights, claims, penalties, or obligations applicable to aid, assistance, or services provided before the effective date of this title under the provisions amended; and

(B) administrative actions and proceedings commenced before such date, or authorized before such date to be commenced, under such provisions.

§ 116(b)(2), 110 Stat. at 2184 (emphasis added). The district court found that this clause saves the present claim insofar as it allows the subclass to assert a “right” or “claim” to “aid, assistance, or services provided before the effective date” of PRWORA that is premised on some continuing obligation of the State. See Ward, 9 F.Supp.2d at 116. The district court located that continuing obligation in 42 U.S.C. § 602(a)(22), a former AFDC statute, which obligates the Commissioner to correct any underpayment of benefits:

A State plan for aid and services to needy families with children must — ...

(22) provide that the State agency will promptly take all necessary steps to correct any overpayment or underpayment of aid under the State Plan....

42 U.S.C. § 602(a)(22) (1994).

We have previously interpreted § 602(a)(22) expansively to require the correction of AFDC underpayments:

Looking first at the language of the statute, we find that the language of [§ 602(a)(22) ], referring to “all necessary steps” and “any ... underpayment,” is completely unrestrictive and unlimited.... As stated recently by the Ninth Circuit in a case involving claims very similar to those in the instant case, “ ‘All’ means every. ‘Any’ means without restriction or limitation. The plain meaning of the statute could not be broader. Congress intended all underpayments to be corrected.”

Tambe v. Bowen, 839 F.2d 108, 110 (2d Cir.1988) (quoting Edwards v. McMahon, 834 F.2d 796, 799 (9th Cir.1987)) (emphasis in original) (additional citations omitted). But Tambe does not bear upon the Eleventh Amendment, which was not at issue in that ease. Nothing in Tambe indicates that Congress intended § 602(a)(22) to abrogate the states’ Eleventh Amendment immunity.

As to the Savings Clause itself (and what it does and does not save) we think the district court may have over-read it. The district court, invoking § 116(b)(2)(A), found that the Savings Clause “expressly retains duties and obligations incumbent upon a state under the AFDC program which existed prior to the effective date of the amendment, as well as .prior claims, such as plaintiffs’ underpayment claims.” Ward, 9 F.Supp.2d at 119 (emphasis in original). This finding depends absolutely on a key phrase from subsection (A) of the Savings Clause — which saves claims for “aid, assistance, or services provided before the effective date of this title” — and the reading of that phrase to encompass aid that was not provided, or was under-provided, prior to the effective date of PRWORA. That is one plausible reading. On the other hand, subsection (A) references benefits “provided” rather than (as it could have) benefits “owed” or “wrongfully withheld” or “required to be provided.” In addition, the subsection preserves claims for “aid, assistance, or services provided before the effective date” of PRWORA. § 116(b)(2)(A), 110 Stat. at 2184 (emphasis added). The subsection certainly does not describe aid to be provided in the future, after the effective date of PRWORA. Accordingly, the scope of subsection (A) of the Savings Clause is at best ambiguous.

This ambiguity does not mean that PRWORA forecloses the recovery of AFDC aid that was short-changed or wrongfully denied by the state. Subsection (B) of the Savings Clause expressly saves “administrative actions and proceedings commenced ... or authorized ... to be commenced” prior to the effective date. § 116(b)(2)(B), 110 Stat. at 2184. Therefore, the subclass could invoke the Savings Clause to recover their underpayments in state administrative proceedings, with (presumably) appeals to state courts.

In any event, subsection (A) of the Savings Clause is insufficiently clear for us to find that Congress intended to abrogate the states’ Eleventh Amendment immunity. See Kimel v. Florida Bd. of Regents, — U.S. —,—, 120 S.Ct. 631, 640, 145 L.Ed.2d 522 (2000) (“Congress may abrogate the States’ constitutionally secured immunity from suit in federal court only by making its intention unmistakably clear in the language of the statute.”) (citations and internal quotation marks omitted). No doubt, the Savings Clause strengthens the argument of the Fitzpatrick subclass that if Connecticut’s policy violated federal law prior to the termination of the AFDC program, the subclass is entitled to a recovery in some forum. But the ongoing ability of the subclass to recover for past underpayment does not change the retrospective nature of such relief, and does not compel the conclusion that such a recovery may be had — or the right to it declared and the means to collect it noticed and advertised — in this federal forum.

With or without the Savings Clause, the subclass is seeking relief that in every practical sense amounts to an order requiring Connecticut to pay them money on account of entitlement to past benefits. Counsel for the subclass conceded as much at oral argument, acknowledging that the subclass would offer the district court’s declaration in state court as res judicata on the question of whether or not Connecticut had violated federal law. The state court would thus be left with only two issues to resolve: (1) whether the reduction in benefits was nevertheless appropriate pursuant to some other federal regulation, and, if not (2) the amount of damages to which each subclass member is entitled. As the Green Court held, this type of relief is precisely what the Eleventh Amendment prohibits federal courts from awarding.

Our holding does not affect or impair the ability (if any) of the subclass to recover in state administrative proceedings. We hold only that the relief requested by the subclass in this action is barred by the Eleventh Amendment.

CONCLUSION

For the foregoing reasons, we reverse the judgment of the district court and direct the court to dismiss the claims of the Fitzpatrick subclass because they are barred by the Eleventh Amendment.

1 . The 1995 amendment changed Connecticut General Statute § 17b-104 to provide:

Effective July 1, 1995, for a family living in subsidized housing, eight per cent of the standard of need, which represents the value of the subsidized housing, shall be counted as income in determining the benefit payment. Effective January 1, 1996, for families subject to time limited benefits pursuant to subsection (b) of section 17b — 112 and living in subsidized housing, the benefit payment shall be reduced by eight per cent of the payment standard.

1995 Conn. Acts 95-351, § 2(d) (Reg.Sess.) (codified at Conn. Gen.Stat. § 17b-104 (1996)).

Recognizing that some families received housing subsidies that were less than eight percent of the standard of need, the Commissioner promulgated a revised policy that reduced AFDC benefits by the lower of (i) eight percent of the standard of need, or (ii) the actual amount of the housing subsidy. See Ward, 895 F.Supp. at 410 (discussing DSS Policy Transmittal, No. UP-95-17).

2 . This notice, commonly referred to as Quern notice relief, described the subclass, the nature of the lawsuit, and presented four questions for the recipient to answer to determine whether the district court’s decision applied to the recipient. The notice then went on to state:

This federal lawsuit has now ended, and no further relief is available from the federal court. If your answer to all four questions above was YES, you should promptly contact the Department of Social Services to request a procedure for determining whether the child you cared for is entitled to some reimbursement of his or her AFDC benefits. You may file the attached form with your local office of the Department of Social Services to apply for reimbursement. Any such reimbursement or procedures may only be reviewed thereafter by whatever state administrative or judicial procedures which may be available for that purpose.