The opinion of the court was delivered by: MCCURN
MEMORANDUM-DECISION AND ORDER
Plaintiffs are New York State residents whose income tax refunds have been withheld by the Internal Revenue Service and turned over to New York State to satisfy allegedly unmet child support obligations.
They challenge the constitutionality of the federal-state tax intercept program created by section 2331 of the Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, 95 Stat. 357, 860 (1981) alleging that the tax intercept program's pre-intercept notice and hearing provisions are inadequate and thus, unconstitutional under the Fifth and Fourteenth Amendments to the United States Constitution. Plaintiffs seek declaratory and injunctive relief as well as damages.
Presently before the court are cross motions for summary judgment. For the reasons set forth below, the plaintiffs' motion and the State/County defendants' motions are granted in part and denied in part. The motion of the Secretary of Health and Human Services and the Secretary of the Treasury is granted.
Plaintiffs Smith and Jonza are New York State residents whose marriages ended in divorce. Mr. Smith has two children by his former wife, Mr. Jonza has four. Subsequent to the divorce, both former wifes and their children received Air to Families with Dependent Children (AFDC). As a prerequisite to receiving AFDC benefits, the women assigned their rights to receive child support payments to the State of New York.
In 1977, the Onondaga Family Court ordered plaintiff Smith to pay thirty dollars per week in child support to the Onondaga County Support Bureau. Mr. Smith made sporadic payments but, as of February, 1985, he owed some $1,600.00 to the State. Smith's name was certified to the IRS for interception of his 1983 income tax refund. He was notified of the potential interception by defendant Heckler on October 14, 1983. The notice stated that Smith's name was being certified to the IRS for collection of past-due support. The notice also stated that he could contact the Onondaga Support Collection Unit before November 25, 1983 if he believed he did not owe the money. The notice provided the address and telephone number of the agency, but rather than contact the agency, Mr. Smith commenced this action.
Mr. Jonza's situation is similar to that of Smith. He was ordered to pay thirty-five dollars per week to the State Enforcement board as of December 5, 1977. This amount was eventually increased to $110 per week. On July 13, 1983, Jonza received notice from the Cayuga County Support Collection Unit that he was some $5,000.00 in arrears and that, unless his account was current by october 31, 1983, his name would be certified to the IRS for interception of his tax refund. Defendant Heckler sent Jonza the same notice that was sent to Smith.
The plaintiffs contend that the notice they received was constitutionally defective in that it did not specify possible defenses and did not provide for adequate hearing procedures before interception. The federal defendants contend that, even if a more detailed notice and hearing are required, they are not the proper parties to provide them. The State and County defendants contend that the plaintiffs lack standing to raise the issue, and that in any event the procedures utilized were constitutionally adequate. In the alternative they argue that newly implemented State regulations have corrected any possible defects in the notice thereby rendering the request for injunctive relief moot. They further contend that the Eleventh Amendment bars any damage award against the State.
Pursuant to Fed. R. Civ. P. 56(c), a party is entitled to summary judgment when it has demonstrated "the absence of any material factual issue genuinely in dispute" and that it is entitled to judgment "as a matter of law." See Universal City Studios, Inc. v. Nintendo Co., Ltd., 746 F.2d 112, 115 (2d Cir. 1984); Project Release v. Prevost, 722 F.2d 960, 968 (2d Cir. 1983). The parties here are essentially in agreement as to the content and timing of the notice received by the plaintiffs. At issue here is the adequacy of that notice.
Before turning to the merits of the case, a brief outline of the statutory scheme is warranted.
The tax intercept program is an effort by the Federal Government and State Agencies to alleviate the burden placed on welfare system by single parents and their children. Many of these families are owed substantial amounts of child support from an absent ex-spouse. When the custodial parent applies for AFDC benefits, he or she is required to assign the right to receive child support payments to the state agency. If the non-custodial parent falls behind in child support payments, the state may certify his or her name to the Secretary of Health and Human Services who then sends the name to the Secretary of the Treasury and the Internal Revenue Service. The non-custodial parent's income tax refund is then intercepted and sent to the appropriate state agency.
The plaintiffs here challenge the pre-intercept notice and hearing procedures provided by both the federal and state defendants. This court recently examined a closely related issue in Presley v. Regan, 604 F. Supp. 609 (N.D.N.Y. 1985). In Presley, the plaintiff was a New York resident whose tax refund had been intercepted on behalf of the State of Michigan. Michigan had agreed to provide the plaintiff with a constitutionally adequate notice and hearing, thus the only issue left for the court to decide was whether the plaintiff was entitled to a hearing in his home state. The court held that due process does not require a hearing in the taxpayer's home state. Presley, 604 F. Supp. at 615. Here the issue is not where a hearing must be held, but rather whether the plaintiffs received all the process they were due prior to the interception of their tax refunds.
Due process requires, at a minimum, that any significant deprivation of property "be preceded by notice and opportunity for hearing appropriate to the nature of the case." Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313, 94 L. Ed. 865, 70 S. Ct. 652 (1950). The "root requirement" of the due process is that a person is entitled to a hearing before he is deprived of his property. Cleveland Board of Education v. Loudermill, 470 U.S. 532, 105 S. Ct. 1487, 1493, 84 L. Ed. 2d 494 (1985) (citations omitted). The opportunity to be heard must be "at a meaningful time and in a meaningful manner." Mathews v. Eldridge, 424 U.S. 319, 333, 47 L. Ed. 2d 18, 96 S. Ct. 893 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545, 552, 14 L. Ed. 2d 62, 85 S. Ct. 1187 (1965)). In Presley this court held that interception of a citizen's tax refund is a significant deprivation of property. Presley, 604 F. Supp. at 614. See also Coughlin v. Regan, 584 F. Supp. 697, 707 (D. Maine 1984); Nelson v. Regan, 560 F. Supp. 1101, 1106 (D. Conn. 1983), aff'd on other grounds, 731 F.2d 105 (2d Cir. 1984), ...