Oldham v. EhrlichOldham v. Ehrlich
Invoking
The principal issues on appeal are (1) whether the district court had jurisdiction, and if so, (2) whether the district court‘s attorneys’ fee award was proper. Although we conclude the court had jurisdiction, we hold it abused its discretion in awarding only a token attorneys’ fee.
I. Background.
Plaintiffs were recipients of Aid to Families with Dependent Children (AFDC). Their eligibility for AFDC benefits depended on their financial need, which was determined by a calculation of their income and resources. See generally
In January 1969, the Department of Health, Education and Welfare (HEW) issued a regulation specifying that, in the calculation of income and resources, “only such net income as is actually available for current use on a regular basis will be considered and only currently available resources will be considered.” National Welfare Rights Organization v. Mathews, 174 U.S.App.D.C. 410, 420, 533 F.2d 637, 647 (D.C.Cir.1976) (quoting
In March 1975, however, HEW issued a new regulation, which specified that the retail market value of a recipient‘s automobile, rather than his equity in it, must be considered as an available resource. On October 1, 1975, the department followed HEW‘s lead and implemented its own retail market value regulation.
As a result of the new regulation, the department revalued the resources attributable to plaintiffs’ automobiles and notified them that their benefits would be suspended.2 Plaintiffs, with the assistance of legal aid attorneys,3 then sued for equitable relief, compensatory and punitive damages, costs, and attorneys’ fees.
On November 1, 1976, the department rescinded the offending regulation and reverted to valuing automobiles on the basis of the amount of owner‘s equity. This action mooted plaintiffs’ claim for equitable relief but left alive their claim for damages.
In January 1977, the court granted the plaintiffs’ motion, under
In January 1979, the district court issued its first ruling on the question of damages. The court held that the department‘s regulation was both statutorily and constitutionally invalid. The statutory holding followed from National Welfare Rights Organization v. Mathews, supra, 533 F.2d at 647, which, in striking down the HEW regulation on which the Nebraska regulation was modeled, held that “availability is required by the statute (
The constitutional holding followed from Vlandis v. Kline, 412 U.S. 441, 452, 93 S.Ct. 2230, 2236, 37 L.Ed.2d 63 (1973), which struck down a state university‘s policy of subjecting a student to a higher, nonresident tuition rate if he had been living outside the state at the time he applied for admission to college. The Supreme Court held that the Due Process Clause forbade the state university
to deny an individual the resident rates on the basis of a permanent and irrebuttable presumption of nonresidence, when that presumption is not necessarily or universally true in fact, and when the State has reasonable alternative means of making the crucial determination.
Id. at 452, 93 S.Ct. at 2236. The district court invoked Vlandis to rule that
(t)he defendants’ promulgation and enforcement of the regulation here created a conclusive and irrebuttable presumption that the entire gross market value of an encumbered automobile was available as a current resource and could be converted into cash when in fact only whatever equity the person had in the automobile was available as a resource to meet their needs. The alternative means were simply to determine the equity, which was the policy which had previously been in effect.
Oldham v. Ehrlich, No. 76-L-175, slip op. at 11 (D.Neb. Jan. 29, 1979).
Upon ruling the regulation invalid, the court initially held the defendants liable for compensatory and punitive damages, but subsequently decided that defendants enjoyed official immunity under Wood v. Strickland, 420 U.S. 308, 95 S.Ct. 992, 43 L.Ed.2d 214 (1975), because they had basis for a good faith belief in the regulation‘s validity. The court‘s final order granted no injunctive or monetary relief but awarded plaintiffs attorneys’ fees of $1000 plus costs incurred with respect to plaintiffs’
II. Jurisdiction.
The department contends that the present action, brought under
The plaintiffs, acknowledging that their Social Security Act-Supremacy Clause claim did not give the district court jurisdiction, assert that their constitutional claim was substantial. They point out that, given a substantial constitutional claim, the district court could hear their Social Security Act claim as a matter of pendent jurisdiction. E. g., Hagans v. Lavine, 415 U.S. 528, 536, 94 S.Ct. 1372, 1378, 39 L.Ed.2d 577 (1974). See Chapman v. Houston Welfare Rights Organization, supra, 441 U.S. at 618 n.36, 99 S.Ct. at 1916 n.36 (“Where the underlying right is based on the Constitution itself, rather than an Act of Congress, § 1343(3) obviously provides jurisdiction.“); id. at 675, 99 S.Ct. at 1946. (Stewart, J., dissenting) (“Today‘s decision may not have a great effect on the scope of federal jurisdiction. * * * (E)ven a welfare recipient with a federal statutory claim may sue in a federal court if his lawyer can link this claim to a substantial constitutional contention. And under the standard of substantiality established by Hagans v. Lavine, supra (415 U.S. 528, 94 S.Ct. 1372, 39 L.Ed.2d 577), such a constitutional claim would not be hard to construct.“). The department responds that the plaintiffs’ due process claim is obviously frivolous and therefore cannot support jurisdiction over the Social Security Act-Supremacy Clause claim.
The nub of the jurisdictional question, then, is whether plaintiffs asserted a non-frivolous constitutional claim. The district court held their claim was not only non-frivolous but warranted a ruling that the Nebraska regulation was unconstitutional in addition to being contrary to the Social Security Act. When analyzed under the appropriate equal protection standard of “rational basis,”6 e. g., Dandridge v. Williams, 397 U.S. 471, 487, 90 S.Ct. 1153, 1162, 25 L.Ed.2d 491 (1970), the retail market value regulation was arguably irrational as a means of measuring the resources of AFDC recipients in that, by assuming a car worth $4000 on which a family still owed $2000 represented $4000 in resources, the regulation “defie(d) the laws of economics and punishe(d) welfare recipients for the type of credit purchases also common to working families.” National Welfare Rights Organization v. Mathews, supra, 533 F.2d at 648. Of course, on the other hand, perhaps the regulation was defensible as a means of implementing a policy decision to discourage purchases on credit, to prevent accumulation of luxury items, to assure a difference between assets of working and welfare families, and to cut welfare costs. See id. Whatever a fullblown equal protection analysis might reveal, we cannot say plaintiffs’ constitutional claim was “essentially fictitious,” “wholly insubstantial,” “obviously without merit,” or such that “prior decisions inescapably render the claim( ) frivolous.” Hagans v. Lavine, supra, 415 U.S. at 537, 538, 94 S.Ct. at 1379. We therefore hold that plaintiffs’ constitutional claim was substantial enough to allow the district court to take pendent jurisdiction over plaintiffs’ Social Security Act claim.7III. Attorneys’ Fees.
Plaintiffs maintain that they, as the prevailing parties in a section 1983 action, were eligible to receive a reasonable attorney‘s fee under
The first point to determine is whether plaintiffs prevailed for purposes of section 1988. Although the Nebraska regulation was amended before this case reached a trial on the merits,8 the plaintiffs are considered the prevailing parties if the offending but now discontinued policy would have been declared invalid.9 See, e. g., Inmates of the Nebraska Penal & Correctional Complex v. Greenholtz, 567 F.2d 1381, 1384 (8th Cir. 1977); Parham v. Southwestern Bell Telephone Co., 433 F.2d 421, 429-30 (8th Cir. 1970). Had not defendants rescinded their regulation, it is virtually certain it would have been held invalid as contrary to the Social Security Act under National Welfare Rights Organization v. Mathews, supra. Given that plaintiffs had a non-frivolous constitutional claim, they may receive attorneys’ fees as the prevailing parties on their pendent nonconstitutional claim. Kimbrough v. Arkansas Activities Association, 574 F.2d 423, 426 (8th Cir. 1978).
Next to decide is whether the court acted within its discretion in reducing the attorneys’ fees award because plaintiffs had legal aid attorneys. Although a court may consider a large number of factors in arriving at a reasonable attorney‘s fee under
Although we otherwise affirm the district court, we remand for determination of an award of attorneys’ fees based upon the appropriate factors.
Notes
Your 1975 Pontiac has (a) value of $5,100 and you are allowed $1200 as an exemption for working. This leaves your car being worth $3,900. You are allowed $2250 in resources so your car is putting you over the maximum allowable resources therefore making you ineligible to receive A(F)DC.
(references to regulations omitted).
The Weinberger Court declined to extend Vlandis to the social security requirement there in question. Reasoning that such an extension of the irrebuttable presumption doctrine “would turn (the irrebuttable presumption) cases into a virtual engine of destruction for countless legislative judgments,” id. at 772, 95 S.Ct. at 2470, the Court ruled generally that governmental rules governing social insurance are valid, notwithstanding some overinclusion or underinclusion, so long as they are rationally based. Id. at 770, 776-77, 95 S.Ct. at 2472.
Weinberger, then, teaches that the appropriate constitutional challenge to a seemingly arbitrary welfare regulation uses the language of equal protection rather than due process. Nevertheless, the irrebuttable presumption doctrine partakes heavily of equal protection doctrine, see, e. g., Note, supra, 87 Harv.L.Rev. at 1548 (“strange hybrid of due process and equal protection scrutiny“). We therefore conclude that although plaintiffs (and the court below) may have chosen an inappropriate mode of constitutional analysis, the plaintiffs’ complaint implicitly raised the appropriate equal protection concerns. It is these concerns, not an irrebuttable presumption argument, that we examine for non-frivolousness.
We disagree. Plaintiffs’ statutory claim was that the regulation was not authorized by statute; their constitutional claim was that if the regulation were authorized by statute, the statute was unconstitutional. These claims, of course, are similar; otherwise there would be no pendent jurisdiction. United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966) (claims must derive from “common nucleus of operative fact“). But they are not identical.