Oldham v. EhrlichOldham v. Ehrlich
- Reporters:
- ,
- Before:
- Stephenson
Invoking
The principal issues on appeal are (1) whether the district court had jurisdiction, and if so, (2) whether the district court’s *165attorneys’ fee award was proper. Although we conclude the court had jurisdiction, we hold it abused its discretion in awarding only a token attorneys’ fee.
1. 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On November 1, 1976, the department rescinded the offending regulation and reverted to valuing automobiles on the basis of the amount of owner’s equity.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
*166to 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 *167S. Ct. at 1916 n.36 (“Where the underlying right is based on the Constitution itself, rather than an Act of Congress,
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.7
*168III. Attorneys’ Fees.
Plaintiffs maintain that they, as the prevailing parties in a
The first point to determine is whether plaintiffs prevailed for purposes of
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
. The Honorable Robert Van Pelt, Senior United States District Judge for the District of Nebraska.
. Plaintiff Annie Dillard’s notification read as follows:
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).
. Plaintiff Dianne Oldham’s attorneys worked for Legal Aid Society of Lincoln, Inc. Plaintiff Annie Dillard’s attorney worked for Legal Aid Society of Omaha-Council Bluffs, Inc.
. Plaintiffs’ attorneys indicated spending over 120 hours on the case, and requested compensation at the rate of $40.00 per hour.
. Of course, a Social Security Act claim would itself vest jurisdiction in a federal court if the amount in controversy exceeded $10,000. See
. As noted, the district court rested its constitutional holding on Vlandis v. Kline, supra. We confess some difficulty with this reliance in light of the strong criticism of the use of Vlandis ’ “irrebuttable presumption doctrine” as an independent basis on which to find a statute invalid, e. g., Note, The Irrebuttable Presumption Doctrine in the Supreme Court, 87 Harv.L.Rev. 1534, 1544-56 (1974); see generally L. Tribe, American Constitutional Law § 16-32 (1978), and in light of the Supreme Court’s holding in Weinberger v. Salfi, 422 U.S. 749, 767-85, 95 S.Ct. 2457, 2467-76, 45 L.Ed.2d 522 (1975), which upheld a social security provision that denied survivor’s benefits to a wife or child whose relationship with the deceased wage earner had lasted less than nine months.
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.
. Defendants also contend that plaintiffs’ “due process argument is merely a restatement in other words of the supremacy clause argument decisively rejected by the Supreme Court in Chapman, supra ” because “the protected prop*168erty right arises out of the Social Security Act.” Appellee’s Brief at 26.
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.
. The court found that the department abandoned its regulation as a direct result of plaintiffs’ suit.
. Defendants emphasize plaintiffs did not prevail on their claim for damages. Yet a party may be considered prevailing for purposes of section 1988 attorneys’ fees without meeting success on every claim he has made. The degree of a plaintiff’s success is appropriate to consider in gauging the amount of the attorney’s fee to award, see e. g., Brown v. Bathke, 588 F.2d 634, 638 (8th Cir. 1978); Nadeau v. Helgemoe, 581 F.2d 275, 279 (1st Cir. 1978), but once plaintiff has won success on a single substantial claim, he qualifies as a prevailing party, see, e. g., id. at 278-79. It is sufficient, then, for plaintiffs here to show they would have been entitled to injunctive relief had defendants not mooted their claim.
. As the sentence in text implies, the attorneys’ fee awarded in this case will go not to the individual attorneys but to their legal aid organization employers.