The Secretary of Health and Human Services' application to stay,
pending review by this Court, prospective enforcement of the
District Court's permanent injunction (affirmed by the Court of
Appeals) -- which, in effect, requires state and local officials,
in determining eligibility and benefits under the Aid to Families
with Dependent Children (AFDC) statute, to deduct the standard work
expense disregard in § 402(a)(8)(A)(ii) of the statute not from
gross income but from net income, after deducting such items as
federal, state, and local taxes -- is granted prospectively from
July 18, 1984. After this Court granted certiorari in this case,
402(a)(8) was amended, effective July 18, 1984, and there is a high
probability that the Court will interpret the amendment as
rendering the District Court's injunction prospectively improper.
Without a stay, the Secretary will suffer irreparable injury if she
succeeds on the merits. Moreover, for purposes of this Court's Rule
44.4, "most extraordinary circumstances" are present so as to
warrant the application for a stay even though the relief has not
first been sought below.
JUSTICE REHNQUIST, Circuit Justice.
The Solicitor General, on behalf of the Secretary of Health and
Human Services, requests that I stay, pending review by this Court,
prospective enforcement of the permanent injunction entered by the
United States District Court for the Northern District of
California on July 29, 1982,
Turner v.
Woods, 559 F.
Supp. 603, and affirmed by the United States Court of Appeals
for the Ninth Circuit,
Turner v. Prod, 707 F.2d 1109
(1983). The issue before the District Court was whether the $75
standard work expense disregard in § 402(a)(8)(A)(ii) of the Aid to
Families with Dependent Children (AFDC) statute, 42 U.S.C. §
602(a)(8)(A)(ii) (1976 ed., Supp. V), is deducted from net income
or gross income in determining AFDC eligibility and benefits. That
court concluded that the disregard was intended by Congress to
be
Page 468 U. S. 1306
deducted from net income, and it entered a permanent injunction
prohibiting state and federal officials
"from including mandatory payroll deductions such as federal,
state and local income taxes, Social Security taxes (F.I.C.A.) and
state disability insurance within the definition of 'income' in
interpreting and applying that term as used in Section 602(a)(7)(A)
of Title 42 of the United States Code [§ 402(a)(7)(A) of the AFDC
statute]."
559 F. Supp. at 616.
The Ninth Circuit's affirmance of the District Court's
interpretation is in conflict with decisions of the Third and
Fourth Circuits, causing a significant disparity in the treatment
of AFDC beneficiaries based solely on residence. This Court granted
the Secretary's petition for a writ of certiorari to resolve the
conflict. 465 U.S. 1064 (1984).
Subsequently, on July 18, 1984, the President signed into law
the Deficit Reduction Act of 1984, Pub.L. 98-369, 98 Stat. 494.
Section 2625(a) of that Act, entitled "Clarification of Earned
Income Provision," amends § 402(a)(8) of the AFDC statute to
provide that,
"in implementing [§ 402(a)(8)] the term 'earned income' shall
mean gross earned income, prior to any deductions for taxes or for
any other purposes."
This amendment became effective on the date of enactment.
The Secretary argues in her application for a stay that Congress
has resolved, at least from the date of enactment of this amendment
forward, the precise issue on which we granted certiorari. In their
memorandum in opposition to the Secretary's application for a stay,
which I requested, the AFDC respondents argue that the Deficit
Reduction Act, while resolving the meaning of "earned income" in §
402(a)(8), does not resolve the meaning of "income" in §
402(a)(7)(A), and thus does not overrule, prospectively, the
interpretation of the Ninth Circuit on the ultimate issue of
whether the $75 standard work expense disregard is deducted from
net income or gross income. In my judgment, respondents' position
is wrong. The Conference Report to the Deficit Reduction
Page 468 U. S. 1307
Act refers specifically to the conflict between the Ninth
Circuit on the one hand and the Third and Fourth Circuits on the
other, including the fact that this Court has agreed to hear the
Ninth Circuit case, and states that the Act
"[a]mends the AFDC statute to make clear that the term 'earned
income' means the gross amount of earnings, prior to the taking of
payroll or other deductions."
H.R.Conf.Rep. No. 98-861, pp. 1394-1395 (1984). From the
Report's discussion, it seems clear to me that Congress intended
the amendment of § 402(a)(8) to resolve the conflict, at least for
the future, on the issue on which we granted certiorari. I do not
see how this discussion is either confusing or ambiguous, as
claimed by respondents.
The Secretary has made out a compelling case for a prospective
stay. Effective July 18, 1984, she is unambiguously directed by
statute to deduct the work expense disregard from gross income,
prior to any deductions for taxes or for any other purposes; yet
she is still subject to an injunction prohibiting her from doing
the same. When this Court decides the merits of the Ninth Circuit
decision affirming the injunction, which was based on the statute
as it stood prior to the Deficit Reduction Act, the Court will
probably also decide the validity of the injunction after the
effective date of the Act. As is evident from the discussion above,
I think there is a high probability that the Court will determine,
as urged by the Secretary in this application, that the injunction
is prospectively improper, and should be dissolved as to AFDC
eligibility and benefit determinations subject to the July 18,
1984, amendment. I express no opinion on the merits prior to the
effective date of the Deficit Reduction Act.
I also conclude that, without a stay, the Secretary will suffer
irreparable injury. If she succeeds on the merits, which I am
confident she will as to the future interpretation of the work
expense disregard, the continued application of the injunction will
result in approximately $2.6 million in improper
Page 468 U. S. 1308
AFDC payments each month, divided equally between the Federal
Government and the State of California, a figure which respondents
apparently concede. Should the Secretary ultimately lose on this
issue, respondents and others so entitled will be able to collect
back AFDC payments that would have been made but for the requested
stay. On the other hand, it is extremely unlikely that the
Secretary would be able to recover funds improperly paid out.
See Edelman v. Jordan, 414 U. S. 1301,
414 U. S.
1302-1303 (1973) (REHNQUIST, J., in chambers). A stay
is, therefore, appropriate.
Finally, the individual respondents cite this Court's Rule 44.4,
which provides that an application for a stay to a Justice "shall
not be entertained, except in the most extraordinary circumstances"
unless the relief requested has first been sought below, and argue
that there are no extraordinary circumstances present in this case.
They further cite my opinions in
Conforte v. Commissioner,
459 U. S. 1309
(1983) (in chambers), and
Dolman v. United States,
439 U. S. 1395
(1978) (in chambers), where stays were denied in part for failure
to apply first for a stay in the lower courts. In
Conforte, there was no reasonable probability that
certiorari would have been granted, and the applicant had not shown
any legitimate reason, let alone extraordinary circumstances, for
not seeking a stay in the Court of Appeals. In
Dolman, the
information presented to me in the application for a stay was
sketchy as to whether the applicants had requested a stay below,
and there was no apparent reason for not requesting such a stay
below.
The situation in the instant case is quite different. The reason
for requesting a stay arose only after this Court granted
certiorari, and was not available when the case was before the
lower courts. The Secretary contends that, because certiorari had
been granted, it was doubtful that either the District Court or the
Court of Appeals had the authority to modify the injunction. I
agree with the Secretary that such doubt exists; and whether or not
an application to one of the lower courts would have been proper
under the circumstances,
Page 468 U. S. 1309
I believe an application directly to this Court is not
improper.
I think there are compelling reasons to grant immediate relief.
With respect to the future propriety of the injunction, the
Secretary is almost certain to prevail on the merits, because of
the intervening congressional action. Every day the injunction
remains in force, the clearly expressed intent of Congress is being
frustrated, and public funds are being improperly expended without
realistic possibility of recovery at the rate of $2.6 million per
month. It would be an empty and costly formality to force the
Secretary to refile her application in the lower courts. In my
judgment, the "most extraordinary circumstances" requirement of
Rule 44.4 is met in the unusual circumstances of this case.
The application for a stay of the District Court injunction is
granted prospectively from July 18, 1984.