The opinion of the court was delivered by: CURTIN
Plaintiffs bring this action to challenge the recoupment provisions of both the federal [45 C.F.R. § 233.20(a)(12)(i)(A)(2)] and New York State [18 N.Y.C.R.R. § 352.31(d)(2)] statutes under the Aid to Families with Dependent Children Program [AFDC], 42 U.S.C. § 601 et seq. These regulations allow AFDC overpayments, caused by the willful withholding of information by a recipient, to be recouped by deductions from future payments, regardless of whether or not the recipient family has assets available in addition to the current assistance payment. Plaintiffs Carter and Jackson both received notices of recoupment after withholding information on monies received, one from a tax refund and the other from alimony payments. They challenged these recoupments at fair hearings, but the determinations of the Social Service Commissioners were upheld. They do not now question these findings, but argue that the underlying regulations are contrary to the intent of Congress as expressed in the AFDC statute, and contrary to express provisions of the AFDC statute. Additionally, plaintiffs claim constitutional violations, contending that the regulations are so arbitrary and capricious that they are violative of their fifth amendment due process rights, and that they deny plaintiffs the equal protection of the laws and deprive them of property without due process as guaranteed by the fourteenth amendment.
Plaintiffs seek declaratory and injunctive relief.
On July 11, 1975 a temporary restraining order was granted without opposition to plaintiffs Jackson and Carter. By order of this court dated November 17, 1975, Maria Bonilla was granted leave to intervene as a party plaintiff,
but her motion for a temporary restraining order was denied.
45 C.F.R. § 233.20(a)(12)(i)(A)(2) provides:
Where such overpayments were occasioned or caused by the recipient's willful withholding of information concerning his income, resources or other circumstances which may affect the amount of payment, the State may recoup prior overpayments from current assistance grants irrespective of current income or resources.
The New York regulation is very similar.
The two specific provisions of the statute that the plaintiffs contend the regulations contradict are: 42 U.S.C. § 602(a)(10) and 42 U.S.C. § 602(a)(7). § 602(a)(10), the so-called "eligibility" statute, reads:
A State plan for aid and services to needy families with children must . . . provide . . . that all individuals wishing to make application for aid to families with dependent children shall have opportunity to do so, and that aid to families with dependent children shall be furnished with reasonable promptness to all eligible individuals. (Emphasis added.)
§ 602(a)(7), sometimes called the "income and resources" rule, reads:
A State plan for aid and services to needy families with children must . . . provide that the State agency shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid to families with dependent children, or of any other individual (living in the same home as such child and relative) whose needs the State determines should be considered in determining the need of the child or relative claiming such aid, as well as any expenses reasonably attributable to the earning of any such income. (Emphasis added.)
All parties submitted comprehensive briefs, and oral argument was heard on November 25, 1975. Before the court at this time are plaintiffs' request for a preliminary injunction and for a convening of a three-judge court, and defendant Weinberger's motion to dismiss the action for lack of jurisdiction.
With respect to HEW, plaintiffs assert three separate bases for jurisdiction in this court: (1) 28 U.S.C. § 1331 (federal question jurisdiction, $10,000 requisite amount in controversy); (2) 28 U.S.C. § 1361 (federal mandamus statute); (3) 5 U.S.C. §§ 701-706 (federal Administrative Procedure Act [APA]). In addition, they assert jurisdiction over the state and county defendants through 28 U.S.C. § 1343(3), (4), and 28 U.S.C. § 1331.
Clearly, none of the plaintiffs' individual claims exceeds $10,000. Plaintiffs deny that they have aggregated their damages to reach the $10,000 minimum, however, claiming to proceed under the "trust fund" theory of Bass v. Rockefeller, 331 F. Supp. 945 (S.D.N.Y.1971), vacated as moot, 464 F.2d 1300 (2d Cir. 1971). This trust fund theory has not yet been accepted in this circuit. Moore and Vermont Welfare Rights Association v. Betit, 511 F.2d 1004 (2d Cir. 1975). There is also much doubt as to whether the APA suffices as an independent jurisdictional grant. Mills v. Richardson, 464 F.2d 995, 1001 n. ...