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SCHNEIDER v. WHALEY

June 30, 1976

Pamela SCHNEIDER et al., Plaintiffs,
v.
Betti S. WHALEY, Individually and as Commissioner of the Agency for Child Development of the City of New York, et al., Defendants



The opinion of the court was delivered by: CANNELLA

MEMORANDUM DECISION AND ORDER

 CANNELLA, District Judge:

 Named plaintiffs, parents whose children attend day care centers funded under Title XX of the Social Security Act (42 U.S.C. § 1397 et seq.) suing on behalf of themselves and all others similarly situated, seek a preliminary injunction staying the Agency for Child Development ("ACD") and the other defendants from totally defunding forty-nine (49) day care centers and partially defunding fifteen (15) others prior to affording plaintiffs some form of a hearing. The preliminary injunction is granted.

 On July 1, 1976, the ACD, a division of the Human Resources Administration created by mayoral order to administer New York City's day care services, will totally defund forty-nine day care programs and partially defund fifteen more. These defundings, which were publicly announced on May 26, 1976, will result in the closing of centers which now provide services for more than 3,000 children.

 The day care centers are authorized and operated pursuant to New York Social Services Law § 410 et seq. By enacting § 410-b of the Social Services Law, New York State has exercised its option to participate in the federal program providing funds to electing states. The defundings are the direct result of a cut in ACD's 1976-77 Budget from the 157 million dollars allocated for (fiscal year) 1975-76 to 126.2 million "or a 16% deficit between present cost and available funds." Tamke Affidavit in Opposition, at 2. Reacting to this financial constraint, ACD determined that it was necessary to defund a number of day care centers and undertook a cost-utilization and facility adequacy study in order to determine which centers should be defunded. On the basis of these inquiries and meetings between ACD staff members and the sponsoring boards of a number of the centers selected to be defunded, the decision to defund the programs in which plaintiffs' children are enrolled was made.

 Notice of the closings was sent to each affected center on or about June 1, 1976 and meetings were held between the ACD staff and the sponsoring boards of the defunded programs "for the express purpose of explaining the reasons for defunding and the implementation of criteria used in making such determination." Tamke Affidavit, at 3. The record is unclear regarding how many parents have received individual notice that their center is to be closed; however, a survey conducted at plaintiffs' behest by the Leadership Committee of the Day Care Legal Action Coalition revealed that as of the middle of June only 28% of the children attending centers which will close had been offered alternative services. On the other hand, a review of the exhibits submitted by ACD on the evening of June 28th indicates that at present well over 50% of the parents have been notified of the defunding and offered alternative services.

 The Leadership Committee survey also disclosed that 1,000 parents had made written demands for a fair hearing pursuant to 18 N.Y.C.R.R. § 358.2 et seq., but that none had been granted. Finally, the survey results indicated that the alternative services which were offered to those 28% who had been contacted were considered inadequate by those parents. The primary complaint voiced was that the alternative center was not within walking distance as the defunded center had been, and required one or two buses to reach.

 ACD projects that by June 30, 1976, 72% of the affected children will have been placed in alternative centers, and that by August 31, 1976 all remaining children will be placed. In addition, ACD has pledged that in making the new placements it will "accord geographic considerations the highest priority. . . ." (Tamke Affidavit, at 7), and estimates that between 75% and 85% of the children affected will be offered placement in centers within 15 to 20 blocks of their present center. Nathaniel Affidavit, at 1.

 Upon the above facts the plaintiffs move for preliminary relief enjoining the defendants from defunding their centers prior to affording them a hearing. They urge that such a hearing is required by the terms of 45 C.F.R. §§ 205.10 and 228.14 as well as the due process clause of the fourteenth amendment. In order to prevail upon a motion for a preliminary injunction, a party "must either demonstrate a combination of probable success on the merits and the possibility of irreparable injury or, in the alternative, that he has raised serious questions going to the merits and that the balance of hardships tips 'decidedly' in his favor." Brown & Williamson Tobacco Corp. v. Engman, 527 F.2d 1115, 1121 (2d Cir. 1975).

 Before proceeding to a consideration of the merits of plaintiffs' claim, the Court grants their motion to denominate this action a class action pursuant to Rule 23(b)(2) of the Federal Rules of Civil Procedure. The class, which shall consist of all parents of children who attend the centers scheduled to be defunded on July 1, 1976, is so numerous that joinder of the more than 3,000 class members would be impracticable. In addition, the question of whether a hearing is required is common to all members of the class and the named plaintiffs' claims are typical. The Court finds that the named plaintiffs and their attorneys will adequately represent the interests of the class. Finally, this case is appropriate for treatment as a 23(b)(2) class action in that the defendants have "acted or refused to act on grounds generally applicable to the class . . ." making final class wide injunctive relief appropriate.

 THE MERITS

 A. The Claim

 Plaintiffs premise jurisdiction in this action on 28 U.S.C. § 1343(3) and (4), 28 U.S.C. § 1331 and the doctrine of pendent jurisdiction. While the plaintiffs do not dispute that ACD, the City and the State are all in a "financial crunch" and that ACD's limited funding requires a redistribution of funds at the very least, they claim that by defunding the centers without providing the affected parents a prior hearing and/or public notice period the defendants are acting in violation of the due process clause of the fourteenth amendment as well as in violation of the applicable federal (45 C.F.R. §§ 205.10, 228.14) and state regulations (18 N.Y.C.R.R. § 358). Specifically, the plaintiffs request that prior to a final decision regarding defunding there be a "single [group] hearing at which evidence ...


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