The opinion of the court was delivered by: LASKER
Plaintiffs are welfare recipients who challenge 18 N.Y.C.R.R. § 358.8(c)(1) insofar as it permits public assistance benefits to be reduced, terminated or suspended prior to a "fair hearing" decision, when the State Department of Social Services unilaterally determines that the change in aid is based solely on issues of state law or policy. They seek a preliminary injunction against application of this regulation to themselves and members of their class. The motion is granted.
Marsha Viverito, a 27 year old mother of two, had been receiving as part of her Aid to Dependent Children (ADC) grant a semi-monthly shelter allowance of $150.50, which was equal to the amount she had to pay on her mortgage, for property taxes and insurance on the home, and for water rate assessment. Although she had been "recertified" and approved for this amount as recently as June, 1976 by the City Department of Social Services, on August 21st she received notice from the State Department of Social Services that in September her shelter allowance would be reduced by almost one-half, to $84.50 semi-monthly. This change was made pursuant to a new state-wide schedule of maximum allowable shelter allowances payable to any public assistance recipient, effective in September, 1975. See 18 N.Y.C.R.R. § 352.3, § 352.4. Mrs. Viverito immediately requested a "fair hearing" provided for by state regulation, and one was scheduled for September 20th. Despite the State's notice that her aid would continue pending decision if she requested a fair hearing, in early September she received a reduced payment of $84.50 from the City Department; her attorney was informed that the City was carrying out the State's determination that "in cases of shelter allowance reduction to conform to the new state policy on maximum shelter allowance there would be no 'aid continuing' even when a fair hearing was timely requested." Paragraph 13, Affidavit of Marsha Viverito.
On September 17th, she filed a complaint in this court seeking declaratory and injunctive relief from the operation of the "policy exception" of 18 N.Y.C.R.R. § 358.8(c)(1) on behalf of herself and all other public assistance recipients in the state, as well as damages. She also sought an order to show cause and a temporary restraining order, which were granted after counsel were heard in Chambers.
On September 24, 1976, when opposing papers were due on Mrs. Viverito's motion for a preliminary injunction, the court was informed that on September 23rd, by an obviously expedited process, a decision had been made after fair hearing confirming the reduction of Mrs. Viverito's benefits. Her request for further injunctive relief was then moot. On September 28th three additional plaintiffs were permitted to intervene in the action: Mrs. Margarita Franciscovitch, a divorced mother of two who had been receiving as part of her ADC grant a shelter allowance of $214/month (which represented her monthly rental under a three year lease approved by the City and signed in July, 1975) until she received notice in August, 1976 that it would be reduced thereafter to $183/month; Mr. Alfred Banister, whose Home Relief shelter allowance of $160/month (equal to his monthly rent under a one year city-approved lease) was reduced to $152/month; and Mrs. Joanne Agoglia, a mother of two, whose shelter allowance of $195/month was reduced by one dollar. Although all plaintiffs timely requested fair hearings on the proposed reductions, in each case the reduction was put into effect prior to the hearing.
Each plaintiff raised constitutional and statutory challenges to the "policy exception" of the state regulation identical to Mrs. Viverito's. In light of the potential for repeated mootness in individual cases, and the findings that the requirements of Rule 23(a) and 23(b)(2) were met, a second order to show cause and temporary restraining order against application of the "policy exception" to reduce aid prior to a fair hearing decision were signed with respect to the named plaintiffs and members of their class. The class was conditionally defined to include "all recipients of public assistance benefits including Aid to Dependent Children and Home Relief in the City of New York who timely request fair hearings to contest the proposed discontinuance or reduction of benefits and whose benefits are terminated, suspended or reduced prior to the fair hearing decision because the defendants or their agents determined pursuant to 18 N.Y.C.R.R. § 358.8(c)(1) that the issue involved is one of law or policy."
"The purpose of a preliminary injunction is to maintain the status quo pending a final determination of the merits . .. It is an extraordinary remedy and will not be granted except upon a clear showing of probable success and possible irreparable injury. . . . However, ' the burden [of showing probable success] is less where the balance of hardships tips decisively towards the party requesting the temporary relief ' . . . In such a case, the moving party may obtain a preliminary injunction if he has raised questions going to the merits so serious, substantial, and difficult as to make them a fair ground for litigation and thus for more deliberate investigation." Checker Motors Corp. v. Chrysler Corp., 405 F.2d 319, 323 (2d Cir.), cert. denied 394 U.S. 999, 89 S. Ct. 1595, 22 L. Ed. 2d 777 (1969), quoted with approval, Gulf & Western Industries v. Great A. & P. Tea Co., Inc., 476 F.2d 687, 692-93 (2d Cir. 1973) (emphasis in original).
See also Gresham v. Chambers, 501 F.2d 687, 691 (2d Cir. 1974). Accordingly, the inquiry must be addressed to 1) the substantiality of plaintiffs' claim for relief and 2) the balance of equity.
A. The Merits of Plaintiffs' Claim
The challenged regulation applies to "any proposed action to discontinue or reduce assistance payments, [or] medical assistance authorization . . ." and provides in relevant part that:
"(c) In cases in which there is a request for a fair hearing within the ...