(D.C. Civil Action No. 4265) APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE
Before ADAMS, GIBBONS and WEIS, Circuit Judges
By 31 Del. C. §§ 321-31 the State of Delaware has adopted the Aid to Families with Dependent Children (AFDC) public assistance program authorized by Title IV of the Social Security Act of 1935, 42 U.S.C. §§ 601-44, as amended. The defendants Baganz, Secretary of the Delaware Department of Health and Social Services, and Jack B. White, Director of the Division of Social Services in Delaware, (the state defendants)*fn1 have state administrative responsibility for AFDC. The third party defendants, the Secretary of Health, Education and Welfare and the Administrator, Social and Rehabilitation Service, Department of Health, Education and Welfare (the federal defendants) have federal administrative responsibility for AFDC. The plaintiffs, suing on their own behalf and on behalf of all others similarly situated,*fn2 are eligible recipients of AFDC public assistance.
On October 27, 1971, as a result of conferences among the state defendants and the Governor of Delaware, it was determined that effective November 1, 1971 AFDC public assistance payments to plaintiffs and other members of the class should be reduced by 11.7% below the amounts theretofore paid under the same conditions of eligibility. On October 27, 1971 notices were sent to the plaintiffs and other class members which read:
Department of Health and Social Services
Division of Social Services
The Division of Social Services must adjust your assistance grant effective November 1971. This grant adjustment is a policy change necessitated by limitation of available funds and to correct an error made in September. You have the right to appeal and have a fair hearing; you may be represented by legal counsel or anyone of your choice; you have a right to informal conference in our Division which in no way affects your right to a formal hearing. Contact your worker if you wish to appeal.
John E. Hiland, Jr., Director"
This notice was received by plaintiffs, and presumably by most other class members, on October 29, 1971. Some class members, however, did not receive any prior notice of the reduction. On November 6, 1971 plaintiffs, and presumably most other class members, received their public assistance checks for the month of November which reflected the 11.7% reduction.
On November 4, 1971 the plaintiffs filed a complaint against the state defendants. The complaint sought a temporary restraining order and preliminary and permanent injunctions restraining the state defendants from enforcing the reduction in payments without adequate prior notice and directing them to issue new checks for the month of November in the amount of the original benefits. The complaint alleges two grounds for relief; (1) that in administering the program the state defendants are bound by the federal regulations and the provisions of the Delaware Public Assistance Manual concerning notice and hearing prior to reduction of benefits; and (2) that reduction of benefits without notice and hearing violated the due process clause of the Fourteenth Amendment. Preliminary injunctive relief was denied. The state defendants filed a third party complaint against the federal defendants seeking a declaration that the federal regulations on which the plaintiffs rely are unlawful and unenforceable. Thereafter the plaintiffs and the state defendants made cross ...