Bowen v. Gilliard Brief for Appellees

    Nos. 86-509 and 86-564

I n  THE

# Buptmt (Emtrt nt %  Inttpft States
O ctober T erm , 1986

Otis It. Bowes, Secretary of Health and 
Human Services,

Appellant, 
v.

B eaty M ae B illiard, et al..
Appellees.

P h il l ip  J. K ik e , Secretary, North Carolina 
Department of Human Resources, et al.,

Appellants,
v.

B eaty M ae G illiard, et al.,
Appellees.

ON APPEAL prom t h e  u n ited  states district court
FOR THE WESTERN DISTRICT OP NORTH CAROLINA

BRIEF FOR APPELLEES

J ulius LbV onne Chambers 
E ric Schnapper 

NAACP Legal Defense & 
Educational Fund 

16th Floor 
99 Hudson Street 
New York, New York 10013 
(212) 219-1900

J ean M, Cary 
Thompson and McAllaster 
327 West Main Street 
Durham, North Carolina 27701 
(919) 688-9646

J ane R. W bttach*
East Central Community 

Legal Services 
Suite 600
5 West Hargett Street 
Raleigh, North Carolina 27601 
(919) 8284647

Lucie E. W hite 
C.C.L.A. Law School 
405 Hilgard Avenue 
Los Angeles, California 90024 
(213) 206-1075

Counsel for Appellees 
* C ounsel of Record



QUESTIONS PRESENTED
1. Does 42 U.S.C. § 602(a)(38)

authorize state officials to require 
non-needy children to become welfare 
recipients and to forfeit their 
child support in order for their 
custodial parents and indigent 
siblings to receive Aid to Families 
with Dependent Children?

2. If 42 U.S.C. § 602(a)(38) does 
authorize such action on the part of 
the state officials, is such a 
procedure unconstitutional?

3. Where state officials knowingly and 
deliberately violate a valid federal 
injunction, does the Eleventh 
Amendment preclude the federal 
courts from ordering state officials 
to return funds improperly taken or

l



withheld in violation of that 
injunction?
Should Hans v. Louisiana. 134 U.S. 1 
(1890), be overruled?



TABLE OF CONTENTS
Page

Statement of the Case ............ 1
Statement of the Facts ........... 5
Summary of Argument .............  15
Argument ........................  22

I. The Appellants' Prac­
tices Are Forbiddenby the Social Security
Act ......................  22

II. The Appellants' Prac­tices Work An Unconsti­
tutional Taking ofPrivate Property ....... 64
A. Child Support Funds

Are Protected by the 
Taking Clause ........  65

B. The Constitution­
ality of the Obligations Imposed 
by Appellants' Prac­
tices ........ 74

C. The Constitution­
ality of Imposing Such Obligations As
A Condition of AFDC 83

iii



III. The Appellants' Prac­
tices Unconstitutionally Burden Fundamental Rights ................

IV. The District Court
Properly Ordered The 
State Appellants To 
Return Funds Seized or 
Withheld in Violation of that Court's 1971 
Injunction ...........

Conclusion ..........

108

121
149

iv



TABLE OF AUTHORITIES
Cases: Page
Adickes v. S. H. Kress & Co.

398 U.S. 144 (1970)........  70,73
Armstrong v. United States, 364

U.S. 40 (1960) ...........  75
Atascadero State Hospital v.Scanlon, 87 L.Ed.2d 171

(1985)................... .. 148
Bourque v. Commissioner of 
Welfare, 6 Conn. Cir. 685,
308 A.2d 593 (1972)........  62

Califano v. Jobst, 434 U.S. 47(1977)............ 113,114,115,118
California Federal S & L Assn, 

v. Guerra, 93 L.Ed.2d 613 (1987)................ . 62
Carroll v. Commissioners of 

Princess Anne, 393 U.S.
175 (1968)............ ... 137

Cleveland Board of Education 
v. LaFleur, 414 U.S. 632 
(1974)................... 110

Commmissioner v. Lester, 366 
U.S. 299 (1961)........... 63

Craig v. Gilliard, 409 U.S.
807 (1972)............... .Passim

Dandridge v. Williams, 397 
U.S. 471 (1970)......... 26

v



Ditmar v. Ditmar, 48 Wash.2d
373, 293 P.2d 759(1956)...... 67

Edelman v. Jordan, 415 U.S.
651 (1974)......... 55,140,145

Gilliard v. Craig, 331 F.
Supp. 587(W.D.N.C.1971)...... Passim

Goodyear v. Goodyear, 257 N.C. 
374, 126 S.E.2d 113 
(1962) .............. . 66

Green v. Mansour, 88 L.Ed.2d 
377 (1985)................. 148

GTE Sylvania, Inc. v. Con­
sumers Union, 445 U.S. 375 
(1980).................... . . 134

Hans v. Louisiana, 134 U.S. 1 (1890) .... ........... . . ii,148
Heckler v. Turner, 84 L.Ed.2d 

138 (1985)................. 24
Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979) .........____
Hobbie v. Unemployment
Appeals Commissioner (No.

61

8 5-9 9 3, Feb. 25, 1 9 8 7)...1 8,6 4,7 2 , 7 3

Howat v. Kansas, 258 U.S. 181
(1922)...................... 134

Hutto v. Finney, 437 U.S.
678 (1978)........... 21,144,145

In re Burns, 136 U.S. 588
(1890)...................... 61

vi



26
Jefferson v. Hackney, 406 

U.S. 535 (1972)...........
Johnson v. Cohen, No. 84-6277

(E.D. Pa., Jan. 10, 1986).... 12
King v. Smith, 392 U.S. 309

(1968)............  ........ 25
Linda R.S. v. Richard D., 410
U.S. 614 (1973)............. 11

Lyng v. Castillo, 91 L.Ed.2d
527 (1986).................. Passim

Pacific Gas & Electric Co. v.
State Energy Resources 
Comm'n, 461 U.S. 190(1983).................... . 62

Papasan v. Allain, 92 L.Ed.2d
209 (1986)... ...........  148

Pasadena City Bd. of Educa­tion v. Spangler, 427 U.S.
424 (1976)............. 134,137,139

Pennsylvania v. Wheeling &
Belmont Bridge Co., 59 U.S.
421 (1856).................. 138,139

Pierce v. Society of Sisters,
268 U.S. 510 (1925).......  109

Portsmouth Harbor Land &
Hotel Co. v. United States,260 U.S. 327 (1978)........  93

Pruneyard Shopping Center v.
Robins, 447 U.S. 74(1980)...................... 60

vii



Pumpelly v. Green Bay Co.,
80 U.S. 166 (1872).......... 93

Rand v. Rand, 40 Md. App.
550, 392 A.2d 1149
(1978).....................  67

Rosado v. Wyman, 397 U.S.
397 (1970).................. 24,26

Schweiker v. Gray Panthers,
453 U.S. 34 (1981)...... 23,25,42,49

Scott v. Commonwealth of Pennsylvania, 46 Pa.
Commwlth. 403, 406 A.2d594 (1979)........    67

Shuttlesworth v. Birmingham,394 U.S. 147 (1969)......... 137
Smith v. Organization of 
Foster Families, 431 U.S.
816 (1977).................. 110

Sniadach v. Family Finance Corp., 395 U.S. 337
(1969).......  ...........  71

Swann v. Board of Education,
402 U.S. 1 (1971)..........  138

System Federation v. Wright,
364 U.S. 642 (1961)  138,139

Teamsters v. United States,
431 U.S. 394 (1977)........  53

United States v. Causby, 328U.S. 256 (1946)............. 93

viii



United States v. Central 
Eureka Mining Co., 357 
U.S. 155 (1958)............. 75

United States v. United Mine 
Workers, 330 U.S. 258 
(1947).....    134

Van Lare v. Hurley, 421 U.S.
338 (1975).................. 25

Wake County ex rel. Fleming v .
Staples, 86 CVD 446 (Wake 
County, N.C., Oct. 1,
(1986)...................... 15

Walker v. City of Birmingham,388 U.S. 307 (1967)...21,134,136,137
Watkins v. Blinzinger, 789

F.2d 474 (7th Cir. 1986).... 53
Watts v. Watts, 240 Iowa 384,

36 N. W. 2d 347 (1949)........ 67
Wetmore v.Markoe, 196 U.S. 68

(1904)...................... 62
Zablocki v. Redhail, 434
U.S. 374(1978).. 108,113,114,115,116

Statutes
7 U.S.C. §2013.  32
7 U.S.C. § 2020(e) (2)....... 33
42 U.S.C. § 602 (a) (7)......... 27

ix



42 U.S.C. § 602(a)(8)(A)
(iii)...................... . 6

42 U.S.C. § 602(a)(8)(A)(vi)... 47
42 U.S.C. § 602 (a) (10) (A).....  33
42 U.S.C. § 602 (a) (14)........  31
42 U.S.C. § 602 (a) (17)........  23
42 U.S.C. § 602(a) (18).......  23
42 U.S.C. § 602 (a) (19) (A).....  31
42 U.S.C. § 602(a) (23)........  23
42 U.S.C. § 602(a) (26)........  31
42 U.S.C. § 602 (a) (26) (B).....  31
42 U.S.C. § 602 (a) (31).....  23,25,48
42 U.S.C. § 602 (a) (35)........  31
42 U.S.C. § 602 (a) (38)........  Passim
42 U.S.C. § 602 (a) (39)........  25,49
42 U.S.C. § 615. ..............  25
42 U.S.C. § 657 (b) (i).........  6
42 U.S.C. § 1396a (a)(17)

(D) . . . ......................  49
N.C. Gen. Stat.§ BO-

13 . 4 (b)..................... 59
N.C. Gen. Stat. § 50-13.4(c)......................... 66

x



N.C. Gen. Stat. § 50-13.4
(d).......... .............  58,66

Regulations:
45 C.F.R. § 232.11............ 3

Other Authorities:
Hearings before the Sub­committee on Labor,
Health and Human Services 
of the Senate Committee,
95th Cong.,1st Sess.(1983)..................... 41

Hearings before the Sub­committee on Labor,
Health and Human Services of the Senate 
Finance Committee, 97th
Cong., 2d Sess. (1982)..... 41

50 Fed. Reg. 9517
(March 8, 1985)............ 10

xi



STATEMENT OF THE CASE
This case originated in 1970 as a 

challenge to a North Carolina practice of 
improperly imputing income to recipients 
of Aid to Families with Dependent 
Children (AFDC) . At the time, North 
Carolina automatically included all 
children living in a household as members
of an AFDC assistance unit if an
application was made for any of the
children. This was true even when a
particular child received adequate child 
support from his absent parent. The 
whole family's grant was reduced by the 
child support belonging to just one 
family member. A three-judge court held 
that to treat child support paid for a 
specific child as a resource available to 
the entire family worked an unlawful 
appropriation of the funds of the 
supporting parent and the recipient 
child, in violation of the intent of the



2
Social Security Act and constitutional 
principles. Gilliard v. Craig. 331 F. 
Supp. 587, 593 (W.D.N.C. 1971). A
permanent injunction was entered, 
prohibiting North Carolina from directly 
or indirectly reducing AFDC payments to 
eligible children by the amount of 
legally-restricted child support income 
received by other children in the 
household. North Carolina Jurisdictional 
Statement. A-108 to A-114, (hereinafter. 
N.C.J.S.). This Court affirmed that 
order. 409 U.S. 807 (1972).

In July, 1984, Congress enacted the 
Deficit Reduction Act of 1984 (DEFRA), 
which contained an amendment to the 
Social Security Act regarding the 
treatment of AFDC recipients who shared a 
home with siblings not receiving AFDC. 
Pub. L. No. 98-369, § 2640(a), 98 Stat.
1145, 42 U.S.C. (Supp. Ill) § 602 (a) (38). 
The Department of Health and Human



3
Services interpreted section 602(a)(38) 
to require termination of AFDC to such 
recipients unless these non-recipient 
siblings were also added to the welfare 
rolls. 45 C.F.R. §206.10(a) (1) (vii) . 
Once drawn into AFDC, their separate 
income was counted as available to the 
whole group and any child support 
payments were required to be assigned to 
the state. 45 C.F.R. § 232.11. North
Carolina officials, although aware that 
this interpretation of section 602(a)(38) 
conflicted with their obligations under 
the 1971 injunction, did not return to 
court to seek a modification of that 
order. (N.C.J.S. A-78). Instead, in
October, 1984, the state officials began 
systematically to violate the 1971 
decree.

In May, 1985, a group of class 
members injured by that violation 
submitted to the district court a request



4
for further relief. (J.App. 30-34). 
North Carolina then filed a third-party 
complaint against Secretary Bowen, 
claiming that the state's actions were 
required by the new HHS regulations. 
(J.App. 66-72). The district court 
upheld the disputed HHS regulations as 
consistent with section 602 (a) (38), but 
held the statute and regulation 
unconstitutional as applied to child 
support recipients, and enjoined their 
enforcement. (N.C.J.S. A-l to A-80). 
The district court also concluded that 
North Carolina officials had knowingly 
violated the outstanding 1971 injunction, 
and directed those officials to return 
all funds seized or withheld in violation 
of that earlier decree. (N.C.J.S. A-78 
to A-80). The district court stayed its 
order pending appeal. (N.C.J.S. A-148). 
Both the federal and state defendants



5
appealed; on December 8, 1986, this Court 
noted probable jurisdiction.

STATEMENT OF THE FACTS 
In October, 1984, North Carolina 

notified all AFDC recipients who lived 
with non-AFDC siblings that their AFDC 
grants would be terminated unless they 
reapplied for AFDC and agreed to put 
those siblings on public assistance. 
Prior to that date, for example, Dianne 
Thomas and her daugher Crystal had been 
receiving a monthly AFDC grant of $194 
because Crystal's father paid no child 
support. Ms. Thomas had not requested 
assistance for her son Sherrod, however, 
because he was adequately supported by a
$200 monthly support payment from
Sherrod's father Ms. Thomas was told
that she could not receive AFDC for
herself and Crystal unless Sherrod also 
went on welfare. (N.C.J.S. A-14). When 
Ms. Thomas and other AFDC parents



6
submitted the required application, they 
were also told that all aid would be 
denied unless they assigned to the state 
the support payment of the non-indigent 
child. (N.C.J.S. A-16). The state
retained most of each support payment, 
providing the applicants with a small 
additional grant for the non-indigent 
applicant, plus in most instances a 
statutory $50 pass through.1 The actual 
additional grant for a child such as 
Sherrod Thomas was $29 (Table 4 J. App. 
52) .

The appellants' practice of 
mandating participation in AFDC by non- 
needy siblings had two immediate 
consequences. First, approximately 15%

1 42 U.S.C. § 657(b)(1) requires
the child support enforcement agency to 
pass through to the family the first $50 paid in child support in a particular 
month. 42 U.S.C. § 602(a)(8)(A)(vi)
requires the AFDC program to disregard 
this $50 in calculating the family's income.



7
of the affected AFDC recipients were 
terminated from the North Carolina AFDC 
program from 1984 through 1986 because 
state officials calculated that the 
support payments to their siblings were 
sufficient to support the entire family. 
Second, in about 85% of the cases a child 
with independent support was conscripted 
onto the rolls and his child support was 
taken by the state. See lists of Class 
Members filed Dec. 11, 1986, J. App. 16. 
State officials then disbursed for that 
child an additional AFDC allotment which 
was substantially less than the amount 
the state had actually received. Prior 
to October, 1984, for example, Diane 
Jefferys was receiving $204 a month in 
child support for two of her children, 
Latoya and Anthony, who were not on AFDC; 
after Ms. Jefferys complied with the 
state's direction to put both children on 
AFDC, the state received the $2 04 each



8
month, but disbursed for the children 
only an additional $71. After passing 
through the $50 disregard, the state 
retained the balance of $83 to help 
defray the overall cost of the AFDC 

program. (N.C.J.S. A-29). Similarly, in 
August, 1985, North Carolina received a 
check for $810 to cover several months of 
accumulated support payments for two 
children of Arvis Waters; state officials 
actually disbursed to Ms. Waters only $50 
of that amount, and retained the 
remaining $760. (N.C.J.S. A-27)

This practice of expropriating most 
of the child support payments involved 
several direct and foreseeable 
consequences. First, of course, it 
drastically lowered the standard of 
living of the supported children whose 
support payments were partially 
expropriated by the state. The money 
available for Latoya and Anthony



9
Jefferys, for example, immediately fell 
by more than half. Ms. Jefferys and her 
children were soon evicted from their 
house, and Ms. Jefferys was unable to buy 
either clothes or shoes for children who 
had had both prior to 1984. (J. App. 
134-135) . Other supported children 
suffered in a similar manner because the 
state was seizing a substantial portion 
of their support funds. (N.C.J.S. A-13 
to A-30). The state retains on average 
$50 to $100 from each monthly child 
support payment, one third to one half of 
each such payment.2 Having been thus 
conscripted onto the AFDC rolls, the

2 See N.C.J.S. A-14 (monthly 
support payment of $200; net additional 
allotment of $29 plus $50 pass-through); 
A—21 to A-22 (monthly support payment of 
$189; net additional allotment of $44 plus $50 pass-through; A-23 to A-24 
(monthly support payment of $190; net 
additional allotment of $44) ; A-28 to A- 29 (monthly support payment of $204; net 
additional allotment of $36 plus $50 pass-through) ; cf. J. App. 109 (average 
"reduction" of $103).



10
formerly self-sufficient children were 
forced to subsist on grants equal to 
about 30% of the federal poverty level.3 

Second, once the fathers of the 
supported children learned that most of 
the support payments were actually going 
to the Department of Human Resources, 
rather than to their own children, many 
of them terminated or reduced those 
payments. The father of Latoya and 
Anthony Jefferys stopped making support 
payments several months after the 
assignment began, because, Ms. Jefferys 
reported, "he feels like when he pays, 
his children do not really benefit." 
(N.C.J.S. A-29). State officials were
evidently unable to bring about a 
resumption of those support payments. 
The father of Sherrod Thomas had

Compare table 4, J.App. 52 
(North Carolina payment standard) with 50 Fed. Reg. 9517-18 (March 8, 1985) (federal poverty guidelines).



11
regularly and voluntarily been paying 
$200 a month for the child's support, but 
ceased making those payments as soon as 
they were assigned to the state; 
subsequently state officials were able to 
induce the father to resume support 
payments, payable to the state, of $87 a 
month. (N.C.J.S. A-16 to A-17; see also 
id. at A-20, A-68 to A-73).

A state judge explained that as a 
practical matter North Carolina courts 
have few effective tools for compelling 
an unwilling father to make support
payments, since garnishment of a father's 
wages frequently results in his 
dismissal, and imprisonment "rarely 
results in income for the family."
(N.C.J.S. A—53). Cf. Linda R.S. v. 
Richard D. . 410 U.S. 614 (1973). Prior
to 1984, the most effective judicial tool 
for inducing fathers to make support
payments was emphasizing the importance



12
of keeping the child at issue off the 
public assistance rolls. (N.C.J.S. A-72 
to A—73). The judge explained that she
expected 81 to continue hearing father's 
refusals to pay child support when they 
learn that their child support is being 
paid to the Department of Human Resources 
instead of to their children, and when 
they discover that their child is on 
welfare even though they are paying 
support regularly." (N.C.J.S. A-72).4

4 The district court in Johnson 
v. Cohen. No. 84-6277 (E.D. Pa. Jan. 10, 
1986) , appeal pending, No. 86-1101 (3d
Cir.) found the disputed practices,

reduce the incentive a father might 
have to provide child support 
willingly. The sibling deeming r u l e s  will i n c r e a s e  the 
unwillingness of fathers to pay 
child support because payments by 
the father will not have demonstrable benefits to the child, 
and because the child support payments will be subsidizing other 
members of the household. The sibling deeming rules will result in 
increased resistance to paying child support.



13
Third, the disputed practices 

poisoned in a variety of ways relations 
among the family members involved. Non­
custodial fathers ready and willing to 
support their children.were predictably 
angered to learn that they were 
effectively forbidden to do so because 
the mother, having had one or more 
children by another less responsible man, 
was seeking AFDC for those other 
children. (N.C.J.S. A-14, A-71).
Because the mandatory assignment 
terminated the normal support 
relationships between the non-custodial 
parent and the child, some of those 
parents reduced or ended their non- 
financial relationship with the children, 
in turn inducing emotional problems among 
the children. (N.C.J.S. A-17). Some
custodial parents have surrendered 
custody of supported children in order to 
avoid seizure of the children's support



14
funds. (N.C.J.S. A-19).

Finally, the state officials have 
moved aggressively to prevent non­
custodial parents from providing in-kind 
support which the state cannot 
effectively seize and profit from. After 
the birth of his son Jermaine, for 
example, James Richardson regularly 
provided the child with food, clothing 
and diapers, and paid directly some of 
the related household bills. When 
Richardson refused to agree instead to 
pay the state $165 a month, of which only 
$50 would go to Jermaine, he was 
prosecuted for criminal non-support. 
(N.C.J.S. A-20). Similarly, Rick Staples 
was directly providing to his child 
Kristen clothing, food, furniture,
medicine and other needed items. After
Kristen7 s child support rights were
assigned by the child's mother as a
condition of her receipt of AFDC for two



15
other children, state officials brought a 
civil action against Staples to enjoin 
him from continuing to provide such in- 
kind assistance to his daughter. The 
Wake County district court judge found 
that it would not be in Kristen's best 
interest for the father to pay monetary 
support rather than purchase necessities 
directly and denied the agency's 
complaint. Wake County, ex rel. Carol 
Fleming v. Rick Staples. 86 CVD 4461 
(Wake County) (Oct. 1, 1986) appeal
dismissed, 86 10DC1351 (N.C.Ct. App. ,
Feb. 2, 1987).

SUMMARY OF ARGUMENT
(1) Section 602(a)(38), as the 

government construes it, requires as a 
condition of ADFC eligibility that an 
applicant's non-needy siblings also go on 
welfare, and forfeit to the state any 
child support payments. The actual 
language of section 602 (a) (38), however,



16
makes no reference to requiring anyone to 
actually apply for or receive public 
assistance. Rather, the statute simply 
mandates that an adjustment be made in 
"the determination" of the size of the 
grant to those individuals who actually 
desire AFDC assistance.

The history of the statute does not 
contain, as the Solicitor suggests, 
"legislative findings that family members 
who live in the same household pool their 
resources." (U.S. Br. 41) . Section 
602 (a) (38), unlike the statute in Lvnq v. 
Castillo. 91 L.Ed.2d 527 (1986), was not 
preceded by or based on any congressional 
hearings regarding the actual practices 
of AFDC recipients. The legislative 
history of section 602(a)(38) suggests, 
at most, that Congress intended to 
require the states to "take into 
consideration" the extent to which the 
income of non-AFDC children was in fact



17
reducing the net needs of AFDC recipients 
with whom they lived.

The HHS regulations effectively 
strip state judges of the power to direct 
a child support payment to a specific 
child if he or she resides in a household 
with AFDC recipients. The regulations 
have the practical effect of converting 
any such state decree into an award to 
the entire family, despite the intent of 
the state court and despite the fact that 
state law does not permit child support 
funds to be used for others in the 
household. Neither the language nor the 
legislative history of section 602(a)(38) 
indicate an intent to pre-empt state 
domestic relations law in this way.

(2) This is not, as was true in 
Lvnq. simply a case in which aid 
recipients are complaining that the 
amount of their benefits has been
reduced. Indeed, in most instances, the



18
HHS regulations actually result in a 
small increase in the AFDC grant. The 
issue here, rather, is whether the HHS 
regulations attach an unconstitutional 
condition to the receipt of that aid. 
Cf. Hobbie v. Unemployment Appeals 
Commission. (No. 85-993, Feb. 25, 1987).
In this case a custodial parent seeking 
AFDC is required to turn over to the 
state the child support payments for her 
non-needy children, even though those 
children neither want nor need AFDC. 
North Carolina turns a substantial net 
profit by thus conscripting supported 
children into AFDC, paying out in 
additional benefits for those children 
several million dollars less than the 
total amount of support funds which the 
state receives for them.

The government's practices 
constitute a taking of private property 
without just compensation. The child



19
support payments diverted to and retained 
by the state are undeniably the private 
property of the supported child. In 
diverting those funds to the government 
rather than spending them on the 
designated child, the mother acts at the 
behest and on behalf of the state. The 
consequences of a loss of AFDC to her 
other children are so catastrophic that 
the mother has no choice but to act as an 
agent of the state and make the demanded 
assignment; the child on whom the funds 
should have been spent literally has no 
choice in the matter.

The Solicitor argues that the amount 
of each child's support funds thus 
expropriated is "not so great as to 
effect a taking." (U.S.Br. 37). But the 
amount of money taken is of enormous 
importance to the comparatively poor 
individuals affected. The government 
asserts that no taking has occurred



20
because the incremental grant paid for 
each affected child, although less than 
the amount seized, nonetheless "reflects 
the needs of the child." (U.S.Br. 39). 
The Taking Clause, however, does not 
permit the government to take from each 
according to his ability, merely because 
it purports to provide to each according 
to his needs.

(3) The actions of the state 
appellants violated a 1971 injunction 
which had been affirmed by this Court. 
Craig v. Gilliard. 409 U.S. 807 (1972).
The district court concluded that the 
state officials knew that their conduct 
was forbidden by the terms of the 1971 
order. (N.C.J.S. A-78, A-79).

The state appellants argue that the 
1984 adoption of section 602 (a) (38) 
removed the legal basis on which the 1971 
injunction rested. These appellants now 
assert that the 1971 opinion relied



21
solely on the Social Security Act as it 
was then written; in their 1972 appeal to 
this Court, however, the state appellants 
insisted that the 1971 opinion rested on 
constitutional grounds. If the state 
officials believed that the enactment of 
section 602(a)(38) did undercut the basis 
of the 1971 injunction, they were 
obligated to obey that injunction until 
it was modified by the court. Walker v. 
City of Birmingham. 388 U.S. 307 (1967).

The state appellants assert that, 
even if they knowingly violated the 1971 
injunction, the Eleventh Amendment 
precludes the district court from 
directing a refund of money seized or 
withheld in violation of that decree. 
"Federal courts are not reduced to 
issuing inj unctions against state 
officers and hoping for compliance. Once 
issued, an injunction may be enforced." 
Hutto v. Finnev. 437 U.S. 678 (1978).



22
The remedial order of the district court 
simply enforces the prospective 1971 
injunction by requiring state officials 
to do today what the 1971 injunction 
required to be done in 1984-86.
I. THE APPELLANTS ' PRACTICES ARE

FORBIDDEN BY THE SOCIAL SECURITY ACT
Congress enacted section 602(a)(38) 

to require that where a parent and child 
receiving AFDC live together with a child 
receiving income such as child support 
payments, the AFDC grant to the parent 
and indigent child would be adjusted to 
take into account the economic benefits 
which those AFDC recipients receive as a 
result of the presence of that non-AFDC 
child. The statutory issue presented by 
this case concerns the nature of the 
adjustment which is authorized by section
602 (a) (38) . The actual language of
section 602 (a) (38) , like much of the
Social Security Act, is "almost
unintelligible to the uninitiated."



23
Schweiker v. Gray Panthers. 453 U.S. 34, 
43 (1981) . To understand the meaning of
that section, it is necessary to begin 
with the statutory scheme onto which it 
was engrafted, and the state of the law 
prior to 1984.

(1) The states participating in the 
AFDC program are given discretion in 
determining the size of the grants they 
will make, subject to certain limitations 
embodied in the Social Security Act and 
the applicable regulations.

Generally, a state must begin with a 
"standard of need."5 This is the amount 
which the state determines is necessary 
to meet essential needs; the level 
generally varies with the number of 
individuals in the household, on the 
theory that those who are part of the

The state standard of need is 
referred to in several parts of the 
statute. See 42 U.S.C. §§ 602(a)(17),
602(a)(18), 602(a)(23), 602(a)(31).



24
same household experience certain economy 
of scale savings. Cf. Lvnq v. Castillo. 
91 L.Ed.2d 534-35. A state cannot alter 
its standard of need merely to lower the 
benefit to be paid; the state may choose 
to make actual grants too small to meet 
the standard of need, but it cannot 
achieve or obscure that result by 
doctoring the standard of need itself. 
Cf. Rosado v. Wvman. 397 U.S. 397, 413-14 
(1970).

Second, a state computes the 
countable income of each applicant. This 
computation is subject to the "actual 
availability principle," which precludes 
a state "from relying on imputed or 
unrealizable sources of income 
artificially to depreciate a recipient's 
need." Heckler v. Turner. 84 L.Ed.2d 
138, 150 (1985). The most important
application of this principle is to bar 
states from reducing or denying benefits



25
on the theory that an applicant is 
receiving presumed but non-existent 
income from another person in the 
household. King v. Smith. 392 U.S. 309 
(1968); Van Lare v. Hurley. 421 U.S. 338 
(1975). In some instances, however, 
Congress has created an express exception 
to the principle, permitting a state to 
"deem" available to an AFDC applicant a 
specified portion of the income of 
another party, regardless of whether it 
is in fact received. The amount "deemed" 
available is determined by subtracting 
from the third party's income that 
party's own standard of need, and making 
certain other adjustments. 42 U.S.C.
§ 602(a)(39) (grandparents), § 602(a)(31) 
(stepparents); § 615 (alien sponsors).
Cf. Schweiker v. Gray Panthers. 453 U.S. 
34 (1981) (spouses).

Third, having computed a countable 
income for the applicants, the state



26
calculates the grant amount. The Social 
Security Act does not mandate a 
particular method of calculation. 
Jefferson v, Hacknev. 406 U.S. 535 
(1972). For example, the state may pay a 
specified percentage of the difference 
between the countable income and the 
applicants' needs. Rosado v.Wyman. 397 
U.S. at 409 and n. 13. Alternately, the 
state might choose to set a maximum on 
the size of the grant, regardless of the 
applicants' needs. Dandridcte v.
Williams. 397 U.S. 471 (1970). Or, like 
North Carolina, a state may apply a 
percentage reduction to the standard of 
need, and then subtract countable income 
from that figure. (J. App. 77-78).

Prior to 1984, states participating 
in the AFDC program did not as a general 
practice take into consideration how the 
need and income of an applicant might be 
affected by the presence in the home of a



27
child who was not seeking AFDC because he 
or she had a separate source of income 
such as child support. Section
602(a)(38) was enacted to require the 
states to make an adjustment in their 
AFDC grants because of the presence of 
such children; what that adjustment was 
to be remains in dispute.

(2) Section 602(a)(7) provides 
that, "in determining [the] need" of an 
AFDC applicant, a state "shall take into 
consideration any ... income" of the 
applicant or certain other individuals. 
Section 602(a)(38) states in pertinent 
part that

in making the determination 
under paragraph (7) with 
respect to a dependent child 
. . . the State agency shall .. . include

*  *  *

(B) any brother or sister of such child ... if such 
brother, or sister is living in 
the same home as the dependent child, and any income of or 
available for such ... brother,



28
or sister shall be included in 
making such determination ....

Section 602(a)(7) and 602(a)(38), read
together, require that, in determining
the need of the parent and indigent child
or children applying for AFDC, the state
will "include" any children who may not
be seeking AFDC, and "take into
consideration" the income of those
children. Section 602(a)(38) clearly
requires that some sort of adjustment be
made in an AFDC grant when there are
supported children in a household, but
the statutory language itself provides
little guidance as to what that
adjustment is to be.

Here, as has occurred before in
other contexts, section 602(a)(38) was
framed in the sort of opaque language
that so often facilitates the legislative
process but complicates the work of the
judicial branch. Although the vague
language of section 602(a)(38) is



29
susceptible of several quite different 
interpretations, each of those 
alternatives is itself quite simple. 
Either the Administration, which 
originally proposed this amendment, or 
the Senate Finance Committee, which first 
approved it, could readily have framed a 
statute or explanation free of ambiguity, 
but they chose not to do so. In the face 
of this studied opacity one cannot assume 
that the framers of section 602(a)(38) 
intended to reject any of the benefit 
adjustment methods set forth with greater 
specificity in other parts of the Social 
Security Act; the only thing which the 
framers of section 602(a)(38) clearly 
rejected was clarity itself.

(3) The Solicitor General argues, 
however, that the purpose of section 
602(a)(38) was not to alter the method of 
calculating the grants for individuals 
who actually wanted AFDC assistance.



30
Rather, he asserts, Congress enacted 
section 602(a)(38) to require, as a 
condition of AFDC assistance to a needy 
child, that all the child's siblings be 
put on AFDC, including children who 
neither wanted nor needed government aid, 
and that all the child support payments 
of those conscripted siblings be assigned 
to the government. The effect of the HHS 
regulations implementing this view has 
been to add several hundred thousand 
unwilling participants to the AFDC rolls.

The language of section 602(a)(38) 
is difficult to reconcile with the 
Solicitor's proposed interpretation. 
Section 602(a)(38) contains no language 
suggesting that supported children or 
anyone else must apply for AFDC, or live 
on welfare rather than rely on support 
from a non-custodial parent. Indeed, 
sect ion 602 (a) (38) , unlike other



31
provisions of the statute,6 does not 
impose any obligations at all on AFDC 
applicants themselves; the commands of 
section 602(a)(38) are directed solely at 
the state AFDC officials calculating the 
size of the grant to be awarded to actual 
applicants. Section 602(a)(26), which 
requires the assignment of child support 
funds, is expressly applicable only to an 
“applicant or recipient;" a member of 
Congress familiar with section 602 (a) (26) 
would have had no reason to think that 
602 (a) (38) would extend that mandatory 
assignment provision to children who 
neither wanted nor needed AFDC.

If Congress had intended actually to

° See, e.q.. 42 U.S.C. §§602(a)(14) (recipients required to submit 
reports) , 602 (a) (19) (A) (certainrecipients required to register for 
employment-related activities) ; 
602 (a) (26) (B) (recipients required to assist state in establishing paternity of 
children born out of wedlock), 602(a)(35) 
(state may require recipients to look for work).



32
require that supported children go on the 
AFDC rolls, it certainly knew how to do 
so. The Food Stamp Amendments of 1982, 
enacted the same year that section 
602(a)(38) was first proposed, expressly 
contained just such a requirement. The 
Food Stamp Program provides funds, not to 
individuals, but to "households" whose 
composition is specified by statute. An 
application must be made on behalf of a 
"household;" thereafter it is the 
statutorily defined "household" whose 
needs and income are considered, and to 
whom the foods stamps are allotted. 7 
U.S.C. §§ 2013 et sea. In 1982, when
Congress redefined the Food Stamp 
household to encompass siblings, that 
statutory change clearly mandated that 
such siblings apply for and comply with 
the provisions of the Food Stamp program. 
Cf. Lvncf v. Castillo. 91 L.Ed.2d at 532 
n. 1. AFDC, on the other hand, remains



33
as it was prior to 1984 a statutory 
scheme which focuses on individuals. 
Requests for AFDC are made, not by a 
statutorily defined entity, such as a 
"household, *' but by "individuals wishing 
to make application for aid." Compare 7 
U.S.C. § 2020(e)(2) with 42 U.S.C. §
602 (a) (10) (A) . Thus the 1984 AFDC
legislation clearly did not compel 
participation in that program by 
individuals who did not wish such 
assistance.

The legislative history of section 
602(a)(38) provides no support for the 
government's interpretation of the 
statute. The Solicitor does not suggest 
that any member of Congress ever actually 
said that additional children would be 
required to go on AFDC, or that support 
payments for children who did not want 
AFDC would be assigned to the government. 
For years critics of AFDC had argued that



34
the very status of being on welfare had a 
debilitating effect on the morale and 
aspirations of children; surely one of 
these critics would have spoken out if it 
were understood that section 602(a)(38) 
would require placing on the welfare 
rolls several hundred thousand children 
who were then being supported directly by 
their own parents. At the time when 
DEFRA was adopted, the overriding issue 
dividing Congress was whether the deficit 
should be cut through reductions in 
spending or increases in taxes. Section 
602(a)(38) as the Solicitor construes it, 
was intended literally to take $150 
million a year from fathers and children 
not then on AFDC, and funnel it back 
through the states to the federal 
government. Had it been generally 
understood that this was to be the effect 
of section 602(a)(38), it seems likely 
that someone would have objected that it



35
had all the trappings of an
extraordinarily retrogressive tax.

The Solicitor bases his statutory
argument on an assertion that there were
"legislative findings that family members
who live in the same household pool their
resources" (U.S. Br. 41), but this
enticing assertion is not accompanied by
any reference to the phrase "pool their
resources" in the legislative history.
Elsewhere in his brief the Solicitor
describes these purported findings in
very different terms, suggesting
variously, that Congress found that such
indigent families "share":

-"the expense of common necessities" 
(U.S. Br. 20)

-"the cost of obtaining life's 
necessities" (U.S. Br. 21)

-"expenses" (U.S. Br. 10, 41)
-"resources" (U.S. Br. 29, 41)
-"income" (U.S. Br. 10, 41)

These quite different "findings" would



36
support very different interpretations of 
the statute. If Congress acted on a 
finding that such families share the 
"expense of common necessities," such as 
rent and utilities, it presumably 
contemplated only an economy of scale 
adjustment based on the lower per capita 
cost of those common needs. Attempting 
to escape the palpable distinction 
between the sharing of certain common 
expenses and a pooling of all income, the 
Solicitor asserts that not only shelter 
and utilities, but also "transportation 
and clothing ... are ordinarily regarded 
as shared expenses." (U.S. Br. 33). If 
a mother were to spend $10 on diapers for 
an infant son, a dress for a young 
daughter, or a blouse for herself, it 
would be strange indeed to describe that 
expenditure as meeting a "shared expense" 
of all three. Similarly, for the 
majority of AFDC recipients who travel on



37
public transportation, the fares 
involved, unlike the cars of more 
affluent families, are not a shared
expense.

(4) The Solicitor General urges the 
Court to apply to the disputed HHS 
regulations the deference usually 
accorded an agency responsible for 
administering a statute. (U.S. Br. 24) . 
That deference is appropriate in the 
ordinary case in which the agency at 
issue not only has relevant technical 
expertise, but also agrees with the 
purposes and priorities that prompted 
Congress to enact the underlying statute. 
But there are some instances in which 
such agreement does not in fact exist. 
The very independence of the executive 
and legislative branches guarantees that 
there will be important, deeply felt 
differences regarding federal policies; 
such differences will inevitably mean



38
that Congress will at times adopt 
legislation opposed by executive 
officials, or will reject in whole or 
part administration legislative 
initiatives. The courts, in determining 
the significance of an agency's 
interpretation of a statute, must as a 
general rule bear in mind the possible 
existence of such differences.

Caution is particularly appropriate 
in construing legislation framed by the 
executive branch and enacted by a 
reluctant Congress. Such legislation 
necessarily represents a compromise of 
the differing policies and priorities 
which animate the two branches of 
government involved. Because of those 
differences, such a statute, like a 
contract drafted by one of two parties 
with adversarial interests, must be 
construed to embody only those 
concessions to administration policy



39

which Congress would clearly have 
understood it was making. It is vital to 
the integrity of the legislative process 
that executive agencies not be permitted 
to give to a statute, after enactment, an 
interpretation more favorable to the 
administration's perspective than the 
construction clearly offered by the 
agency when the legislation was still 
before Congress.

During the years immediately 
preceding the enactment of DEFRA, the 
most consistent and heated differences 
between Congress and the executive branch 
concerned the level of benefits to be 
provided to the indigent under various 
social welfare programs. The
administration strongly favored reducing 
the deficit by cutting such social 
welfare spending, while Congress often 
objected to placing the burden of deficit 
reduction on the less affluent Americans



40
who depended on federal aid. The debate 
over proposals to reduce AFDC benefits to 
households with supported children was 
not an isolated skirmish, but part of a 
wide-ranging and continuing struggle, 
rooted in fundamental differences 
regarding economic and fiscal policy.

For two and a half years officials 
of the executive branch lobbied a 
reluctant Congress to reduce AFDC 
benefits for recipients in households 
that included supported children. 
Executive branch officials proposed 
statutory language which contained no 
reference to requiring that supported 
children be placed on AFDC, and no 
reference to requiring assignments of the 
support payments of children who did not 
want AFDC. Between January 1982 and July 
1984 executive branch officials commented 
on their proposals in testimony,



41
correspondence, and budget messages.7 
Not once during this entire process was 
there any mention of compulsory welfare 
or mandatory assignments. Only weeks 
after congressional approval had been 
obtained, however, HHS produced explicit 
regulations mandating the disputed 
practices.

The rules of statutory construction 
should take account of the difficulties 
often faced by Congress in framing 
legislation. Executive branch officials 
trying to win enactment of a contested 
piece of legislation, like any other

' Departments of Labor, Health 
and Human Services, Education and Related Agencies Appropriations for 1984: 
Hearings before Subcommittee on the 
Department of Labor, Health, and Human 
Services, Education and Related Agencies, 
98th Cong. 1st Sess. 528-529 (1983): Departments of Labor, Health and Human 
Services, Education and Related Agencies Appropriations for 1983: Hearings before 
Subcommittee on the Departments of Labor, 
Health, and Human Services, Education and 
Related Agencies, 97th Cong. 2d Sess. 
572-573 (1982). J. App. 168-69.



42
lobbyists, are unlikely to warn that the 
measure might have a meaning which would 
increase opposition on the Hill. An 
unfortunate but undeniable part of 
relations between these two branches of 
government is that executive officials at 
times utilize their particular expertise 
and knowledge to frame proposals, 
statements and testimony which, although 
not literally inaccurate, may convey to a 
busy Congress an impression somewhat at 
odds with the actual understanding or 
intent of those executive officials. The 
danger of such "misunderstandings" is 
particularly great in dealing with the 
Social Security Act, whose very 
terminology is "an aggravated assault on 
the English language, resisting attempts 
to understand it." Schweicker v. Gray 
Panthers, 453 U.S. at 43, n. 14.

Whatever the drafting problems posed 
by the Act itself, it is very easy to



43
articulate in ordinary English the 
construction which the government now 
wishes to place on section 602(a) (38). 
The Secretary of HHS was able to do so 
with ease and dispatch as soon as the 
statute was adopted; the Solicitor 
General explains that proposed 
construction with his usual clarity, and 
offers the Court a helpful "simplified 
example" to illustrate his meaning. But 
neither that straightforward construction 
nor that example was ever offered to 
Congress. Prior to September, 1984, 
executive branch officials systematically 
avoided referring either to compulsory 
AFDC or mandatory assignments of child 
support. It is of no importance that the 
words used by those executive officials 
might have carried a second meaning, 
apparent to the cognoscenti within the 
HHS bureaucracy, different than the 
understanding that would have been



44
conveyed to an ordinary member of 
Congress, for it is the understanding and 
intent of Congress that controls.

(5) Our view that section 
602 (a) (38) was intended to adjust the 
grants of actual recipients, rather than 
to conscript unwilling individuals onto 
the public assistance rolls, does not by 
itself provide a full explication of the 
meaning of the statute. There remains to 
be resolved what type of adjustment is 
authorized by the statute. Congress 
certainly did not intend to give HHS 
unlimited discretion to devise whatever 
draconian adjustment scheme would most 
severely slash AFDC grants. Neither the 
statute nor the relevant committee 
reports specify what sort of grant 
reduction is to occur under what 
particular circumstances. In light of 
the vague record, and of the much vetted 
differences between the legislative and



45
executive branches regarding the 
appropriate level of support for indigent 
recipients of federal aid, the Court must 
attempt to determine what type or types 
of grant reduction Congress could clearly 
have understood it was authorizing when 
it adopted section 602(a)(38).

We believe that section 602(a)(38) 
might plausibly be read to support either 
of two interpretations. First, it may be 
that, as the Solicitor appears to 
suggest, Congress was concerned that AFDC 
recipients in homes with supported 
children were less needy because they 
enjoyed the benefit of the economies of 
scale that occur in larger households. 
(U.S. Br. 29? cf. Lvng v. Castillo. 91 
L . Ed.2d at 532-33). Although some 
expenses, such as clothing, school 
supplies, and public transportation, are 
largely individual, other expenses—  
particularly rent and utilities —  can



46
readily be shared, and are ordinarily 
lower per capita in a larger household. 
North Carolina AFDC practice quantifies 
the economies of scale that occur, 
providing for a lower per capita AFDC 
grant in larger families.8 If the 
purpose of section 602(a)(38) was to 
require an economy of scale adjustment, 
that could be achieved simply by basing 
the grant on the per capita level 
appropriate for the total number of 
applicants and supported children in the

8 The per capita AFDC, the 
standard of need and payment standard in 
1984 were as follows:
Persons In Household

Per Capita 
Standard of 
Need

Per capita 
Payment

1 $296 $148.00
2 194 97.00
3 149 74.50
4 122 61.00
5 107 53.50
6 96 48.00
7 88 44.00
8 80 40.00

J. App. 51-52, Tables 2 and 4.



47
household, rather than on the higher per 
capita level for a household including 
only the applicants.9 This economy of 
scale reduction in the grant would 
"include" the non-needy children and 
their income in the "determination" of 
the per-capita need and grant, doing so 
in a manner which would "take into 
consideration" the economies of scale 
realized because of the incomes of those 
non-needy children.10

y For example, prior to the adoption of section 602(a)(38) the grant 
for a parent of one child would have been 
$194, regardless of the number of non- 
needy children in the home. Under an 
economy of scale adjustment, the presence 
of one such non-needy child would lower 
the per capita payment level from $97.00 
to $74.50, thus reducing the actual grant to $149. Similarly, if a mother and two 
needy children shared their home with two 
non-needy children, their grant would be reduced from $223 to $160.00.

10 O n  t h i s  r e a d i n g  42 U.S.C. § 602(a)(8)(A)(vi) would
prohibit such an economy of scale reduction if the total child support received by children in the family was less than $50.



48
Section 602(a)(38) might be read, in 

the alternative, to mandate effective 
state measures to assure that any income 
of non-AFDC children which was in fact 
provided to AFDC siblings would be 
counted as income to those siblings. It 
is unlikely, however, that Congress 
intended to permit the state to count all 
of a non-AFDC child's income as income to 
the AFDC recipients in the household. 
Because any such deeming rule would 
violate the principle of availability, 
Congress has always spoken unambiguously 
when it wished to deny grant applicants 
the opportunity to prove that they were 
not actually receiving presumed income. 
The statute in Lvnq. for example, 
expressly denied siblings the chance, 
afforded to unrelated individuals in a 
common home, to prove that they were not 
sharing the cost of preparing meals. See
91 L .Ed.2d at 534-35. Sections



49
602(a)(31) and 602(a)(39) establish 
specific fixed formulas for calculating 
the amount of stepprent and grandparent 
income which must be treated as available 
to AFDC recipients in the household. 
This Court found similar deeming 
authorized under the Medicaid Act because 
of a statutory provision permitting a 
state to "take into account the financial 
responsibility of any individual for any 
applicant or recipient ...[if] such 
a p 1 i cant or recipient is such 
individual's spouse." 42 U.S.C. § 
1396a (a) (17) (D) . Schweiker v. Gray 
Panthers. 453 U.S. 34, 44-46 (1981).
Section 602 (a) (38), on the other hand, 
contains no such express language 
permitting a departure from the principle 
of availability.

The circumstances leading toi the
adoption of section 602(a)(38) are
strikingly different than those which



50
amendments in Lvnq. The Congress that 
adopted the Food Stamp amendments was 
prompted by a substantial body of 
evidence, garnered in a series of House 
and Senate hearings, that Food Stamp 
recipients were fraudulently denying that 
they shared their food costs, and that 
individualized detection of that abuse 
was impracticable, Lvnq v, Castillo. 91 
L.Ed.2d at 534-35 and nn. 4-6; Brief for 
the Appellant, No. 85-250, pp. 18-19 and 
nn. 13-19. The Food Stamp amendments 
were a carefully considered legislative 
response, albeit a drastic one, to a 
clear and intractable problem. The 
legislative history of section 
602 (a) (38), on the one hand, contains no 
allegations of any similar abuse 
regarding the use of child support funds, 
and no suggestion that the detection of 
any such abuses would be so difficult as 
to require the type of rigid rule



51
involved in Lvng. Congress did not hold 
so much as a day of hearings regarding 
the practices of AFDC recipients residing 
with supported children. It seems 
unlikely that Congress would have 
resorted to the sort of harsh measure 
involved in Lvng in the absence of any 
evidence of an abuse requiring such a 
remedy.

The legislative history does not, as
the Solicitor suggests, contain any
congressional finding that AFDC
recipients and supported children in the
same household in fact pool all their
income and use it to meet the expenses
incurred by each of them. The passage of
the Senate report on which the Solicitor
places primary reliance explains:

This change will . . . ensure that the income of family 
members who live together and 
share expenses is recognized 
and counted as available to the 
family as a whole. (S.Prt. 98- 169, at 980)



52
The Solicitor suggests that this sentence 
constitutes a finding that family members 
who "live together" generally or always 
"share expenses."11 That might be a 
plausible interpretation if the report 
referred to family members "who live 
together, and thus share expenses." But 
the passage as actually written says 
something quite different, that the 
purpose of the statute is to "recognize" 
that income is available to a family as a 
whole if its members meet two distinct 
requirements, i.e., they both "live 
together" and "share expenses." It is 
difficult to read into this sentence an 
intent to count income as "available" to 
an entire family if its members do "live

11 The Solicitor also argues that the record in this case demonstrates that 
child support is generally diverted to 
AFDC recipients. (U.S. Br. 41 n. 14) . The district court, however, found that 
the testimony relied on by the government 
showed that such diversions occurred, at most, in moments of "financial crisis." (N.C.J.S. A-64).



53
together" but do not "share expenses." 
Although the Solicitor also refers to 
several staff reports to the Senate 
Finance Committee, and to a letter from 
the Secretary of HHS to the Vice- 
President, neither type of document 
carries significant weight in 
ascertaining the intent of members of 
Congress itself. The Solicitor does not 
actually assert, for example, that 
Secretary Heckler's typewritten letter 
was actually read or relied on by members 
of Congress, or that it was ever referred 
to or quoted in the legislative history. 
Compare Teamsters v. United States. 431 
U.S. 324, 351 (1977) (Justice Department
statement placed in Congessional Record 
by floor managers of bill; See Watkins v. 
Blinzinqer. 789 F. 2d 474, 479 (7th Cir.
1986) (" [T]he words of the staff are not 
the equivalent of statements in committee 
reports").



54
On this reading section 602(a)(38) 

would mandate the state to inquire into
the manner in which AFDC parents are
utilizing child support funds. To
understand the significance of such a
statutory requirements it is necessary to 
refer to the terms of the original 1971 
decree in Gilliard v. Craig. Paragraph 3 
of that injunction forbad state officials 
from crediting to AFDC recipients the 
income of others in the household 
"without first detrmining that such 
income is legally available to" the AFDC 
recipients. (N.C.J.S. A-110). Under the 
terms of the decree the critical issue 
was whether the income in question was 
"legally available" to the AFDC 
recipients, not whether it was available 
in fact. The language of the injunction, 
if read literally, appeared to preclude 
reducing an AFDC grant because a non-AFDC 
child in the home was receiving child



55
support that was not "legally available" 
to others in the household, regardless of 
how the funds were actually being spent. 
The 1971 opinion held that North Carolina 
could not, in calculating the AFDC budget 
of an applicant, consider the resources 
of a non-applicant whose income exceeded 
his or her standard of need, reasoning 
that such a non-applicant had to be 
disregarded because he or she had too 
great an income to be eligible for AFDC. 
The opinion made an exception for cases 
in which there was "parental consent" to 
inclusion of those resources but made no 
provision for non-applicants whose income 
was in fact being shared with actual AFDC 
applicants. (N.C.J.S. A-98).

This Court's 1972 decision affirming 
the opinion and order in Craig v. 
Gilliard. 409 U.S. 807, made the 
principles thus upheld binding throughout 
the country. Edelman v. Jordan 415 U.S.



56
651 (1974). Although the precise legal
significance of that summary affirmance 
might have been fairly debatable, North 
Carolina, like other states, evidently 
proceeded on the assumption that child 
support, since not "legally available" to 
anyone else in the household, could not 
be considered no matter how it was 
actually spent. Between the issuance of 
the 1971 injunction and the 1984 
implementation of the HHS regulations, 
North Carolina simply made no effort to 
ascertain how child support funds of non­
recipients were in fact being used. 
This was not, as in Lvnq. a case in which 
inquiries into family practices proved 
futile, but, rather, a situation in which 
such inquiries simply were not attempted.

Section 602(a)(38) could fairly be 
construed to forbid this practice of 
disregarding whether support funds were 
in fact being diverted to AFDC



57
recipients. On this reading the statute 
would direct the states at the least to 
subject child support payments to the 
same, often exacting scrutiny applied to 
other funds in the possession of the AFDC 
parent, requiring the parent to provide 
periodic reports regarding the manner in 
which those payments were being 
disbursed, and insisting on verification 
of an applicant's representations. A 
state which had reason to doubt the 
accuracy of those reports would have to 
invoke the same procedures available for 
resolving any dispute about the 
availability of income to an AFDC 
recipient. If an applicant or recipient 
failed to provide a state with relevant 
requested information regarding the 
disposition of support funds in her 
possession, the state could undoubtedly 
make an appropriate reduction in her
grant.



58
The language of section 602(a)(38), 

as we suggested earlier, could plausibly 
be read either to mandate such inquiries 
and reductions or to require an economy 
of scale adjustment in the grants of AFDC 
applicants living with non-AFDC siblings. 
Under these circumstances, we believe 
that HHS should be accorded the 
discretion to decide which method to use 
in implementing section 602(a)(38).

(6) Section 602 (a) (38), as the 
Solicitor construes it, would if 
constitutional override state law in a 
variety of ways. In North Carolina, as 
is true throughout the nation, state 
domestic relations law requires that 
support payments be spent "for the 
benefit of" the supported child, N.C. 
Gen. Stat. § 50-13.4(d), but section
602 (a) (38), in the governments view, 
requires that about one third to one- 
half of those funds be spent to acquire



59
AFDC benefit for the child's parent and 
siblings. North Carolina law directs 
that the support payment be set by the 
state court at a level sufficient to meet 
"the reasonable needs of the child," N.C. 
Gen. Stat. § 50-13.4 (b), but 
§602 (a) (38), as the Solicitor reads it, 
directs that the supported child actually 
receive only a fraction of the funds 
judicially determined to be necessary to 
meet those needs. The inescapable effect 
of the disputed HHS regulations is to 
strip state judges of the power to direct 
an award of child support to a child who 
happens to reside with siblings on AFDC; 
in such a case the child support will, as 
a practical matter, have to be shared 
with the siblings and custodial parent on 
AFDC, despite the contrary intent and 
direction of the state court which 
ordered that payment, and despite the 
terms of the North Carolina statute



60
authorizing child support orders. See 
Br. of Amicus Curiae of National Council 
of Juvenile and Family Court Judges.

Congress, we believe, has no 
authority to override state law in this 
manner. Nothing in the powers
enumerated by Article I confers upon 
Congress the ability to adopt a general 
domestic relations law applicable to the 
population at large. "Nor as a general 
proposition is the United States, as 
opposed to the several states, possessed 
of residual authority that enables it to 
'define' property in the first instance." 
Prunevard Shopping Center v. Robins. 447 
U.S. 74 , 84 (1980). The detailed
provisions of the Social Security Act are 
an exercise of congressional power under 
the Spending Clause; Congress undeniably 
has the ability to impose on willing 
participants in federal programs 
obligations which could not be extended



61
to the public at large. A requirement 
that supported children who want to 
receive AFDC assign their support 
payments to the government, to the extent 
that it might displace state domestic 
relations law, falls within the authority 
of Congress under the spending power. 
Cf. Hiscruierdo v. Hisquierdo. 439 U.S. 
572 (1979). But where, as here, state 
domestic relations law governs the 
property rights of a child who neither 
wants nor needs federal assistance, it is 
difficult to see how the Spending Power 
could provide the Congress with any 
authority to displace those state rules.

This Court has repeatedly held that 
"[t]he whole subject of the domestic 
relations of husband and wife, parent and 
child, belongs to the laws of the States 
and not to the laws of the United 
States." In re Burrus. 136 U.S. 586,
593-94 (1890). Federal statutes have



62
been construed to pre-empt state law in 
this area only if Congress has 
"positively required" the pre-emption of 
state law "by direct enactment." Wetmore 
v, Markoe. 196 U.S. 68, 77 (1904).
" [ P] re-emption is not to be lightly 
presumed." California Federal S. & T,.
Assn.  Guerra, 93 L.Ed.2d 613, 623
(1986). State law will prevail in the 
absence of a "clear and manifest purpose" 
by Congress to override that state 
provision. Pacific Gas & Electric Co. v. 
State Energy Resources Comm'n. 461 U.S. 
190, 206 (1983). Nothing in the
legislative history of section 602(a)(38) 
indicates any intent to override state 
domestic relations law, or any 
understanding that the proposed 
legislation might have such an impact. 
That history and the language of the 
statute suggest, at most, a desire to 
recognize misuse of support funds if and



63
when and when it actually occurred, not 
an attempt by Congress to require such 
violations of state domestic relations 
law.

Where a statute such as 602(a) (38) 
reasonably lends itself to two or more 
different interpretations, the law should 
be construed in a manner that avoids 
serious constitutional questions. We 
urge, for the reasons set out at length 
below, that the Solicitor's proposed 
interpretation of section 602 (a) (38) 
would render it unconstitutional. The 
interpretation of the statute which we 
propose, on the other hand, would avoid 
those constitutional problems. If, as we 
urge, section 602(a)(38) is susceptible 
of a constitutional interpretation, such 
a construction would avoid the 
administrative problems that would arise 
if the statute were struck down and



64
Congress were required to enact a 
constitutional substitute.

11. THE APPELLANTS' PRACTICES WORK AN
UNCONSTITUTIONAL TAKING OF PRIVATEPROPERTY
T h i s  c a s e  turns  on the 

interrelationship of two distinct and 
longstanding legal principles. This 
Court has repeatedly held, as the 
Solicitor General correctly observes, 
that the formula for allocating social 
welfare benefits ordinarily need meet 
only a rational basis test. Lvnq 
v.Castillo. 91 L.Ed.2d 527 (1986). This
Court has also insisted, however, most 
recently in Hobbie v. Unemployment 
Appeals Commission (No. 85-993, slip 
opinion February 25, 1987), that the
government cannot, in providing such 
benefits, establish conditions which are 
themselves unconstitutional, or impose 
substantial and direct burdens on
constitutionally protected activities.



65
Where, as in Hobbie. a social welfare 
program is operated in a manner which 
imposes such an unconstitutional 
condition, that restriction must be 
struck down, even though it might 
otherwise meet the minimal rational basis 
requirement of Lvna. Hobbie. slip 
opinion p. 5. The disposition of the 
instant appeal turns largely on whether 
the practices at issue merely reflect a
reasonable attempt, as in Lvna. to
ascertain the needs of benefit
recipients, or whether those practices,
as occurred in Hobbie. effectively
condition the distribution of those
benefits on the abandonment or violation
of a substantive constitutional right.
A. Child Support Funds Are Protected bv the Taking Clause

In North Carolina, as throughout the 
nation, child support funds are the 
private property of the supported child. 
North Carolina statutes provide that



66
child support payments are to be paid to
the custodial parent "for the benefit of
such child." N.C.Gen. Stat. § 50-
13.4(d). In litigated support
proceedings, the amount of the payment is
carefully calibrated to meet the
particular needs of the supported child,
"including his or her health, education,
and maintenance." N.C.Gen. Stat. § 50-
13.4(c). Although support payments are
ordinarily made to the adult who is the
custodial parent, that parent

is not the beneficiary of the moneys . . . These monies belong 
to the children. [The
custodial parent] is a mere 
trustee for them.... She 
cannot ... profit at the 
expense of the children.

Goodyear v. Goodyear, 257 N.C. 374, 379,
126 S.E.2d 113, 117 (1962). "It is a
violation of a court order for a
custodial parent to spend the child
support on other children not designated 
in the child support order." (N.C.J.S.



67
A—43 to A-44, quoting affidavit of state 
court judge).12 The federal Internal 
Revenue Code does not treat child support 
payments as income to the custodial 
parent, since that parent may use the 
funds only to meet the needs of the 
designated child, and cannot "spend the 
monies ... as she sees fit" for herself 
or third parties. Commissioner v.

See also Scott v. Commonwealth 
of Pennsylvania. 46 Pa. Cmnwlth. 403, 406 
A.2d 594, 596 (1979) (child support funds 
"belong to that [designated] child and not to other children or the mother); 
Ditmar v. Ditmar. 48 Wash. 2d 373, 374,
293 P. 2d 759, 760 (1956) ("a mother hasno personal interest in child-support 
money and holds it only as a trustee") ,* Watts v. Watts. 240 Iowa 384, 391,36
N.W.2d 347, 351 (1949) (child support
payments "not the property of the 
[mother]. She was merely the custodian 
of the funds ...;" Rand v. Rand. 40 Md. 
App. 550, 392 A.2d 1149, 152 (1978)
(child support funds must "be applied 
exclusively to the ascertained needs of 
the child ... not to any extraneous 
purposes"). Bourque v. Commissioner of 
Welfare. 6 Conn. Cir. 685, 308 A.2d 543,
546 (1972) (fact that support payments
are made to mother does "not alter the 
fact that the benefits were for the use 
of the child.").



68
Lester. 366 U.S. 299 (1961).

The Solicitor appears to base his 
brief on the premise that the child for 
whom support payments are made has "no 
... property right" "to ... prohibi[t] 
the mother from spending the money on 
anyone other than the designated child." 
U.S.Br. 33). If the Solilcitor or the 
Attorney General of North Carolina are 
suggesting that a custodial parent could 
legally use support funds intended for 
one child to purchase clothes for the 
child's brother, pay bus fares for the 
child's sister, or buy presents for a 
friend, they are plainly mistaken.

The effect on child support payments 
of the HHS regulations can readily be 
illustrated by a simple example. Under 
the 1984 benefit schedule, a mother such 
as Dianne Thomas with one child on AFDC 
would receive a monthly AFDC grant of 
$194. If the mother gave birth to or



69
acquired custody of a second child, and 
received support payments of $200 per 
month for that child, the mother would be 
required, on pain of forfeiture of her 
AFDC benefits, to assign the child 
support payments to the state, and to put 
the second child on AFDC. In return for 
this $2 00 which the state received each 
month, state officials would pass onto 
the mother the first $50 of that support 
payment, and provide an additional AFDC 
allotment of $29, for a total of $79.13 
The difference of $121 would be retained 
by the state as a net profit from the 
transaction. No matter how large the

Depending on the number of 
children who were previously receiving 
AFDC, the additional grant for the new child could be as little as $13. (J.App. 52) .

The Solicitor General also suggests that by applying for AFDC, the supported 
child also receives Medicaid. (U.S. Br. 
39). Medicaid is available in North 
Carolina, albeit on somewhat different 
terms, to children not receiving AFDC.



70
child support payment which is received 
by the state in a given month on behalf 
of a supported child, the state will not 
provide for the child in return more than 
a total of $79; the net difference is 
simply kept by the state.

This practice certainly has the 
trappings of the type of uncompensated 
taking which the Fifth Amendment 
prohibits. Although the initial seizure 
and diversion of support funds is made by 
the custodial parent of the child 
involved, that parent clearly acts at the 
direction and behest of the state. Cf. 
Adickes v. S. H. Kress & Co.. 398 U.S. 
144, 170-71 (1970). "The state . . . 
us[es] one set of children's needs as a 
lever to coerce a mother either to break 
her legal obligation to the child 
receiving child support or to see her 
other children go hungry without AFDC." 
(N.C.J.S. A-58). The consequences of



71
that threatened sanction are so 
catastrophic that virtually every mother 
in North Carolina agrees to do the 
state's bidding. If such a mother were 
directed, on pain of loss of AFDC, to 
seize the money of a stranger and turn it 
over to North Carolina officials, that 
seizure would unquestionably constitute 
state action; the seizure here is no 
different. It is of no constitutional 
significance that the funds are seized 
before they reach the child, rather than 
being physically taken out of the child's 
hands after receipt. Cf. Sniadach v. 
Family Finance Corn. . 395 U.S. 377
(1969) .

This arrangement is manifestly 
unlike the circumstances presented by 
Lyng; indeed, so far as we are aware it 
is unique even in the byzantine realm of 
welfare law. In Lyng, the respondents 
had applied for a federal benefit and



72
complained that the level of that benefit 
they received had been set at an 
unconstitutionally low level. Here the 
affected children, prior to 1984, were 
receiving no AFDC benefit; they were not 
then part of the AFDC program, and still 
prefer to continue to remain outside it. 
The money in dispute in this case is not, 
as in Lvnq. government funds, but the 
private property of the supported 
children.

In the instant case the use of 
benefit conditions to work an apparent 
constitutional violation is, in one 
respect, even more egregious than in 
Hobbie. Ms. Hobbie was only being asked 
to sacrifice her own constitutional 
rights in order to receive a government 
benefit; if she had chosen to relinquish 
the right to keep the Sabbath on 
Saturday, it would at least have been of 
her own choice, and she would in return



73
have escaped the financial penalty 
imposed by the state. Here, on the other 
hand, a threatened denial of benefits is 
used to conscript AFDC mothers to act as 
ad hoc state agents, directed to violate 
the constitutional rights of children who 
are given no choice and who receive 
nothing in return. It is as though, in 
Hobbie. Florida had withheld unemployment 
compensation from any parent who 
permitted his or her children to keep the 
Sabbath on Saturday. Such a rule, as 
here, would work a direct constitutional 
violation, rather than merely impose an 
unconstitutional condition. Adickes v. 
S.H. Kress & Co., supra.

In defense of this practice the 
Solicitor General makes two distinct 
types of contentions. First, he offers 
arguments which, if sustained, would 
render constitutional the seizure of 
child support funds in the manner at



74
issue even if the child was not living 
with a parent and indigent sibling 
receiving AFDC. Second, the Solicitor 
contends that, even if such a seizure 
would be unconstitutional as applied to 
the general population, the seizure is 
permissible where it occurs as a result 
of conditions imposed on the receipt of 
AFDC.

B. The Constitutionality of theObligations Imposed by 
Appellants' Practices

There would seem to be little doubt 
as to the unconstitutionality of any 
statute which, in order to subsidize a 
state's AFDC program, simply expropriated 
one half of all child support payments 
paid to any child in the general 
population. Such a confiscatory scheme 
would be precisely the sort of practice 
condemned by the Taking Clause, "forcing 
some people alone to bear burdens which, 
in all fairness, should be born by the



75
public as a whole." Armstrong v .  United 
States. 364 U.S. 40, 49 (1960). The 
Solicitor General does not expressly 
suggest that, as a means of defraying the 
cost of AFDC, Congress or North Carolina 
could simply expropriate a substantial 
portion of all child support payments 
received by any minor in the state. But 
the Solicitor advances several arguments 
which, if credited, would compel the 
conclusion that such a scheme would 
indeed be constitutional.

The Solicitor urges, first, that 
"the 7economic impact7 of the challenged 
legislation ... is not so great as to 
effect a taking." (U.S.Br. 37). He 
observes, for example, that the amount of 
money taken from any single child is far 
smaller than the economic injury 
sustained by the owners of the gold mines 
at issue in United States v. Central 
Eureka Mining Co. . 357 U.S. 155 (1958)



76
(U.S.Br. 37-38 n. 10). To some Americans 
the seizure of $50 or $100 a month might 
indeed seem relatively minor; it is 
undeniably smaller than the amounts of 
property at issue in previous Taking 
Clause cases. But for the indigent and 
the working poor, many of whom are 
surviving on a per capita monthly income 
of little more than $100,14 the seizure 
of even a modest amount can be 
catastrophic. As a result of the seizure 
and retention of the child support funds 
at issue, the mothers in the instant case 
have been unable to buy shoes and clothes 
for children who prior to October 1984 
were receiving at least a subsistence 
level of child support.15 What may 
seem a pittance to the affluent may well 
be a necessity for the less fortunate.

14 See N.C.J.S. A-13 to A-29.
15 N.C.J.S. A-16, A-22, A-30; see 

also id. at A-16 (no phone service), A-25 
(no toys, car seat or high chair).



77
The Taking Clause, which safeguards the 
mansions of the rich and the factories of 
the wealthiest of corporations, protects 
with equal vigilance the pennies of the 
poor.

The Solicitor suggests, in the 
alternative, that any negative economic 
impact may be only an occasional 
unintended effect of a benign government 
practice. The $50 set aside, he asserts, 
was adopted because "the child support 
assigned to the state in consequence of 
the new filing-unit provision might 
sometimes be greater than the marginal 
increase in AFDC benefits obtained by the 
family by filing as a larger unit." Any 
net loss of child support, he suggests, 
was merely a "potential disadvantage" of 
the 1984 legislation. (U.S.Br. 14)
(Emphasis added). This innocuous 
characterization of the regulatory scheme 
is wholly inconsistent with the



78
Solicitor's argument that the very 
purpose of section 602(a)(38) was to 
bring about a net loss of child support 
to the affected children, and a 
corresponding gain for the state and 
federal governments.

The Solicitor also contends that the 
challenged practices do not constitute a 
taking because, although North Carolina 
does not pass on to each child the full 
amount of the support payment which the 
state obtained, the state does return an 
amount "that reflects the needs of the 
child." (U.S.Br. 39). This would indeed 
be a compelling argument if the 
constitutional principle embodied in the 
Taking Clause were that the government 
may take from each according to his 
ability, so long as it provides to each 
according to his needs. Under such a 
doctrine, North Carolina might well 
choose to expropriate all child support



79
funds in the state and disburse to each 
affected child an equal monthly stipend. 
The North Carolina practice of demanding 
assignment of a minor's child support 
matches with harsh exactness the child's 
ability to pay; the grant which the child 
receives in return "reflects," but does 
not purport to meet, his or her essential 
needs, since the grant equals less than 
one third of the federal poverty level. 
But while there are undeniably 
jurisdictions which believe that property 
should be confiscated in proportion to 
each individual's ability to pay, and 
redistributed according to each person's 
particular needs, that does not happen to 
be the view of private property embodied 
in the Taking Clause.

Even if the seizure of these funds 
constitutes a taking, the Solicitor 
argues that the affected child receives 
"just compensation" because, in addition



80
to a monthly stipend of $79 or less, the 
child enjoys the benefit of government 
aid in collecting the child support. 
Although the child forfeits all but $50 
of the funds collected each month, the 
state assumes "the burden of pursuing 
non-custodial parents who fail to satisfy 
their support obligations." (U.S.Br. 
39). In addition, the Solicitor notes, 
the child is guaranteed an additional 
allotment, in practice between $13 and 
$29 a month, "regardless of the state's 
ability to collect from the absent 
father." (Id.). The Solicitor General 
professes incomprehension that the 
district court failed to grasp the 
fairness and generosity of this seemingly 
beneficent plan. (U.S.Br. 37). If such 
an ostensible fee-for-service scheme were 
constitutional, a state could indeed 
treat all children in this way, 
regardless of whether their siblings



81
happened to be on AFDC.

A state could certainly establish an 
optional child support service with fees 
reasonably related to the cost of 
collection. Federal law in fact requires 
North Carolina to offer just such 
assistance, on a voluntary, at cost, 
basis, and that program is undoubtedly 
constitutional. 42 U.S.C. §§ 651 et seq. 
But the practices at issue here, even as 
the Solicitor characterizes them, require 
participation by many parents and 
children who neither need nor want 
government help in collecting child 
support, and impose a fee - typically all 
amounts collected in excess of $50-$80 
per month —  which would make a robber 
baron blush. In August, 1985, for 
example, North Carolina took from Arvis 
Water's two youngest children $760 of an 
$810 check; the compensatory service 
which the state provided in return was



82
the assistance of AFDC officials in 
cashing the $810 check which the state 
had received from the clerk of the Bronx 
Supreme Court. (N.C.J.S. A-27). Check 
cashing is at times a useful service, and 
its value might reasonably be considered, 
as the Solicitor suggests, in deciding 
whether just compensation has occurred. 
But a fee of $760 for cashing an $810 
check is rather higher than the fair 
market value for that service.

Even if the seizure of child support 
payments to subsidize AFDC is a taking, 
the Solicitor suggests that the only 
appropriate remedy may be individual 
civil actions for just compensation, 
rather than a class action to enjoin the 
taking. (U.S. Br. 40 n. 13). We are not 
entirely sure that this is a serious 
suggestion. The number of affected class 
members in the instant case between 1984 
and 1986 was more than 26,000; nationally



83

the total number of individuals whose 
funds are being seized each year is far 
larger. It seems unlikely that the 
United States believes that either the 
federal or state courts are capable of 
handling such a volume of litigation, or 
that the purposes of federalism would 
somehow be well served if this Court were 
to inflict such a burden on the courts of 
North Carolina, rather than sustain the 
simple injunctive remedy ordered by the 
district court below.

C. The Constitutionality of Imposing Such Obligations As A 
Condition of AFDC

The fact that the North Carolina 
could not directly impose the obligations 
and restrictions inherent in the disputed 
AFDC rules is not, of course, dispositive 
of this litigation. Where an otherwise 
impermissible government requirement or 
practice occurs in the context of a 
social welfare program, that context may



84
provide a justification inapplicable to
the public at large. The regulations and
contours of any social welfare program
will inevitably discourage certain
private conduct and encourage other;
those incentives and disincentives will
not in every instance be so direct and
substantial as to be equivalent to a
direct government command or prohibition.
Lynq v. Castillo. 91 L.Ed.2d at 527.

(1) The Solicitor General contends
that no actionable taking has occurred in
this case because "participation in the
AFDC program is entirely voluntary."
(U.S. Br. 35). The Solicitor argues:

Congress may attach reasonable conditions to participation in 
such programs. When a person voluntarily complies with such 
conditions in order to gain 
access to public benefits that 
he desires, there is no 
"taking" of his property. (U.S.Br. 35) (Emphasis added).
The manifest difficulty with this

argument is that the individuals who want



85

to participate in AFDC, and the 
individuals whose property is being 
seized, are simply different people. It 
is the mother and indigent child who 
"desire" "to gain access to public 
benefits"; the property being seized, on 
the other hand, belongs to the supported 
child. The mother has absolutely no 
choice but to do the state's bidding; if 
the mother refuses, she and her indigent 
child will be denied even the absolute 
necessities required for survival. The 
HHS regulations impose on the mother a 
Sophie's choice, requiring her to choose 
to sacrifice the financial interests of 
one child in order to protect the 
interests of the others. "The falsity of 
the freedom of the mother, whose options 
are either to reduce one child's child 
support income or to cut her other 
children off from their sole source of 
support, AFDC, is painfully clear."



86
(N.C.J.S., A-50).

Having thus conscripted the mother 
into acting as an agent of the state, 
North Carolina requires her to deliver to 
the state child support funds which she 
holds, not as her own property, but on 
behalf of the supported child. The 
supported child, of course, does not 
consent to anything; the mother, who is 
supposed to disburse the child support 
funds for the support of that child, has 
in reality been compelled to disburse the 
funds for the support of the North 
Carolina Department of Human Resources.

The essentially coercive nature of 
this scheme readily distinguishes it from 
the allocation formula upheld in Lvna v. 
Castillo. In Lvnq. respondent Castillo 
and his wife moved into the home of the 
wife's daughter, Teresa Barrera. When 
the Castillos applied for Food Stamps, 
the allotment provided to them was set at



87
a lower level because they were living 
with the Barreras. This Court upheld 
that reduced allotment as reasonably 
reflecting "the economies of scale when 
people buy and cook their food together." 
91 L.Ed.2d at 534. But the Barreras were 
placed under no legal obligation either 
to feed the Castillos or to subsidize the 
Food Stamp program; so far as appears 
from the opinion in that case they did 
neither.

Lvng would have resembled the 
circumstances of this case only if Food 
Stamp officials had required the 
Castillos, as a condition of receiving 
benefits, to seize and deliver to the 
state each month a specified amount of 
the Barreras' money. The cases would 
also be similar if in Lvng federal 
officials had given the Castillos a full 
allotment of Food Stamps, and then 
garnisheed Ms. Barreras' salary for an



88
amount equal to the savings the Castillos 
had theoretically realized by living at 
the Barrera home. But neither the 
Solicitor General nor this Court in Lvng 
suggested that the United States was 
entitled to seize the property of the 
Barreras simply because the Castillos had 
"voluntarily" applied for Food Stamps.

(2) The Solicitor asserts that "the 
child support . . . assigned to the state 
is in effect 'returned7 to the family in 
the form of AFDC benefits." (U.S. Br. 
32) . If this statement were literally 
true, of course, the instant litigation 
would never have arisen. The undisputed 
facts are that, with the exception of the 
$50 set aside and the $13-29 incremental 
allotment, "the family" does not receive 
any additional funds as a result of the 
mandatory assignment of child support 
payments.

The particular manner in which North



89
Carolina actually accounts for the child 
support funds of a conscripted AFDC 
recipient highlights the confiscatory 
nature of the transaction.16 When Dianne 
Thomas reluctantly agreed to apply for 
ADFC for her son Sherrod, the state 
increased the AFDC grant by only $29. 
But the state then insisted that 
Sherrod's father was indebted to the 
state for $111.50, half of the total 
grant to Sherrod, his mother and his 
sister. If Sherrod's father were to make 
support payments of more than $111.50, 
however, North Carolina still would not 
return the difference to Ms. Thomas or 
her son; instead, the surplus would be 
allocated by the state to reduce the 
"debt" owed to the state by the father of 
Sherrod's sister.

(3) The Solicitor General, although

16 This procedure is described in the deposition of Dan Miles, pp. 24-29.



90
not directly denying that child support 
funds are the property of the designated 
child, insists that the custodial parent 
is not restricted to using the funds for 
items which the child "alone will be 
permitted to use." (U.S. Br. 33). An 
indigent child may of course wear clothes 
or play with toys purchased for an older 
supported sibling. Child support 
payments may be used to pay a fair 
proportion of necessarily shared expenses 
such as rent or utilities, thus reducing 
the expenses of the mother and indigent 
child. These are precisely the types of 
considerations which underlie the 
economies of scale described above, and 
they might well provide a basis for 
reassessing the needs of the mother and 
indigent child.

But the incidental conferring of 
such collateral benefits on others in the 
supported child's home is altogether



91
different from an expenditure to acquire 
items for the exclusive or primary- 
purpose of benefiting the custodial 
parent or any family member other than 
supported child. Where support payments 
are made for a young boy, the money 
obviously cannot be spent for a blouse 
for his mother or a dress for his sister. 
A fortiori the mother cannot expend half 
of a child's support payments for the 
sole purpose of acquiring AFDC benefits 
for herself and her other children.

The state argues that it is in the 
"best interest" of a supported child for 
his or her custodial parent and siblings 
or receive AFDC; thus, the state 
suggests, a custodial parent may take 
child support intended for one child and 
use it instead to acquire AFDC for the 
parent and a different child. (N.C.Br. 
13) . Obviously any child benefits to 
some degree if relatives in his or her



92
household are better off; in that sense 
it could be said that it would be in the 
"best interest" of a child if his or her 
child support were used to support all 
the relatives in the home. But the 
purpose of designating the beneficiaries 
of a child support order is to specify 
which individuals are and are not to 
receive that support; the amount of such 
an order is calibrated to reflect the 
particular needs of the designated 
recipients alone. The very existence of 
such a designation is inconsistent with 
the state's suggestion that the "best 
interest" of a beneficiary could be 
construed to include assuring that his or 
her non-designated relatives are well 
clothed, fed and housed.

(4) The Solicitor contends that the 
constitutionality of the seizure which 
occurred in this case should be 
determined, not by the standards



93
applicable under the Taking Clause to a 
seizure, but by the less stringent 
standard which would be appropriate if 
North Carolina, rather than actually 
seizing the funds of the supported child, 
had chosen instead merely to reduce the 
AFDC grant to the mother and indigent 
child. This lesser standard, the 
Solicitor suggests, is appropriate 
because a hypothetical practice of 
reducing AFDC grants might have had "the 
same economic bottom line" as the seizure 
which actually took place. (U.S. Br. 34- 
35) .

The Solicitor's argument would 
literally stand on its head a century of 
decisions construing the Taking Clause. 
Since at least 187217 this Court has held

L Pumpellv v. Green Bay Co. . 80 U.S. 166, 177-78 (1872) (flooding of 
land); see also Portsmouth Harbor Land & Hotel Co. v. United States. 260 U.S. 327 
(1922); (cannon fired over land); United 
States v. Causbv. 328 U.S. 256, 261-62



94
that a government practice which has "the 
same economic bottom line" as a physical 
seizure of property must be redressed by 
just compensation. Not every limitation 
of land use constitutes a taking, but it 
has never been suggested that a physical 
seizure of property would fall outside 
the Fifth Amendment if the government 
were able to hypothesize a practice 
equally injurious to the owner which 
would not literally utilize such a 
seizure. Similarly, this Court noted in 
Hobbie that the denial of benefits in 
that case imposed "the same kind of 
burden on the free exercise of religion 
as would a fine imposed ... for 
Saturday worship." (Slip opinion, p.4). 
The conclusion compelled by that 
functional equivalence was that the 
denial of benefits was unconstitutional,

(1946) (flight path less than 100 feet above land).



95
not that fining Saturday worshippers 
would be permitted by the Free Exercise
Clause.

(5) In addition to the 19,000 class 
members affected by the outright seizure 
of child support funds, the benefits of 
approximately 3,000 AFDC recipients were 
terminated solely because those 
recipients resided with minor siblings 
who were receiving a substantial child 
support payment.-1-8 Prior to the
adoption of the HHS regulations, for 
example, Mary Medlin and her two older 
children were receiving a grant of $223; 
her two younger children, who were not on 
public assistance, were living on a total 
of $2 50 in child support. In October 
1984, Ms. Medlin, as directed by state 
officials, sought AFDC for the two 
younger children, and agreed to assign

18List of Class Members,filed 
Decemer 11, 1986. See J. App. 16.



96
their support rights to the state; state 
officials then ruled that, because of the 
amount of that child support, all the 
children, as well as Ms. Medlin herself, 
were ineligible for AFDC. (N.C.J.S. A-
18).19 Under the HHS regulations, 
otherwise eligible AFDC applicants must 
be denied assistance if they reside with 
siblings whose child support payments, 
less the $50 disregard, are as great as 
the total AFDC benefit which would be 
paid to an applicant family composed of 
both the actual applicants and the 
supported siblings. In effect, HHS 
regulations require a state to act as 
though child support payments, which 
cannot legally be used to support either 
non-designated children or the custodial 
parent, were in fact income which the 
mother was free to spend on herself or

19This determination appears to have mistakenly ignored the $50.00 disregard.



97
anyone else in the household. Neither 
appellant addresses the constitutionality 
of terminations made on this basis.

These terminations, we urge, are 
constitutionally indistinguishable from 
the taking which would occur if the state 
continued the AFDC benefits but 
expropriated an equal amount in child 
s u p p o r t  p a y m e n t s . They are
indistinguishable, not because the 
economic consequence to the state is the 
same, but because both schemes require 
the custodial parent to seize and misuse 
the child support payments of one child 
in order to assure to herself and the 
non-supported siblings the essentials 
which AFDC would readily provide if the 
supported child did not live in their 
home. This situation is quite unlike 
Lyng v. Castillo where, if the Castillos 
were denied Food Stamps, the Barreras 
could have chosen to refuse to make up



98
the loss with their own funds. Here the
custodial parent whose benefits are 
terminated because of the presence of the 
supported child is herself in control of 
that c hild's funds. In such
circumstances the custodial parent has 
literally no choice but to either 
misappropriate the support funds or, as 
did Ms. Medlin, surrender to another 
adult custody of the supported child.

Ms. Medlin would have been under 
similar pressures if North Carolina had 
had no AFDC program, just as Ms. Hobbie 
would have been subject to substantial 
economic pressures to work on her Sabbath 
if Florida had had no unemployment 
compensation program. But having a 
system of benefits generally available to 
the population as a whole, a state cannot 
carve exceptions which, as in Hobbie. 
burden constitutionally protected 
activities or which, as here, inexorably



99
and forseeably cause harms which the 
state itself could not constitutionally
inflict.

It is difficult to explain the 
termination of AFDC in these cases except 
as the result of a deliberate effort to 
force the custodial parent to misuse the 
child support funds. The loss of AFDC 
occasioned by a termination is far larger 
than might be necessary to account for 
any additional income which the actual
AFDC recipients might, prior to the
termination, have been receiving in
diverted child support funds. In
September 1984, for example, the two
supported children in the Medlin 
household were receiving $250 a month in 
child support, while Ms. Medlin and her 
two other children were receiving an AFDC 
grant of $233. Assuming, arguendo, that 
some support funds were being diverted to 
the AFDC recipients, only a small portion



100
of the support funds could have been 
involved; even if the funds were pooled, 
and the total of $483 were divided 
equally among the five members of the 
household, the net diversion to the AFDC 
recipients would have been only $56, far 
smaller than the $233 reduction that was 
actually made in their grant.

Similarly, the practice of actually 
expropriating support funds is too harsh 
to be explicable as an attempt to adjust 
for any diversion of support funds to 
voluntary AFDC applicants, since those 
funds are seized and retained even where 
the supported children have less support 
per capita than the AFDC recipients 
themselves. If Sherrod Thomas, for 
example, had been receiving $90 a month 
in child support, his income would have 
been lower than the $96 per capita grant 
to his mother and sister; under those 
circumstances, even if Ms. Thomas did



101
treat all the income as a pool, there 
would have been no net transfer to the 
two AFDC recipients. Yet despite that 
fact, under the HHS regulations North 
Carolina would still return to Sherrod 
only a portion of the child support which 
it received for him. The system is 
undeniably contoured to reduce to AFDC
levels the standard of living of any
individual who resides with an AFDC
recipient, and to require that that
individual ' s funds be exhausted
supporting the recipient before any
assistance is provided to anyone in the
home.

Neither HHS nor North Carolina , we
urge, could rationally base its
allocation o f AFDC funds on the
assumption that all AFDC parents who
receive child support for a non-AFDC 
child are unlawfully spending those funds 
on themselves and on non-designated



102
children. This is not a situation, as 
existed in Lvng v. Castillo, where the 
funds of the more affluent household 
members could legally be used to buy food 
for their indigent relatives; the 
Barreras were certainly free to assist 
the Castillos in that manner, and it 
might have been reasonable to assume that 
most people in the position of the 
Barreras would ordinarily do so. In the 
instant case, however, North Carolina law 
expressly forbade Ms. Medlin from 
diverting to herself or her indigent 
children the support payments that she 
was receiving for her non-AFDC children, 
and such a diversion would have 
constituted a violation of the court 
order pursuant to which most of the 
support was received.

The vast majority of Americans 
undoubtedly respect the commands of the 
laws of the states in which they reside,



103
and take seriously the terms of any 
applicable court order. The Solicitor's 
brief appears to contend that it is a 
matter of "common sense," based on "human 
experience," that parents on AFDC, unlike 
other citizens, would not respect the 
legal restrictions on child support funds 
in their possession. (U.S. Br. 22, 46). 
Such preconceived notions that poor 
people systematically disregard legal 
obligations respected by others are, we 
urge, insufficient to provide a rational 
basis for the disputed practices. North 
Carolina could not terminate all grants 
to existing AFDC recipients on the 
assumption that, because they were poor, 
they were probably violating the AFDC 
regulations; it is hardly more reasonable 
for the state to terminate a particular 
group of recipients by presuming the 
occurrence of misconduct that would 
violate both the AFDC regulations and



104
state domestic relations law.

The terminations are particularly 
unreasonable because, by assuming that 
every parent involved is violating North 
Carolina law, those terminations 
virtually compel that very abuse. 
Parents who are in compliance with state 
law are not accorded any opportunity to 
allege or demonstrate they are obeying 
the law. North Carolina need not, of 
course, close its eyes to the possibility 
that any group of AFDC recipients may 
have undisclosed income. Since AFDC 
parents who manage child support funds, 
like AFDC parents who work part time as 
bank tellers, have an opportunity not 
available to other recipients to obtain 
additional income, the state could 
subject those parents to particular 
scrutiny. Any state participating in the 
AFDC program may require recipients to 
provide essential material information,



105
and may terminate those families that 
refuse to do so. Consistent with that 
general practice, North Carolina could 
certainly insist that AFDC parents with 
control of child suppport funds to 
account for the use of that money; if the 
recipient failed to provide that 
information, the state could reduce or 
adjust the recipient's grant in an 
appropriate manner. But such a practice 
would be very different than a rigid rule 
framed on the premise that an entire 
class of AFDC recipients is 
systematically violating that law.

(6) Throughout his brief the 
Solicitor suggests, in words evocative of 
an earlier simpler time, that the people 
affected by the disputed practices should 
be regarded, not as individuals, but as 
members of a family. It is “the family" 
whose needs were reduced by child 
support, "the family" that voluntarily



106
applied for AFDC, "the family" which 
received the grant, and "the family" 
which thus "cannot be heard to complain 
of a 'taking'(See, e.g.. U.S. Br. 29, 
36) . The Solicitor General asks the 
Court, in the name of "the family," to 
uphold a practice which has the 
predictable and demonstrable effect of 
driving mothers to relinquish custody of 
their children, deterring fathers from 
making essential child support payments, 
provoking hostility and even violence 
between the parents, and reducing already 
impoverished children to a state of 
absolute destitution.

The Solicitor's analysis conjures up 
the image of an idyllic home in which 
children live together with their common 
mother and father, in which the financial 
interests of all members are identical, 
in which any income is properly used to 
meet the needs of everyone, share and



107
share alike. But the related parents and 
children affected by the practices at 
issue in the instant case are in reality 
scattered among three or more separate, 
possibly antagonistic households. The 
vital nurturing relationship between 
parent and child, so vital to the well 
being of both, continues, but it is 
subject to extraordinary strains and 
pressures. The nuclear family has been 
torn asunder by divorce or abandonment, 
and complicated by prior or subsequent 
relationships and children. Under such 
circumstances, financial resources and 
support obligations, matters ordinarily 
dealt with through mutual agreement 
within traditional unified families, must 
be specifically allocated and regulated 
by state domestic relations law. To 
pretend that this is not occurring, or 
that it is somehow unnecessary, would 
inevitably be to worsen an already



108
difficult situation.
I H  - THE A P P E L L A N T S '  PRACTICES

U N C O N S T I T U T I O N A L L Y  B U R D E NFUNDAMENTAL RIGHTS
Lynq v. Castillo mandates a two-part 

analysis where a government practice is 
challenged because it allegedly burdens a 
fundamental right. First, the Court 
inquires whether the burden "directly and 
substantially" interferes with the 
protected activity, 91 L.Ed.2d at 533, 
quoting Zablocki v. Redhail. 434 U.S. 
374, 386-87 (1978). Where the burden is
of that magnitude, it will be held 
invalid absent a particularly compelling 
state purpose which can be achieved in no 
other way. Zablocki v. Redhail. 434 U.S. 
at 388. Second, if the disputed practice 
does not directly and substantially 
burden the protected activity, the Court 
will consider whether the practice "is 
rationally related to a legitimate 
governmental interest." Lvng v.



109
Castillo. 91 L.Ed.2d at 533.

The district court properly regarded 
the decision of a parent and child to 
live together as among the fundamental 
rights to which this two-part analysis 
applied. Zablocki recognized that 
decisions regarding child rearing and 
family relationships were on "the same 
level of importance" as the decision to 
marry. 434 U.S. at 386. If a mother has 
a fundamental right to decide whether to 
give birth to a child, surely her 
decision to raise the child in her own 
home is entitled to equivalent 
protection. Id. The ability of parents 
to decide where their children will live 
is even more vital than their ability to 
decide where those children will go to 
school. See Pierce v. Society of 
Sisters. 268 U.S. 510 (1925). "This
Court has long recognized that freedom of 
personal choice in matters of ... family



110
life is one of the liberties protected by 
the Due Process Clause." Cleveland Board 
of Education v. LaFleur, 414 U.S. 632, 
639-40 (1974). "[T]he importance of the 
familial relationship, to the individuals 
involved and to society, stems from the 
emotional attachments that derive from 
the intimacy of daily association" in a 
family's home. Smith v. Organization of 
Foster Families. 431 U.S. 816, 844 
(1977) . A state which imposed a fine on 
a child who lived with his or her mother 
would clearly violate this fundamental 
liberty; a similar constitutional 
violation exists where, as here, the 
state seizes a substantial portion of the 
child support funds of a child who lives 
with a mother and sibling on AFDC, but 
permits the child to retain those funds 
if custody of the child is given instead 
to father, grandparent, or non-relative. 
As the district judge observed, under the



Ill
disputed practices, "if a child wants to 
live with his ... mother and half­
siblings, the child must surrender a 
right to private property, the right to 
. . . money awarded to the child by state 
court order or voluntarily provided by an 
absent father." (N.C.J.S. A-62).

When the father and mother of a 
child do not live together, the existence 
of financial support from the non­
custodial parent is often one of the few 
strands of a familial relationship that 
remains between that parent and the 
child. A prohibition forbidding a non­
custodial parent to help feed, clothe or 
house his or her child would strike at 
the very heart of their parent-child 
relationship. (See N.C.J.S. A-72 to A-
73) . The disputed practices have the 
effect of virtually prohibiting a non­
custodial parent from providing 
substantial financial assistance to his



112

or her child if that child resides with 
relatives on AFDC. North Carolina will 
expropriate all but the first $50 of any 
funds which a non-custodial parent tries 
to provide to such a child; if a father 
paying $50 a month increases his child 
support to $150 a month, the child whom 
he wishes to assist will not receive so 
much as a penny of that additional $100. 
The state has gone so far as to prosecute 
criminally a father who sought to avoid 
this expropriation by bringing his son 
food, clothing and diapers. (N.C.J.S. A- 
18 to A-20). The only way a non­
custodial parent can assist such a child 
is by first providing to the others in 
the child's household support equal to 
their entire AFDC grant.

The Court has not attempted to 
formulate any mechanical rule for 
determining whether a burden imposed on a 
fundamental right is "direct" and



113
"substantial." In Zablocki v. Redhail. 
434 U.S. 374 (1978), the Court struck
down a state law which forbade a 
noncustodial parent from marrying if he 
were subject to a child support order and 
was too poor to assure that the child at 
issue would not become a "public charge." 
In Califano v. Jobst, 434 U.S. 47 (1977), 
the Court sustained a federal statute 
which eliminated social security payments 
to most dependents who married. In Lvnq 
the Court sustained a statute which 
reduced a family's Food Stamp allotment 
if it shared a home with certain 
relatives. Each of these decisions 
turned on the nature of the burden at 
issue and the circumstances under which 
it was imposed. Zablocki. Jobst and Lvnq 
do suggest, however, that a number of 
considerations are particularly 
important.

First, the substantiality of an



114
alleged burden turns to a great degree on 
the magnitude and likelihood of the 
financial cost attached to the protected 
behavior. In Jobst. for example, the 
Court sustained a benefit scheme which 
had the effect, by shifting the married 
plaintiffs between programs, of reducing
their per capita monthly grant by only
$10. 434 U.S. at 57 n. 17; see also
Zablocki, 434 U.S. at 387 n. 12. In
Zablocki the Court struck down a scheme 
which forbade certain individuals from 
marrying unless they could provide their 
existing children with enough support to 
prevent them from becoming public 
charges. 434 U.S. at 387. In Lvnq the 
challenged reduction in benefits imposed 
no net burden on most recipients, since 
it merely reflected the economies of 
scale they were experiencing by living 
with their relatives. In the instant 
case the amount of funds forfeited by a



115
child who lives with his or her mother 
equals about one third to one half of his 
or her child support; the dollar amounts
are far larger than in Jobst. Here,
unlike Lvna, the net financial loss to
the supported children is not an
incidental result affecting a few
exceptional cases ; the imposition of that
loss is the very purpose of the
challenged practice, and it is inflicted 
on all of the class members. The 
disputed practices bear even more heavily 
on the right of a non-custodial parent to 
assist his or her child; with the 
exception of the $50 set aside, all such 
support is ordinarily expropriated by the 
state and never reaches the intended 
recipient. The burden here on the non­
custodial parent who wishes to support 
his or her child is literally several 
times greater than the burden on the 
father who wished to marry in Zablocki.



116
In Zablocki the father could not marry 
unless he supported at the public 
assistance level his existing child; here 
the non-custodial parent who wants to 
assist such a child cannot do so unless 
he or she first supports at that level 
every other child who lives in his own 
child's home, even though those other 
children are not related to him.

Second, the Court's decisions 
consider whether the burden is likely to 
actually deter those affected from 
engaging in the protected activity. In 
Jobst there was no evidence that the 
challenged statute had ever discouraged 
anyone from marrying, Zablocki 434 U.S. 
at 387 n. 12; in Lvnq the Court held that 
it was "exceedingly unlikely" the 
disputed statute would deter relatives 
from living together, since the rental 
cost of separate housing would ordinarily 
far outweigh any loss in Food Stamps. 91



117
L. Ed. 2d at 53 3. In the instant case, on
the other hand, there is undisputed
evidence that mothers have sent their
supported children to live with other
relatives in order to avoid forfeiture of 
much of the child's support payments. 
(J.App. 58) . As reluctant as a mother 
would ordinarily be to surrender custody 
of a child, from a material perspective 
the child will undeniably be better fed, 
clothed and maintained living on $200 
with its grandparent or father than 
living on $79 with its mother. The 
potential difference in the standard of 
living such a child would enjoy would 
necessarily weigh heavily in a mother's 
decision. The testimony is equally clear 
that the practice of expropriating all 
child support over $50 necessarily 
discouraged non-custodial parents from 
seeking to provide such assistance; 
indeed, it would be simply irrational for



118
a parent who wished to provide such 
support to actually attempt to do so, 
since the state is certain to intercept 
and retain the proferred financial 
assistance.

Third, the Court has been more 
willing to overturn a practice whose 
burdens fall with especial harshness on 
the indigent. In Jobst, the statute at 
issue imposed the same financial burden 
on all Social Security recipients, rich 
and poor alike, except in the case of 
marriages between two disabled 
recipients, on whom no burden was imposed 
at all. 434 U.S. at 52-53, 54-58. In
Lvnq. the complete loss of Food Stamps 
was limited to recipients who moved in 
with affluent relatives; those living 
with indigent relatives merely faced an 
economy of scale reduction. But in the 
instant case, as in Zablocki, the burden 
never applies when all the individuals



119
involved are affluent. If a child 
receiving $200 a month in support moves 
in with a mother and sibling living in a 
mansion in the suburb of Raleigh, the 
state does not take so much as a nickel 
of the child's support payments. But if 
an otherwise identical child moves in 
with a mother and sibling living on AFDC 
in a downtown housing proj ect, the child 
must forfeit to the state a significant 
portion of his or her support payments. 
This practice, which places the disputed 
burden only on children whose siblings 
and custodial parent are "public 
charges," cannot readily be distinguished 
from the practice in Zablocki which 
burdened only parents whose children were 
"public charges." See 434 U.S. 404-05. 
(Stevens, J. , concurring). Similarly, 
although the practice of seizing support 
funds precludes most non-custodial 
parents from assisting a child who lives



120
with AFDC recipients, a non-custodial 
parent rich enough to support the entire 
household may, after doing so, provide 
whatever aid he or she pleases to his or 
her own child. If Sherrod Thomas' father 
wants to resume supporting his son, for 
example, he must first provide $194 a 
month for the two AFDC recipients in 
Sherrod's home (See N.C.J.S. A-14). To 
the right of a non-custodial parent to 
support his or her child North Carolina 
attaches a price which only the very 
affluent could afford.

The burden on the ability of a 
mother and child to live together is the 
same regardless of whether the state 
seizes a substantial portion of the 
support funds, thus penalizing the child, 
or reduces or terminates the AFDC grant 
by an equal amount, thus penalizing the 
mother. This constitutional problem, 
like that occasioned by the virtual



121
prohibition of support by a non-custodial
parent, is removed if the state bases its
treatment of this situation on a
requirement that each AFDC parent provide
an accounting of how she uses child
support funds, and restricts any
reduction or termination of benefits to
those cases in which such an accounting
is not provided, or in which the state
concludes that support funds are in fact
being diverted to AFDC recipients.
IV. THE DISTRICT COURT PROPERLY ORDERED THE STATE APPELLANTS TO RETURN FUNDS SEIZED OR WITHHELD IN VIOLATION OF 

THAT COURT'S 1971 INJUNCTION
In addition to its decision

regarding the meaning and validity of
section 602(a)(38), the district court
held that disputed conduct in this case
had violated the injunction issued by
that court in 1971 (N.C.J.S. A-7, A-78 to
A—79). The district court ordered the
state appellants to return to the class
members funds which between October 1984



122
and July 198620 had been seized or 
withheld in violation of that previous 
injunction. (N.C.J.S. 124-26). This
portion of the judgment below was 
expressly based only on the violations of 
the 1971 injunction, not on the district 
c o u r t ' s  v i e w  r e g a r d i n g  the 
constitutionality of the 1984 HHS 
regulations. (N.C.J.S. A-78).
Accordingly, the correctness of the 
restitution provisions of the district 
court's order does not turn on the 
validity of section 602(a)(38) and should 
be addressed separately by this Court.

(1) The state appellants argue,

z u  In their district court stay 
application the state appellants agreed 
that, if the merits of the section 
602 (a) (38) issues were resolved against 
them, they would return all funds 
improperly seized or withheld after May 
7, 1986, the date of the district court's 
decision. Memorandum of Law in Support of Stay Pending Appeal by the Defendants 
Third-Party Plaintiffs, p. 16 ("If
plaintiffs ultimately prevail on appeal, 
their right to receive AFDC can be retroactively restored.")



123
first, that the practices which commenced
on October 1, 1984, did not in fact
violate the original 1971 decree. The
1971 decree provided that the North
Carolina Board of Social Services and its
employees were

restrained and enjoined from 
directly or indirectly 
reducing, or continuing to 
reduce, withholding, or 
continuing to withhold, the payment to AFDC beneficiaries of any funds on the basis of 
crediting outside income of one or more members of the family 
group without first determining 
that such income is legally 
available to all members of the family group.

(N.C.J.S. A-110).
The relevant facts are not in 

dispute. The state appellants do not, of 
course, deny that beginning in 1984 they 
directly or indirectly reduced AFDC 
payments to certain families because of 
the existence of child support payments. 
In 1971 that type of reduction was 
achieved by permitting a supported child



124
to retain his child support, but directly 
reducing the family's AFDC grant by an 
equal amount. (N.C.J.S. A-89 to A-90) In 
1984-86 the state achieved a similar 
result in most cases by seizing part of 
the child support payment. In other 
cases state officials terminated all AFDC 
payments to recipients solely because 
they lived with children receiving child 
support. State officials expressly 
conceded that beginning in 1984 they made 
no effort to ascertain whether the seized 
funds were under state law "legally 
available to all members of the family 
group."21 The state appellants do not 
deny that these practices, if engaged in 
before 1984, would have been a violation 
of the 1971 injunction.22

21 Deposition of Kay Fields, pp. 
43-46.

22 See, e.g. , N.C.Br. 23 ("§602. . . now mandates the very conduct which the Gilliard v. Craig court said- was 
violative of the Social Security Act.")



125
When section 602(a)(38) was first

adopted, North Carolina officials
candidly recognized that the 1971
Gilliard injunction forbade the very
practices which federal officials were
then proposing and which North Carolina
subsequently implemented. An August,
1984, memorandum by state social services
officials acknowledged that the 1971
injunction, unless modified, prohibited
the sort of practices contemplated by the
then proposed federal regulations:

The effect of this law in 
Guilliard [sic] will depend on 
whether or not the new law 
supersedes the court order. If 
it does, Guilliard [sic] would be voided. If not, the State would be placed in much the same position as exists in 
Alexander v. Hill, i.e., either 
comply with a court order and 
lose compliance with Federal 
regs, or vice versa. (N.C.J.S.A-79).

The district court concluded that this 
memorandum demonstrated that the "[s]tate 
defendants were aware of the conflict



126
between the anticipated . . . regulations 
and this court's outstanding order" 
(N.C.J.S. A—78); counsel for the state 
appellants does not challenge this 
factual finding that state officials 
believed they were in violation of the 
1971 injunction.

In this Court, however, counsel for 
the state appellants now asserts that the 
district court's finding of a violation 
of the 1971 injunction is based on an 
incorrect interpretation of that earlier 
decree. In the instant case, the 
district judge who in 1986 allegedly 
misunderstood the 1971 decree is in fact 
the same judge who fifteen years earlier 
had drafted and ordered into effect that 
very injunction. The district court's 
interpretation of its own orders is 
certainly entitled to considerable 
weight.

The state appellants assert that the



127
1971 decree merely directed them to obey 
the Social Security Act itself. (N.C.Br. 
16-23; N.C.J.S. 15). Since the 1984 
legislation amended that Act, the state 
argues, the meaning of the injunction 
changed as well. Far from violating that 
earlier decree, these appellants assert, 
"in effect, the State Defendants indeed 
were following the original 1971 
injunction by modifying their actions in 
compliance with the amended directives of 
the Social Security Act." (N.C.J.S. 15). 
This argument simply flies in the face of 
the literal language of the 1971 
injunction, which includes no reference 
whatever to the Social Security Act, but 
contains instead an unambiguous and 
unqualified prohibition against the very 
conduct which admittedly has been 
occurring since 1984.

The state appellants suggest the 
injunction should be construed to require



128
only compliance with the Social Security 
Act because, they now urge, the 1971 
opinion on which the injunction was based 
had condemned the disputed practices 
solely because they violated the Act as 
then written. (N.C. Br. 17-20). If this 
interpretation of the 1971 opinion were 
correct, it might well have provided a 
basis for modifying the injunction of 
that year in light of subsequent, 
constitutional legislation. But the 
rationale of the underlying opinion 
cannot j ustify disregarding the
unambiguous requirements of the 
injunction itself. It is, moreover, far 
from clear that the 1971 opinion rested 
solely on statutory grounds. Sixteen 
years ago, when Craig v. Gilliard was 
here on appeal to this Court, North 
Carolina construed the 1971 decision 
very differently than it does today, 
insisting that the 1971 opinion had



129
declared the practices at issue to be 
unconstitutional.23 The dissenting judge 
in the 1971 decision also believed that 
the majority had reached its conclusion 
at least in part on constitutional 
grounds.24 The 1971 majority opinion

The guestion which the state asserted was presented by the appeal in 
Craig v. Gilliard was "whether the plaintiffs' rights under the Fourteenth 
Amendment to the United States 
Constitution were violated by the 
defendants reducing their AFDC benefits 
due to income received by a particular 
member of the Plaintiffs' family." 
Jurisdictional Statement, No. 71-1234, p. 
4. The jurisdictional statement explained, "It is contended by the 
Defendant that the Court below committed error in ruling that the regulations used by the North Carolina Department of 
Social Services and the Mecklenburg 
County Department of Social Services 
violated the equal protection rights of 
plaintiffs." Id., pp. 9-10. The
jurisdictional statement did not suggest 
that the alleged statutory violation was even an alternative basis for the district court's opinion.

N.C.J.S. A-100, ("The majority . . . proceeds to strike as violative of 
the equal protection clause, and in 
contravention of the Social Security Act 

North Carolina rule ... relative to ... A. F. D. C.....") .



130
invalidated the then disputed practices 
b e c a u s e  they created "unfair 
discrimination" and worked "an unlawful 
appropriation of the funds of both" 
supported children and their non­
custodial parents. (N.C.J.S. A-98). We 
do not suggest that reasonable people 
could not disagree about the rationale of 
the 1971 opinion; Judge McMillan 
subsequently expressed the view that the 
1971 opinion was indeed based on the 
Social Security Act. (N.C.J.S. A-117). 
But any such dispute about the rationale 
and continued propriety of an injunction 
must be resolved by an appropriate court, 
not by the party to whom the commands of 
the decree are addressed.

The state appellants assert, in the 
alternative, that by adopting section 
6 0 2 ( a ) (38) "Congress made the 
'determination7 that child support income 
'is legally available' to all members of



131
the family group comprising an AFDC 
standard filing unit." (N.C.Br. 24). 
The state appellants do not, however, 
point to anything in the legislative 
history of section 602 (a) (38) in which 
Congress even considered, much less 
purported to make any decision regarding, 
the legal restrictions in North Carolina 
or elsewhere regarding the use of child 
support funds. The Solicitor General, 
although advancing an exceedingly 
expansive view of the legislative history 
of section 602 (a) (38), does not purport 
to find in that history any hint that 
Congress intended to evaluate the legal 
principles controlling the use of child 
support funds in any of the fifty states 
participating in the AFDC program. 
Again, moreover, the language of the 1971 
injunction requires that the defendant 
state off icials themselves make a 
determination of whether particular



132
support funds were legally available to 
other family members under state law. 
The existence of a congressional 
"determination" might have provided a 
basis for modifying that injunction, but 
no such congressional action by itself 
could remove the obligations imposed by 
the 1971 injunction on the defendants 
themselves.

(2) Second, the state appellants 
argue that their obligation to comply 
with the literal commands of the 1971 
injunction ended in 1984 when Congress 
adopted section 602(a)(38). Appellants 
do not merely suggest that they were 
entitled to return to court in 1984 and 
seek a modification or recission of the 
1971 injunction, a proposition which we 
would not contest. Rather, these 
appellants argue that, once section 
602(a)(38) was enacted, state officials 
were at liberty to at once disregard the



133
outstanding injunction, without first, or 
ever, seeking a change in that order. 
The mere adoption of that legislation 
assertedly "obviate[d] the necessity of 
the enjoined party following established 
procedures in petitioning the proper 
federal forum for relief." (N.C. Br. 
26) .

The state appellants' argument is 
inconsistent with the rule long 
recognized by this Court that when a 
court with jurisdiction over the relevant 
subject matter and parties issues an 
injunction, that order, no matter how 
unsound, must be obeyed until modified or 
reversed by a court having the authority 
to do so. A party which violates such an 
outstanding injunction may be punished 
for contempt regardless of whether the 
injunction at issue was improper or even 
unconstitutional. This rule is required 
by "respect for judicial process," and



134
applies to any person subject to the 
commands of a mandatory injunction, 
"however exalted his station, however 
righteous his motives." Walker v. 
Birmingham. 388 U.S. 307, 320-21 (1967).
This Court has in the past required 
federal officials,25 local officials,26 
union organizers,27 and opponents of 
government discrimination28 to continue 
to obey disputed injunctions, and to 
present to the appropriate court whatever 
objections they might have to the 
legality of any such order. The state 
officials in the instant case were 
subject to the same obligation.

25 GTE Svlvania, Inc. v. 
Consumers Union. 445 U.S. 375, 386 (1980).

26 Pasadena City Bd. of Education 
v. Soanaler. 427 U.S. 424, 439-40 (1976).

27 United States v. United Mine
Workers. 330 U.S. 258, 293-94 (1947);
Howat v. Kansas. 258 U.S. 181, 189-90 (1922).

28 Walker v. City of Birmingham, supra.



135
The state appellants do not suggest 

that disobedience to an outstanding 
injunction is permissible whenever a 
subsequent enactment raises questions 
about the rationale of that order, but 
assert that disobedience was permissible 
here because, with the enactment of 
section 602 (a) (38), the 1971 injunction 
"no longer ha[d] any basis in the law." 
(N.C.Br. 26). But whether that 1984 
legislation indeed eviscerated the 
rationale of the 1971 injunction can 
hardly be said to be crystal clear. 
Appellants' present analysis rests on its 
assertion that the injunction was 
originally based solely on appellees' 
statutory claim, a view which is 
precisely the opposite of the state's 
original position. Even assuming that to 
have been the basis of the 1971 
injunction, there was a respectable body 
of judicial opinion in 1985 and 1986



136
which rejected appellants' interpretation 
of section 602 (a) (38).29 Appellants 
undeniably had a colorable argument for a 
modification of the 1971 injunction, and 
a reasonable judge could conceivably have 
granted such relief. But in the 
resolution of such a request, as in all 
other areas of the law, "no man can be 
judge in his own case." Walker v. 
Birmingham. 388 U.S. at 320.

Appellants' deliberate violation of 
the 1971 injunction cannot be justified 
by their arguments that, had they sought 
a modification in advance of that 
violation, "it would have been an abuse 
of discretion for the district court to 
have denied the State's request." (N.C. 
Br. 25) . "The proper procedure . . . was 
to seek judicial review of the injunction 
and not to disobey it, no matter how 
well-founded their doubts might be as to

29 See U.S.Br. pp. 5-6 n.2.



137
its validity.11 Carroll v. Commissioners 
of Princess Anne. 393 U.S. 175, 179
(1968) . The ordinance underlying the 
injunction at issue in Walker v. 
Birmingham was unanimously held 
unconstitutional by this Court, 
Shuttlesworth v. Birmingham. 394 U.S. 147
(1969) , but Reverend Walker, Dr. Martin 
Luther King, and their co-defendants 
still went to jail for violating that 
order.

A party subject to an injunction 
cannot disregard the commands of that 
decree merely because subsequent events, 
such as the enactment of relevant 
legislation, appear to undermine the 
original basis of the order. A similar 
sequence of events occurred in Pasadena 
City Board of Education v. Spangler. 427 
U.S. 424 (1976). There, following the
district court's issuance in 1970 of a 
school desegregation order, this Court



138
formulated a new set of guidelines for 
such decrees in Swann v. Board of 
Education. 402 U.S. 1 (1971) . In 1974
the school board moved for modification 
of the decree in light of Swann. and this 
Court held that Swann required the 
requested change in the injunction. 402 
U.S. at 432-38. The Court also made 
clear, however, that the board remained 
under a legal obligation to obey the 1970 
injunction until it was modified by 
judicial action, "notwithstanding 
eminently reasonable and proper 
objections to that order." 427 U.S. at
439-40.

Neither Pennsylvania v. Wheeling & 
Belmont Bridge Co. . 59 U.S. 421 (1855),
nor System Federation v. Wright. 364 U.S. 
642 (1961), permits a party to violate an 
outstanding injunction because of the 
subsequent enactment of legislation. 
Wheeling and System Federation establish



139
the "rules governing modification of ... 
a final decree ... by a court of equity," 
Spangler. 427 U.S. at 437, not rules 
permitting violation of such a decree by 
a contumacious litigant. In System 
Federation the union subject to the 
injunction at issue filed a motion for 
modification of that decree in light of 
the subsequent legislation, and pursued 
that request to this Court. 364 U.S. at 
644-45. Wheeling has always been 
understood to establish "the power of [a]
. . . Court to modify [a] decree", System 
Federation. 364 U.S. at 646, not to 
authorize violation of an unmodified 
injunction.

(3) In the district court, the 
state officials expressly acknowledged, 
correctly in our view, that they could be 
required to return the disputed child 
support funds if those funds had been 
seized or withheld in violation of the



140
outstanding 1971 federal injunction.
They asserted in their memorandum on the
Eleventh Amendment:

Edelman v. Jordan holds 
that a federal court can 
require payment of state funds 
as "a necessary consequence of 
compliance in the future with a 
substantive federal-question 
determination." ... In light of 
Edelman ... the deciding 
question is what conduct did 
the court declare to be 
u n l a w f u l  in its 1971 j udgment.3 0

Based on this view of the law, the state 
officials did not urge the lower court to 
dismiss appellees7 monetary claims under 
the 1971 injunction, but argued only that 
the court should dismiss any monetary 
claim "based on allegations that 42 
U . S . C .  § 6 0 2  (a) ( 38)  w a s
unconstitutional."31

JU Memorandum of Points and Authorities in Support of Defendants7 
Motion to Dismiss In Part Plaintiffs7 Claim for Retroactive AFDC Payments, pp. 3-4.

31 Id., p. 7.



141
In this Court, on the other hand, 

the state appellants assert that the 
Eleventh Amendment guarantees impunity to 
a state which violates a federal court 
injunction. (N.C.Br. 35-36). On the 
appellants' view, the obligations 
established by the 1971 injunction, 
although prospective and thus enforceable 
when that decree was issued, somehow had 
become retroactive and thus invalid by 
the summer of 198 6 when Judge McMillan 
sought to enforce them. The prospective 
terms of the 1971 decree required state 
officials to provide AFDC to Mary Medlin
and her three indigent children in
October, 1984 without regard to the
support payments being made to Ms.
Medlin's other child, Karen. Appellants 
concede that the original order was valid 
and enforceable, despite the Eleventh 
Amendment, when it was issued in 1971. 
But, they argue, once state officials



142
actually violated the decree by cutting 
off AFDC to the Medlins because of 
Karen's child support, any enforcement of 
the decree with regard to the grant for 
October 1984 became retrospective and 
thus impermissible under the Eleventh 
Amendment. Insofar as the 1971 decree 
applied to the grant to be paid Ms. 
Medlin for October 1984, appellants 
assert, the decree was rendered 
unconstitutional and unenforceable 
precisely because, and at the point when, 
state officials violated that decree. On 
this view the violation of a prospective 
d e c r e e  a u t o m a t i c a l l y  renders 
unenforceable the very legal obligation 
that was violated.

The Attorney General of North 
Carolina asks this Court not merely to 
overturn the award in this case, but to 
confer on the state the right to violate 
with impunity any "mere" federal



143
injunction with which the state happens 
to disagree. (N.C.Br. 36) A carefully 
considered and fairly litigated 
injunction solemnly issued by a court of 
the United States is dismissed as only "a 
judge-made decree" to which "a sovereign 
state" need pay little heed. (N.C.Br. 
35). On this view the Eleventh Amendment 
was intended, not merely to repeal the 
citizen-state diversity clause of Article 
III, but to embody in the Constitution an 
immunity rule comparable to the doctrine 
of interposition openly advanced in the 
1950's by states determined to disregard 
federal court decrees. On the Attorney 
General's view, the state would be free 
to violate with impunity an injunction 
issued by this Court against 
implementation of the disputed HHS 
regulations just as it violated the 
original 1971 injunction which had been 
affirmed by this Court.



144
In Hutto V. Finney. 437 U.S. 678

(1978) , this Court made clear that the
Eleventh Amendment does not confer on the
states or state officials any such
license to violate with impunity
injunctions issued by the federal courts:

In exercising their prospective 
powers under Ex parte Young ... federal courts are not reduced 
to issuing injunctions against 
state officers and hoping for compliance. Once issued, an 
injunction may be enforced.Many of the court's most 
effective enforcement weapons 
involve financial penalties ... 
which compensatee] the party 
who won the injunction for the 
effects of his opponent's 
n o n c o m p 1 iance . . . . The
principles of federalism that 
inform Eleventh Amendment doctrine surely do not require federal courts to enforce their 
decrees only by sending high state officials to jail.

437 U.S. at 691. Once state officials
are under a "court imposed obligation to
conform to a ... standard" of conduct,
federal courts have plenary authority to
issue whatever orders are necessary to
bring about "compliance with decrees



145
which by their terms were prospective in 
nature." Edelman v, Jordan. 415 U.S. 
651, 668 (1974) . Hutto and Edelman make 
clear that a court's authority to issue a 
prospective injunction necessarily 
includes the power to correct the effects 
of subsequent violations of such a 
decree.

The state Attorney General insists 
that this view of the Eleventh Amendment 
in no way limits the "contempt power" of
the federal courts. (N.C. Br. 42) . But
he offers no explanation of what he
thinks the district judge should have
done when it determined that the 1971
injunction had been violated. Appellants 
may be suggesting that the district judge 
could have found the state officials in 
contempt, and imposed a fine, payable 
from the state treasury, equal to the 
amount of child support payments 
expropriated or withheld in violation of



146
the 1971 injunction; but such an order 
would differ only in form from the order 
to which the state appellants object, and 
there would surely be no constitutional 
obstacle if the judge directed that the 
proceeds of such a fine be paid over to 
the very indigent parents and children 
from whom the money was originally taken. 
If the state objects to that use of the 
contempt power, the only other 
conceivable use of that power would be 
against the defendant officials who 
personally violated the 1971 injunction. 
But it is difficult to believe that what 
the Attorney General is proposing is that 
the district court in a case such as this 
should have, and on remand ought to, 
vindicate the authority of that court by 
imposing fines or a term of imprisonment 
on Phillip Kirk, the Secretary of the 
North Carolina Department of Human 
Resources, and his subordinates.



147
The order actually issued by the 

district court in this case requires the 
state appellants to do no more than was 
required by the original 1971 injunction 
itself. The state officials are 
obligated to disgorge only the particular 
funds seized or withheld in violation of 
the earlier injunction, and the funds are 
to be disbursed solely to the specific 
individuals who would have retained or 
received them had the injunction not been 
violated. (N.C.J.S. A-124). Although 
the violation of the injunction may have 
caused the class members significant 
consequential financial or emotional 
injuries (see, e.g. N.C.J.S. A-17), the 
decree does not mandate the payment of 
any compensatory damages to redress such 
harms. Neither does the order provide 
for pre- or post-judgment interest. The 
1986 decree simply requires that the 
state appellants disburse exactly the



148
same amounts of money to precisely the 
same people as was already required by 
the prospective provisions of the 1971
decree.

Were this Court to adhere to the 
view of the Eleventh Amendment first 
espoused in Hans v. Louisiana, 134 U.S.l 
(1890), affirmance of the order in this 
case would be required for the above 
reasons. But we do not advocate 
continued judicial efforts to explicate 
Hans. During the last two terms, four 
members of this Court have repeatedly 
urged that Hans should be overruled 
because that decision appears to be 
unwarranted by the history and origins of 
the Eleventh Amendment.32 Hans remains 
in force only because a majority of the 
Court has preferred to postpone

32 Papasan v. Allain. 92 L.Ed.2d 
209 (1986); Green v. Mansour. 88 L.Ed.2d 
371 (1986); Atascadero State Hospital v. 
Scanlon. 87 L.Ed.2d 171 (1985).



149
addressing that issue. We believe it 
would be inappropriate to continue to 
refine the distinctions that grow out of 
Hans until the Court has reconsidered 
whether Hans itself is consistent with 
the intent of the framers of the Eleventh 
Amendment.

CONCLUSION
For the above reasons the judgment 

and opinion of the district court should 
be affirmed.

Respectfully submitted,

JANE R. WETTACH*
East Central Community 

Legal Services Suite 600
5 West Hargett Street 
Raleigh, North Carolina 27601 (919) 828-4647



150

JULIUS LeVONNE CHAMBERS 
ERIC SCHNAPPER
NAACP Legal Defense Fund 
16th Floor 
99 Hudson Street 
New York, New York 10013
(212) 219-1900

LUCIE E. WHITE
U.C.L.A. Law School
405 Hilgard Avenue
Los Angeles, California 90024(213) 206 1075

JEAN M. CARY
THOMPSON & McALLASTER 
327 West Main Street 
Durham, North Carolina 27701 
(919) 688-9646

Counsel for Appellees
♦Counsel of Record



Hamilton Graphics, Inc.— 200 Hudson Street, New York, N.Y.— (212) 964-4177