Appellants Brief — Bowen v. Gilliard

In The

Supreme Court of the United States

October Term, 1986

s.

—_—

PHILLIP J. KIRK, Secretary, North Carolina

Department of Human Resources,

in his official capacity, et al.,

Appellants,

BEATY MAE GILLIARD, e¢ al.,

Appellees.

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On Appeal from the United States District Court

for the Western District of North Carolina

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BRIEF FOR APPELLANTS

sy

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Lacy H. THornsure

Attorney General for the

State of North Carolina

CatTHerine C. McLams*

Assistant Attorney General for the

State of North Carolina

Post Office Box 629

Raleigh, North Carolina 27602

Telephone: (919) 733-4618

Counsel for Appellants

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or call collect (402) 342-2831

QUESTIONS PRESENTED

I. Whether the District Court erred in holding that

42 U.S.C. (Supp. II) § 602(a)(38), which requires that

all child support payments are to be considered as house-

hold income (and thus assigned to the State) in determin-

ing eligibility of a family unit for AFDC benefits, results

in a deprivation of property based on a child’s unchosen

family membership and therefore violates the Fifth and

Fourteenth Amendments to the United States Constitu-

tion.

Il. Whether the District Court erred in ordering

State Defendants to make retroactive payments to the

identified class members when the amended statute man-

dated the conduct of the State Defendants and the Elev-

enth Amendment to the United States Constitution bars

this award of retroactive payments.

* Rule 28.1 is not applicable in this case.

QUESTIONS PRESENTED

TABLE OF AUTHORITIES

REPORTS OF OPINIONS BELOW

JURISDICTION ...

STATUTE INVOLVED

STATEMENT OF THE CASE

SUMMARY OF ARGUMENT

ii

TABLE OF CONTENTS

ARGUMENT T:

42 U.S.C. (SUPP. II) § 602(a)(38) DOES NOT

VIOLATE THE FIFTH AND FOURTEENTH

AMENDMENTS TO THE UNITED STATES

CONSTITUTION

ARGUMENT II:

THE DISTRICT COURT ERRED IN ORDER-

ING THE STATE DEFENDANTS TO MAKE

RETROACTIVE PAYMENTS TO THE INDI-

VIDUAL CLASS MEMBERS

A. RETROACTIVE PAYMENTS SHOULD

C,

SEED dnnisssicisicninialataceains

NOT HAVE BEEN ORDERED BECAUSE

THERE WAS NO VIOLATION OF THE

1971 INJUNCTION

RETROACTIVE PAYMENTS SHOULD

NOT HAVE BEEN ORDERED BECAUSE

42 U.S.C. (Supp. Il) § 602(a)(38) VACAT-

nD THE 1971 INJUNCTION AS A MAT-

TER OF LAW

RETROACTIVE PAYMENTS SHOULD

NOT HAVE BEEN ORDERED BECAUSE

THIS TYPE OF AWARD IS BARRED BY

THE ELEVENTH AMENDMENT TO THE

UNITED STATES CONSTITUTION

10

14

16

24

32

43

;

}

ill

TABLE OF AUTHORITIES

Pages

CasEs

Atascadero State Hospital v. Scanlon, — U.S. —,

105 8.Ct. 3142 (1985) 9, 33, 34

Califano v. Aznavorian, 439 U.S. 170 (1978) 0. ..8, 10

Califano v. Jobst, 434 U.S. 47 (1977) 10

County of Oneida v. Oneida Indian Nation of New

York, 470 U.S. 226 (1985) a 33

Dandridge v. Williams, 397 U.S. 471 (1970) WW. 10, 31

Davies Warehouse Co. v. Bowles, 321 U.S. 144 (1944)... 23

Dawkins v. Craig, 483 F.2d 1191 (4th Cir. 1973)... 34

Edelman v. Jordan, 415 U.S. 651 (1974). 9, 32, 34, 36, 42

Employees v. Missouri Public Health Department,

a 32

Ex parte Young, 209 U.S. 123 (1908) cece 32, 42

Fitzpatrick v. Bitzer, 427 U.S. 445 (1976) 220... 32

Ford Motor Co. v. Department of Treasury of

Indiana, 323 U.S. 459 (1945) 39

Gilliard v. Craig, 331 F.Supp. 587 (1971), aff’d

without opinion, 409 U.S. 807 (1972) passim

Gilliard v. Kirk, 633 F.Supp. 1529 (W.D.N.C. 1986)

ea passim

Goodyear v. Goodyear, 257 N.C. 374, 126 S.E.2d 113

ES 8,12

Green v. Mansour, — U.S. —, 106 S.Ct. 423 (1985)....33, 36,

37

Hagans v. Lavine, 415 U.S. 528 (1974) 00. we 18, 19

Hans v. Louisiana, 134 U.S. 1 (1890) 0. 32

Harris v. McRae, 448 U.S. 297 (1980) 2 31

iv

TABLE OF AUTHORITIES—Continued

Pages

Haskell v. Kansas Natural Gas Co., 224 U.S. 217

(1912) 19

Heckler v. Turner, 470 U.S. 184 (1985) . 31

Hodges v. Snyder, 261 U.S. 600 (1923) 30

Hutto v. Finnev, 437 U.S. 678 (1978) 32, 41, 42

Kentucky v. Graham, — U.S. —, 105 S.Ct. 3099

(1985) 33, 42

Lackey v. Department of Human Resources, 306

N.C. 231, 293 S.H.2d 171 (1982) ..... 13

Lifsey v. Bullock, 11 F.Supp. 728 (D.C.N.C. 1935). 8,13

Lyng v. Castillo, — U.S. —, 106 S.Ct. 2727 (1986)....7, 10

Milliken v. Bradley, 433 U.S. 267 (1977) 32, 42

Oregon & California Railroad Company v. United

States, 238 U.S. 393 (1915) 29

Papasan v. Allain, — U.S. —, 106 S.Ct. 2932

(1986) my 33, 37, 39, 40, 41, 42

Pasadena City Board of Education v. a 427

U.S. 424 (1976) 19, 24

Pennhurst State School and Hospital v. Halderman,

— 5? SF Renee 9, 32, 33, 34, 35, 36

Pennsylvania v. Wheeling & Belmont Bridge Co.,

18 How. (59 U.S.) 421 (1855) 9, 26, 28, 30, 31

Polites v. United States, 364 U.S. 426 (1960) 00... 28

Quern v. Jordan, 440 U.S. 332 (1979) 32, 33

Re Lassiter, 43 N.C.App. 525, appeal dismissed,

299 N.C. 120 end affirmed 452 U.S. 18 (1981)... 8,13

Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984)... 11

Schweiker v. Wilson, 450 U.S. 221 (1981) oo. 10

v

TABLE OF AUTHORITIES—Continued

Pages

System Federation No. 91, Railway Employes’ De-

partment, AFL-CIO, et al. v. Wright, 364 U.S. 642

(1961) 25, 30

Tyndall v. Tyndall, 270 N.C. 106, 153 S.E.2d 819

(1967) 12

United States v. Kubrick, 444 U.S. 111 (1979) 00. = 3

United States v. South Buffalo Railway Co., 333

U.S. 771 (1948) 31

United States v. Swift & Co., 286 U.S. 106 (1932)........... 25

United States v. United Mine Workers of America,

330 U.S. 258 (1947) .. ' 24

Walker v. City of Birmingham, 388 U.S. 307 (1967)... 24

- Weinberger, v. Salfi, 422 U.S. 749 (1975) 0. 10, 11

Wyman v. James, 400 U.S. 309 (1971) 1]

SraTuTEs

N.C.G.S. § 50-13.4(a) 11

N.C.G.S. § 50-13.4(c¢) 12

EE SID criitisscsnciescrssiviabiaeeieessicsnaiivoainashianionte 8, 12

N.C.G.S. § 108A-25 ts 13

N.C.G.S. § 108A-27 13

N.C.G.S. § 110-37 5, 12

28 U.S.C. 4§ 2281 22

28 U.S.C. § 1252 1

42 U.S.C. $601 et seq. . 2,17

GD UA, CHRU, TD SGUE OU COU icceccncceicterecttcs 3, 4

42 U.S.C. §§ 601-615 . 84

vi

TABLE OF AUTHORITIES—Continued

Pages

42 U.S.C. § 602(a) (7) 17, 20

42 U.S.C. § 602(a) (26) (A) 5, 14

42 U.S.C. § 602 (Supp. I) (a) (38) passim

42 U.S.C. § 1983 33, 42

42 U.S.C. § 1988 ..... 42

42 U.S.C. (& Supp. I1)1396a(a) (10) (A) (i) (1) .

CoNSTITUTIONAL PROVISIONS

Fifth Amendment, United States Constitution ................. 2,7

Eleventh Amendment, United States Constitution —.passim

Fourteenth Amendment, United States Constitu-

tion vi 3, 7, 18, 33

RuLEs

Rule 28.1 of the Rules of the Supreme Court... i

_:

REPORTS OF OPINIONS BELOW

The opinion of the district court in Gilliard v. Kirk

is reported at 633 F.Supp. 1529 (W.D.N.C. 1986). A copy

thereof is printed in the Jurisdictional Statement at pages

A1-A80. An order which clarified the opinion, filed July

3, 1986, is not reported and a copy thereof is reprinted in

the Jurisdictional Statement at pages A81-A86. The opin-

ion of the district court in Gilliard v. Craig is reported at

331 F.Supp. 587 (1971), aff’d without opinion, 409 U.S.

807 (1972). A copy thereof is printed in the Jurisdictional

Statement at pages A87-A107.

re)

JURISDICTION

The judgment of the district court for the Western

District of North Carolina was entered on July 14, 1986.

(J.S. at A-121). Notice of Appeal to this Court was filed

on August 1, 1986. (J.S. at A-132). A Motion for Recon-

sideration was denied by the district court on August 25,

1986. (J.S. at A-128). Supplementary Notice of Appeal

to this Court was filed on September 2, 1986. (J.S. at

A-137). The Jurisdictional Statement was docketed with

this Court on September 29, 1986. This Court noted prob-

able jurisdiction on December 8, 1986. The Jurisdiction

of this Court rests upon 28 U.S.C. § 1252.

o

STATUTE AND CONSTITUTIONAL

PROVISIONS INVOLVED

42 U.S.C. (Supp. II) § 602(a)(38). State plans for aid

and services to needy families with children; contents;

approval by Secretary; records and reports; treatment of

earned income advances.

(a) Contents. A State plan for aid and services to

needy families with children must—

(38) provide that in making the determination under

paragraph (7) with respect to a dependent child and ap-

plying paragraph (8), the State agency shall (except as

otherwise provided in this part [42 USCS §§ 601 et seq.])

include—

(A) any parent of such child, and

(B) any brother or sister of such child, if such broth-

er or sister meets the conditions described in clauses (1)

and (2) of section 406(a) [42 USCS §606(a)], if such

parent, brother, or sister is living in the same home as

the dependent child, and any income of or available for

such parent, brother, or sister shall be included in making

such determination and applying such paragraph with

respect to the family (notwithstanding section 205(j) [42

USCS § 405(j)], in the case of benefits provided under

title IT [42 USCS §§ 401 et seq.];

Fifth Amendment, United States Constitution:

No person shal be held to answer for a capital or

otherwise infamous crime, unless on a presentment or

indictment of a grand jury, except in cases arising in

the land or naval forces, or in the militia, when in ac-

tual service in time of war or public danger; nor

shall any person be subject for the same offense to

be twice put in jeopardy of life or limb; nor shall be

compelled in any criminal case to be a witness against

himself, nor be deprived of life, liberty, or property,

without due process of law; nor shall private property

be taken for public use without just compensation.

Eleventh Amendment, United States Constitution:

The judicial power of the United States shall not be

construed to extend to any suit in law or equity, com-

menced or prosecuted against one of the United States

by citizens of another state, or by citizens or subjects

of any foreign state.

Fourteenth Amendment, United States Constitution:

1. All persons born or naturalized in the United

States, and subject to the jurisdiction thereof, are

citizens of the United States and of the state wherein

they reside. No state shall make or enforce any law

which shall abridge the privileges or immunities of

citizens of the United States; nor shall any state de-

prive any person of life, liberty, or property, with-

out due process of law; nor deny to any person within

its jurisdiction the equal protection of the laws.

ray

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STATEMENT OF THE CASE

The Aid to Families with Dependent Children (AFDC)

program was established in 1935 to provide financial as-

sistance to families with needy dependent children. Social

Security Act, Chapter 531, Title IV, ¢§ 401-406, 49 Stat.

627-629, 42 U.S.C. (& Supp. IT) § 601 et seq. It is a joint

state-federal program. This suit initially began on May

5, 1970 when the plaintiffs filed a complaint in the United

Stetes District Court for the Western District of North

Carolina challenging the legality of certain policies and

regulations of the State of North Carolina in administer-

ing its AFDC program. Specifically, the conduct of the

State which was contested was the consideration of child

support income as a resource available to the entire family

unit in determining its eligibility for AFDC benefits and

the amount of benefits received. (J.A. at 17-29). In 1971

a three-judge court held that, both under the existing fed-

eral statutes and state regulations, it was improper to

include child support payments as family income and en-

joined the State from this conduct. Gilliard v. Craig, 331

F’. Supp. 587 (1971), aff’d without opinion, 409 U.S. 807

(1972).

In 1984 Congress amended the Social Security Act

provisions on which Gilliard v. Craig, supra, was based.

Deficit Reduction Act of 1984 (DEFRA), Pub. L. No. 98-

369, § 2640, 98 Stat. 494, 42 U.S.C. (Supp. IT) § 602(a) (38).

The amended statute explicitly requires that a parent and

any sibling or half-sibling who reside with with a depen-

dent child applying for or receiving AFDC benefits must

be included in the AFDC filing unit. Prior to 1984, a fam-

ily applying for or receiving AFDC assistance could ex-

elude at will from the filing unit a member receiving in-

come that, if counted in the eligibility determination, would

reduce the amount of the family’s AFDC benefits or would

have terminated its eligibility altogether. The present

federal statutes, following the 1984 amendment, require

that all persons enumerated in 42 U.S.C. (Supp. IT) § 602

(a) (38) must be included in the AFDC filing unit and all

income received by the filing unit must be considered in

determining the family’s initial eligibility for AFDC bene-

fits and the level of benefits an eligible family will re-

ceive. 42 U.S.C. (Supp. IT) § 601 et seq. Sinee 1975, the

AFDC program has required, as a condition of eligibility,

that an applicant for assistance must assign to the state

any right to receive child support payments. Social Ser-

vices Amendments of 1974, Pub.L. No. 93-647, § 101(¢) (5)

(C), 88 Stat. 2359, 42 U.S.C. § 602(a)(26)(A). Since 1975

the laws of the State of North Carolina have provided that

‘*{b]y aecepting public assistance for or on behalf of a de-

pendent child or children, the recipient shall be deemed to

have made an assignment to the State or to the county from

which such assistance was received of the right to any

child support owed for the child or children up to the

amount of public assistance paid.’’ N.C.G.S. $ 110-37. In

October of 1984 the State of North Carolina implemented

the new DEFRA provisions.

On May 30, 1985, plaintiffs filed a motion for further

relief, asking the court to enforce the 1971 injunction or, in

the alternative, to declare that 42 U.S.C. (Supp. IT)

§ 602(a)(38) was unconstitutional. (J.A. at 30-34). The

State Defendants’ motion for the convening of a three-

judge panel was denied on August 9, 1985. (J.S. at A-115).

The State’s motion to file a third-party complaint against

the Secretary of Health and Human Services was granted

on August 15, 1985. (J.S. at A-141).

On May 7, 1986 the district court issued its opinion.

Guliard v. Kirk, 633 F.Supp. 1529 (W.D.N.C. 1986). The

court held that the State of North Carolina had properly

interpreted 42 U.S.C. (Supp. IT) § 602(a) (38) by requiring

child support income of co-resident siblings or half sib-

lings to be ineluded as a family resource. 7d. at 1543. The

court then held the statute to be unconstitutional by apply-

ing a standard of ‘‘heightened serutiny.’’ Jd. at 1556. The

eourt further held that ‘‘retroactive benefits are properly

6

available in this case’’ because the State of North Caro-

lina was still bound by the restrictions of the 1971 injunc-

tion at the time it conformed its conduct to the mandates

of the amended statute in 1984. 7d. at 1563. On July 3,

1986 the court issued an order further clarifying its opin-

ion which states that it ‘‘finds the statute unconstitutional

because it imposes a financial penalty on children receiv-

ing adequate child support. ... Such a deprivation of

property based on a child’s unchosen family membership

violates due process and equal protection principles.’’

(J.S. at A-82). Also on July 3, 1986 the court issued its

final order which granted ‘‘Prospective Relief’’ by en-

joining the State of North Carolina as follows:

‘*2. State defendants, their officers, agents, servants,

employees and those persons acting under or in con-

cert or participation with them, are hereby restrained

and enjoined from enforcing any and all statutes,

regulations, rules or policies that require an AFDC

applicant or recipient to include in the AFDC applica-

tion all children living with the applicant or recipient

when that would require the inclusion of children who

receive adequate child support and would not other-

wise be included in the AFDC unit. The state de-

fendants are also restrained and enjoined from count-

ing the income of children not voluntarily included in

an assistance application as income available to the

AFDC unit.

3. State defendants are likewise enjoined from en-

forcing any statutes, regulations, rules or policies that

require an AFDC applicant or recipient to assign to

the state a child’s rights to receive child support un-

less the applicant wishes to obtain AFDC for that

ehild.’’ (J.S. at A-123).

‘*Retroactive Relief’? was granted as follows:

‘*4. State defendants are ordered to pay to the mem-

bers of the class the AFDC benefits they would have

received but for the unlawful reduction, termination

or denial from October, 1984, to the present. State

defendants will also return all child support mem-

bers of the class would have received but for the un-

lawful inclusion of these children in the AFDC stan-

dard filing unit and subsequent assignment of their

child support to the state, from October, 1984, to the

present.’’ (J.S. at A-124).

The district court also granted retroactive notice relief

against the State. (J.S. at A-124 to A-126).

On August 25, 1986 the district court stayed its order

pending appeal (J.S. at A-148), but refused to reconsider

its order. (J.S. at A-128).

Ly

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SUMMARY OF ARGUMENT

In its first argument, the State of North Carolina

adopts the argument of the Secretary of Health and Hu-

man Services in that the district court erred in holding

that 42 U.S.C. (Supp. II) § 602(a)(38) was violative of

the Fifth and Fourteenth Amendments to the Constitu-

tion of the United States. Specifically, the State De-

fendants believe the district court erred in applying a

‘‘heightened scrutiny’’ standard of review in its analysis

of the statute. The proper standard for judicial review

of social legislation is ‘‘minimal scrutiny.’’ Lyng v.

Castillo, — U.S. —, 106 S.Ct. 2727, 2729-2730 (1986).

There is no constitutional violation presented by the re-

quirements of this statute because its mandates have a

reasonable basis and are rationally related to several

legitimate governmental interests, including federal bud-

get concerns and Congress’s recognition of the reality that

households actually share expenses, so scarce public

funds should be provided to those most in need. See, Cali-

fano v. Aznavorian, 439 U.S. 170 (1978). The amended

statute merely sets out new eligibility requirements for

the receipt of AFDC benefits and thus does not effect a

‘direct taking.’’ The district court was not correct in

its interpretation that North Carolina law would prohibit

the assignment of the right to receive child support to the

State because the custodial parent cannot assign away the

private property of the minor child. The law of North

Carolina mandates that child support is to be used to

‘*benefit’’ the child and the custodial parent, as trustee

for the child, has the discretionary authority to make the

decision that the advantages the child would receive from

participation in the AFDC program would be in the

child’s best interest. See, N.C.G.S. § 50-13.4(d); Goodyear

v. Goodyear, 257 N.C. 374, 126 S.E.2d 113 (1962); Lifsey

v. Bullock, 11 F.Supp. 728 (D.C.N.C. 1935); Re Lassiter,

43 N.C.App. 525, appeal dismissed, 299 N.C. 120 and af-

firmed 452 U.S. 18 (1981).

In its second argument, the State of North Carolina

shows that the district court erred in ordering the State

Defendants to pay retroactive benefits to the individual

class members. The district court reasoned that ‘‘ [r]etro-

active benefits were properly available’’ because the

State was still bound by a 1971 injunction which had not

been vacated, modified or reversed. The 1971 injunction

was based upon statutory grounds and merely forbade

the State Defendants to engage in conduct which was

illegal under the Social Security Act as then written.

Gilliard v. Craig, 331 F.Supp. 587 (1971), aff’d without

opinion, 409 U.S. 807 (1972). When the Social Security

Act was amended in 1984, the conduct which was illegal

in 1971 became legal and required. The specific provisions

of the 1971 injunction were never violated. Even if this

Court should find that in 1984 the State Defendants were

still bound by the 1971 injunction, the prior injunction was

vacated as a matter of law when Congress changed the

statutory grounds upon which the injunction was based

and mandated the very conduct which was previously for-

bidden. See, Pennsylvania v. Wheeling & Belmont Bridge

Co., 18 How. (59 U.S.) 421 (1855). Furthermore, the

award of retroactive damages against the State Defend-

ants by a federal court is absolutely barred by the

Eleventh Amendment to the Constitution of the United

States. See, Edelman v. Jordan, 415 U.S. 651 (1974).

There has been no State nor Congressional waiver of the

State Defendants’ Eleventh Amendment immunity. See,

Atascadero State Hospital v. Scanlon, — U.S. —, 105

S.Ct. 3142 (1985). A judge-made injunction cannot over-

ride the explicit limitation on federal jurisdiction con-

tained in the Eleventh Amendment. See, Pennhurst State

Schooi and Hospital v. Halderman, 465 U.S. 89 (1984).

Even if the 1971 injunction were regarded as a continuing

legal obligation on the part of the State Defendants,

retroactive relief is still barred by the Eleventh Amend-

ment. See, Papasan v. Allain, — U.S. —, 106 S.Ct. 2932

(1986).

10

ARGUMENT

42 U.S.C. §602(a)(38) DOES NOT VIOLATE

THE FIFTH AND FOURTEENTH AMEND.

MENTS TO THE UNITED STATES CONSTI-

TUTION.

For its first argument, the State of North Carolina

adopts the argument contained in the Brief on the Merits

of the Secretary of Health and Human Services in the

appeal of Bowen v. Gilliard, No. 86-509, which is consoli-

dated with Gilliard v. Kirk, for hearing.

The State Defendants agree with the Federal De-

fendants that the district court erred in holding that 42

U.S.C. (Supp. IT) § 602(a)(38) was violative of due pro-

cess and equal protection principles by applving a ‘‘height-

ened scrutiny’’ standard of review. Gilliard v. Kirk, 635

F.Supp. 1529, 1556 (W.D. N.C. 1986). This Court has re-

cently reaffirmed its long and consistent line of opinions

which point unerringly to the principle that the proper

standard for judicial review of social legislation is MINI-

MAL SCRUTINY. Lyng v. Castillo, — U.S. —, 106 S.Ct.

2727, 2729-2730 (1986). See also, Schweiker v. Wilson.

450 U.S. 221 (1981); Califano v. Jobst, 434 U.S. 47 (1977);

Weinberger v. Salfi, 422 U.S. 749 (1975); Dandridge v.

Williams, 397 U.S. 471, reh’g denied, 398 U.S. 914 (1970).

The very nature of social welfare legislation necessitates

drawing sometimes arbitrary lines among categories of

people, but as long as the classification has a reasonable

basis, it does not violate the Constitution. Califano v.

Aznavorian, 439 U.S. 170 (1978). The AFDC family fil-

ing unit mandated by 42 U.S.C. (Supp. IT) § 602(a)(38)

is rationally related to numerous legitimate governmental

interests, including the reduction of federal expenditures,

11

the realignment of a family member’s need determination

with the realities of shared household expenses, and the

limitation of searce public funds to those most in need.

In addition, all defendants are in agreement that 42

U.S.C. (Supp. 11) § 602(a)(38) does not effect a direct

taking of child support. Participation in the AFDC pro-

gram is voluntary on the part of the recipient. When

DEFRA amended the statute in 1984, it merely set out

new criteria for participation in the program. Congress

of course has the power to make eligibility rules for public

programs which are rationally related to a legitimate

legislative objective. Weinberger v. Salfi, 422 U.S. 749

(1975); cf. Ruckelshaus v. Monsanto Co., 467 U.S. 986,

1007 (1984). This Court in Wyman v. James, 400 U.S. 309

(1971), has previously rejected constitutional challenges

to similar conditions of eligibility for public assistance,

emphasizing the voluntary right of the potential AFDC

recipient to refuse to accede to certain conditions of eligi-

bility with the consequence of refusal being the cessation

of public assistance.

Furthermore, the basis for the Gilliard v. Kirk deci-

sion that an unconstitutional ‘‘taking’’ has occurred is

grounded upon the district court’s interpretation of North

Carolina child support laws. Gilliard v. Kirk, 633 F.Supp.

1529, 1548-1549 (W.D.N.C. 1986). The court’s analysis of

the law of the State of North Caroling in this area is far

too restrictive and is in error. Tle relowant state statutes

read, in pertinent part, as follows: “Any parent...

having custody of a minor child . .. may institute an

action for the support of such child. . . .’’ N.C.GS.

§ 50-13.4(a). ‘‘Payments ordered for the support of a

minor child shall be in such amount as to meet the reason-

12

able needs of the child for health, education, and mainten-

ance, having due regard to the estates, earnings, condi-

tions, accustomed standard of living of the child and the

parties, the child care and homemaker contributions of

each party, and other facts of the particular case.’’

N.C.G.S. § 50-13.4(¢c). ‘‘Payments for the support of a

minor child shall be ordered to be paid to the person hav-

ing custody . . . for the benefit of such child.’’ N.C.G.S.

§ 50-13.4(d). From the foregoing statutes and two cases,

Goodyear v. Goodyear, 257 N.C. 374, 126 S.E.2d 113

(1962) and Tyndall v. Tyndall, 270 N.C. 106, 153 S.E.2d

819 (1967), the district court reached its conclusion that

the custodial parent is bereft of any discretion to deter-

mine that the receipt of AFDC benefits for the entire

family unit (with the attendant assignment of child sup-

port rights to the State as required by state law in

N.C.G.S. § 110-37) would be in the best interest or ‘‘bene-

fit’’ of a minor child possessing the right to receive child

support. The Goodyear and Tyndall opinions merely enun-

ciate the settled law of North Carolina that child support

is received by the custodial parent, as trustee, for the

‘*henefit’’ of the child(ren); the trustee cannot ‘‘profit’’

herself from the money received. See, Goodyear v. Good-

year, 257 N.C. 374, 126 S.E.2d 113 (1962) ; Tyndall v. Tyn-

dall, 270 N.C. 106, 153 S.E.2d 819 (1967). Both of these

cases revolved around allegations that the custodial parent

was individually bettering herself financially from child

support monies at the expense of the children. These

North Carolina cases simply do not stand for the proposi-

tion that the custodial parent has no discretion in deter-

mining how to utilize child support payments for the

‘*benefit’’ of the child receiving support. North Carolina

has long recognized the right of a parent in the good

13

faith management of a minor child’s property for the bene-

fit of the child. See, Lifsey v. Bullock, 11 F.Supp. 728

(D.C.N.C. 1935) ; See also, Re Lassiter, 43 N.C. App. 525,

appeal dismissed, 299 N.C. 120 and affirmed 452 U.S. 18

(1981). Surely, a custodial parent, as trustee, could de-

termine reasonably and rationally that it would be in the

best interests of the child entitled to child support that an

assignment of the right to support be made to the State

in order that (1) a steady source of AFDC income would

be received instead of erratic or unpaid child support, (2)

the child would be automatically entitled to receive free

medical care under the Medicaid program because of in-

clusion in the AFDC filing unit (see 42 U.S.C. (& Supp.

II) 1396a(a)(10)(A)(i)(1)), and (3) the standard of liv-

ing of the family in which the child lives would be en-

hanced. The choice to apply for AFDC benefits is volun-

tary. There is no North Carolina law which would prevent

the custodial parent of a child entitled to receive child

support from making a decision that it would be in the

best interests of that child to receive AFDC benefits and

comply with its requirements in order to do so.

As stated previously, the new family filing unit now

mandated by 42 U.S.C. (Supp. II) § 602(a)(38) is one

of the conditions of eligibility for receipt of benefits un-

der the AFDC program. Indeed, as a voluntary partici-

pant in the AFDC program, North Carolina has adopted

federal laws governing the program. N.C.G.S. § 108A-25;

N.C.G.S. § 108A-27; ef. Lackey v. Department of Human

Resources, 306 N.C. 231, 293 S.E.2d 171 (1982) (Medicaid

regulations). Thus the law of North Carolina regarding

child support income of AFDC recipients is in fact the

eligibility requirement of 42 U.S.C. §602 (Supp.

14

Il) (a)(38) and the assignment requirement of 42 U.S.C.

§ 602(a)(26)(A). The district court’s interpretation of

North Carolina law regarding child support was in error.

fy

~

ARGUMENT II

THE DISTRICT COURT ERRED IN ORDER-

ING THE STATE OF NORTH CAROLINA TO

PAY RETROACTIVE BENEFITS TO INDI-

VIDUAL CLASS MEMBERS BASED UPON

REASONING THAT THE STATE HAD VIO-

LATED AN OUTSTANDING 1971 INJUNC-

TION WHEN THE AMENDED STATUTE

MANDATED THE CONDUCT FOLLOWED

AND THE ELEVENTH AMENDMENT TO THE

UNITED STATES CONSTITUTION BARS

THIS AWARD OF RETROACTIVE DAM-

AGES.

In its final order, filed July 3, 1986, the district court

ordered retroactive relief against the State of North Caro-

lina, in pertinent part, as follows:

RETROACTIVE RELIEF

‘*4. State defendants are ordered to pay to the mem-

bers of the class the AFDC benefits they would have

received but for the unlawful reduction, termination

or denial from October, 1984, to the present. State

defendants will also return all child support [which]

members of the class would have received but for the

unlawful inclusion of these children in the AFDC

standard filing unit and subsequent assignment of

their child support to the State from October, 1984,

to the present.

eee

15

7. Within thirty (30) days of the filing of the list

{of identified class members], state defendants shall

make a retroactive payment of all amounts due to the

identified class members who have remained on

AFDC and for whom defendants have sufficient in-

formation to calculate the appropriate payment.

eee

9. Within thirty (30) days of receipt by the county

Department of Social Services of all information

necessary to calculate a... retroactive benefit [of

an identified class member who did not remain on

AFDC], the state defendants shall pay the re-

cipent.’’ (J.S. at A-124, A-126).

In addition to ordering retroactive monetary relief,

the court also ordered retroactive notice relief in the form

of mailings, sign displays and public service announce-

ments calculated to apprise class members of their entitle-

ment to retroactive benefits, as well as later mailings to

accompany each payment authorized which would explain

the payment and set forth appeal rights. (J.S. at A-124

to A-126).!

For several apparent reasons, the district court was

in error in its award of the above retroactive damages

against the State of North Carolina.

: The Order filed July 3, 1986 was stayed pending appeal

by Order of the Court filed August 25, 1986. (J.S. at A-148).

16

A. The District Court erred in ordering the

State of North Carolina to pay retroactive

benefits to individual class members based

upon its reasoning that the State had vio-

lated an outstanding 1971 injunction in light

of the directives of the former injunction

which merely enjoined the State from statu-

torily illegal conduct in violation of the So-

cial Security Act as then written.

In Gilliard v. Kirk, 633 F.Supp. 1529, 1563 (W.D.N.C.

1986), Judge McMillan found that ‘‘[rJetroactive bene-

fits are properly available in this case’’ because the State

‘‘was still acting under the restrictions imposed by this

court’s earlier injunction, which forbade the involuntary

attribution of child support income to a family in which

some children receive adequate child support income and

some received only AFDC.’’ A review of the 1971 in-

junction and its surrounding circumstances clearly demon-

strates the fallacy of the district court’s reasoning in 1986.

In March of 1970, under state policy then existing, the

State defendants reduced the monthly AFDC benefits to

the Gilliard family by the amount of a monthly child sup-

port payment which was being made by the father of one

of the children in the family. This decision was affirmed

by the State on appeal. In May 1970 plaintiffs instituted

a lawsuit in the United States District Court for the West-

ern District of North Carolina. In their complaint they

sued individually and as members of a class asking that

the State defendants be enjoined from, among other

things: ‘‘(a) ineluding children in AFDC grants auto-

matically, without either application having been made or

consent having been given by the head of the AFDC

household; (b) ineluding children in AFDC grants who

17

are receiving adequate inderendent support; and (c)

characterizing independent support payments to individual

AFDC recipients as resources properly deductible in cal-

culating monthly AFDC payments.’’ (J.A. at 28). The

grounds for the plaintiffs’ prayer for relief was that the

aforesaid actions of the State were in violation of the

Due Process and Equal Protection Clauses of the Four-

teenth Amendment and of the Social Security Act of 1935,

as amended, Title 42 U.S.C. Section 601 et seg. (J.A. at

22). The case was heard on November 5, 1970 before a

three-judge court. In Gilliard v. Craig, 331 F.Supp. 587

(1971), aff’d without opinion, 409 U.S. 807 (1972), the

State’s conduct, in automatically including child support

as a resource available to the family and deducting the

same from AFDC benefits otherwise payable, was held

to be illegal.

The Memorandum of Decision and Order, decided

June 10, 1971, is clearly based upon statutory grounds;

that is, that the aforestated conduct of the State defend-

ants would be enjoined as being in violation of the Social

Security Act as then written. The federal statute which

regulated the distribution of AFDC benefits at the time of

this holding was 42 U.S.C., Section 602(a)(7), which read:

‘*A State plan for aid and services to needy families

with children must ***(7)*** provide that the State

agency shall, in determining need, take into considera-

tion any other income and resources of any child or

relative claiming aid to families with dependent chil-

dren, 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

18

well as any expenses reasonably attributable to the

earning of any such income; ***. (Emphasis added.) ’’

Gilliard v. Craig, supra at page 589.

The ‘‘Conelusion’’ of the opinion reads as follows, in

pertinent part:

‘*‘BOTH UNDER THE MOST RATIONAL INTER-

PRETATION OF 42 U.S.C., SECTION 602(a)(7),

AND UNDER THE STATE’S OWN REGULA-

TIONS, it is improper to include as family resources

support payments belonging individually to Samuel

Davis, Jr. Samuel Davis, Jr. is not a proper mem-

ber of the group because he is not a ‘‘needy’’ child

UNDER THE SOCIAL SECURITY ACT. ... The

defendants may not UNDER THE LAW reduce or

continue to withhold the payment of AFDC benefits

to members of the Gilliard family or any others of the

class represented by the Gilliard family because of

the presumed availability to an AFDC family of sup-

port payments which belong to one or more but not

all of the members of that family.’’ (Emphasis

added).

Gilliard v. Craig, supra, at pages 593-594.

The 1971 decision in Gilliard v. Craig, which decided

the plaintiffs’ claims on statutory rather than constitu-

tional grounds, was in accordance with rules of judicial

discretion specifically approved by this Court and through-

out the federal judiciary. The exact procedural posture

in Gilliard v. Craig was present in Hagans v. Lavine, 415

U.S. 528 (1974), wherein recipients of AFDC benefits

brought suit in federal court on the ground that a state

regulation under the AFDC program violated the Equal

Protection clause of the Fourteenth Amendment and also

conflicted with the Social Security Act and implementing

19

regulations. The Court specifically held that ‘‘[g]iven a

constitutional question over which the District Court had

jurisdiction, it also had jurisdiction over the ‘statutory’

claim. ... The latter was to be decided first and the

former not reached if the statutory claim was dispositive.’’

Id., 415 U.S. at 543. The Hagans Court emphasized ‘‘the

ordinary rule that a federal court should not decide federal

constitutional questions where a dispositive nonconstitu-

tional ground is available.’’ Zd., 415 U.S. at 547.

Orders of a federal court should be read in terms of

‘*the issues made and the relief sought and granted.’’

Haskell v. Kansas Natural Gas Co., 224 U.S. 217, 223

(1912). In Gilliard v. Craig the injunctive relief sought

by the plaintiffs was to prohibit certain conduct by the

State defendants and was granted on the grounds that

the conduct was in violation of the Social Security Act

as it stood before the court in 1971.

The language of an injunction should be as specific

as possible in order that the enjoined party can follow its

mandates without fear of being held in contempt. Pasa-

dena City Board of Education v. Spangler, 427 U.S. 424

(1976). The ENTIRE PROSPECTIVE RELIEF ordered

by the Court in Gilliard v. Craig is contained in its Judg-

ment filed December 13, 1971 and reads as follows:

‘*3. Prospective Relief. It is further Ordered, Ad-

judged, and Decreed that the Defendants, their of-

ficers, agents, servants, employees, and those persons

acting under or in concert or participation with them,

be, and they hereby are restrained and enjoined from

directly or indirectly reducing, or continuing to re-

duce, withholding, or continuing to withhold, the pay-

ment to AFDC beneficiaries of any funds on the basis

of crediting outside income or resources of one or

20

more members of the family group WITHOUT

FIRST DETERMINING THAT SUCH INCOME IS

LEGALLY AVAILABLE TO ALL MEMBERS OF

THE FAMILY GROUP.” (J.S. at A-110). (Em-

phasis added)

Thus, the conduct of the State defendants which was

enjoined in 1971 was the improper reduction or withhold-

ing of AFDC benefits unless it was ‘‘FIRST DETER-

MIN[ED]”’ that the outside income or resources to be

credited was ‘‘LEGALLY AVAILABLE”? to all family

members. Although not a model of clarity, the Memoran-

dum of Decision in Gilliard v. Craig states that the in-

clusion of the child support payment as a resource avail-

able to the entire family was not in accordance with 42

U.S.C., Section 602(a)(7) ‘‘which, as we read [the sta-

tute], authorizes state agencies administering the jlan to

consider resources of a child in detesmining the needs

of the child, but does not require nor authorize that the

resources available only to a child living in the home

should be treated as resources available to the family at

large.’’? Gilliard v. Craig, 331 F.Supp. 587, 593 (1971),

aff’d without opinion, 409 U.S. 807 (1972). The opinion

also cited decisions which it believed affected the issue

of the presumption of ‘‘available income’’ but correctly

declined to extrapolate that these cases controlled on con-

stitutional grounds. Jd. The most rational, and State

defendants would proffer the ONLY, reading of the 1971

injunction is that the State was enjoined from conduct

which was not authorized by the Social Security Act as

it was written in 1971.

In 1984 Congress amended the Social Security Act to

specifically require that a parent and all siblings who

21

live in the same household with a dependent child must

be included in the standard filing unit in order for the

household to receive AFDC benefits. Deficit Reduction

Act of 1984 (DEFRA), Pub. L. No. 98-369, § 2640, 98

Stat. 494, 42 U.S.C. (Supp. IT) § 602 (a)(38). The amended

statute reads, in pertinent part, as follows:

‘*A State plan for aid and services to needy

families with children must —

provide that in making the determination under para-

graph (7) with respect to a dependent child and apply-

ing paragraph (8), the State agency shall (except as

otherwise provided in this part) include —

(A) any parent of such child, and

(B) any brother or sister of such child, if such

brother or sister meets the conditions described in

clauses (1) and (2) of section 606(a) [of this title],

if such parent, brother, or sister is living in the same

home as the dependent child, and any income of or

available for such parent, brother, or sister shall be

included in making such determination and applying

such paragraph with respect to the family (notwith-

standing section 405(j) of this title, in the case of

benefits provided under subchapter II of this chap-

ter)***,”

After the State defendants conformed their conduct

to the amended 1984 Social Security Act, the plaintiffs

filed a motion for further relief on May 30, 1985, asking

that the Court invalidate the new standard filing unit

regulations enacted by the State and reaffirm the original

1971 injunction. (J.A. at 30-34). The judicial orders and

opinions subsequent to the 1985 motion for further relief

make it abundantly clear that the injunction of the Gilliard

v. Craig court was directed to the enjoining of conduct

which was illegal under the Socia) Security Act as it was

written in 1971.

First, following plaintiffs’ motion, the State de-

fendants filed a motion for a three-judge court which was

denied on August 9, 1985. (J.S. at A-115). In the order

denying State defendants’ motion, Judge McMillan, who

also wrote for the three-judge court in Gilliard v. Craig,

stated as follows:

‘‘The [original] complaint was filed on May 5, 1970.

The case was assigned to this judge, who requested a

three-judge court to decide the merits of the case,

pursuant to 28 U.S.C. § 2281. The complaint raised

constitutional challenges to defendants’ practice of

ealeulating AFDC (Aid to Families with Dependent

Children) benefits by presuming that child support

payments belonging to one or more, but not all, mem-

bers of the family were available to the entire family.

After a hearing on the merits, the three-judge

court, two to one, HELD THAT DEFENDANTS’

PRACTICE VIOLATED THE SOCIAL SE-

CURITY ACT. AN INJUNCTION WAS ENTERED

AGAINST DEFENDANTS. ... THE CONSTITU-

TIONAL GROUNDS RAISED BY PLAINTIFFS

WERE NEVER REACHED BY THE COURT;

THE DECISION WAS MADE ON STATUTORY

GROUNDS ONLY.’ (J.S. at A-i112). (Emphasis

added).

Secondly, in Judge MeMillan’s 1986 opinion upon

which this appeal is based, he reiterated that in 1971 the

court invalidated the North Carolina policy on the grounds

that it ‘‘violated the intent of the Social Security Act

AS THEN WRITTEN.” Gilliard v. Kirk, 633 F.Supp.

1529, 1543 (W.D.N.C. 1986). (Emphasis added).

23

‘Inere has been no allegation in this case, nor can

there be, that the State defendants did not comply with

the 1971 injunction until the 1984 amendment of the Social

Security Act. The statute in question, 42 U.S.C. (Supp.

II) § 602(a)(38), now mandates the very conduct which

the Gilliard v. Craig court said was violative of the So-

cial Security Act as then written. Thus, what was ILLE-

GAL in 1971 was made LEGAL in 1984. The amended

statute mandatorily made for the State Defendants the

‘*determination’’ required under the 1971 injunction ‘‘that

such income is legally available to all members of the

family group.’’ (J.S. at A-110). It thereby conclusively

fulfilled the condition precedent contained in the 1971

injunction upon which the prohibition of the enjoined

conduct depended.

The 1986 Memorandum of Decision in Gilliard v.

Kirk, 633 F.Supp. 1529, 1547 (W.D.N.C. 1986) acknowl-

edges that ‘‘[t]he reguiatory distinction between ‘actual-

ly’ available and ‘legally’ available income corroborates

the defendants’ contention that Congress intended the

attribution of child support income to other family mem-

bers as a means of reducing AFDC expenditures.’’ The

district court then held that the attribution required by

the amended statute was unconstitutional. It is, of course,

well settled that in 1984, when the amended statute passed

into effect, the State Defendants were to presume that the

Act of Congress was constitutional. See, Davies Ware-

house Co. v. Bowles, 321 U.S. 144 (1944). A presumedly

constitutional mandate of a controlling federal statute is

perforce ‘‘legal’’.

The 1971 injunction specifically enjoined the State

from reducing or withholding AFDC benefits by credit-

24

ing child support income ‘‘without first determining that

such income is legally available to all members of the fami-

ly group.’’ (J.S. at 110). In 1971 a mandatory inclusion

of child support income was illegal under the Social Secur-

ity Act as then written. With the passage of 42 U.S.C.

(Supp. IT) § 602(a)(38) as part of the 1984 federal Defi-

cit Reduction Act, Congress made the ‘‘determination’’

that child support income ‘‘is legally available’’ to all

members of the family group comprising an AFDC

standard filing unit.

The State Defendants respectfully submit to this

Court that the terms of the 1971 injunction have not been

violated since in 1984 Congress made ‘‘legally available’’

what was previously illegal and the State thus correctly

counted child support payments in determining eligibility

for AFDC benefits.

B. The District Court erred in ordering the

State of North Carolina to pay retroactive

benefits to indi idual class members because

the 1984 amendment to the Social Security

Act mandated the State’s conduct forbidden

by the 1971 injunction and thereby vacated

the former order as a matter of law.

In Gilliard v. Kirk, 633 F.Supp. 1529 (W.D.N.C. 1986),

the district court held that retroactive benefits were

properly available to the individual class members be-

cause the 1971 injunction still bound the State Defendants

as it had not been stayed, vacated, or reversed, citing

Pasadena City Board of Education v. Spangler, 427 U.S.

424 (1976); Walker v. City of Birmingham, 388 U.S. 307

(1967); United States v. United Mine Workers of

America, 330 U.S. 258 (1947). State Defendants are not

25

proposing to this Court that it now overrule the above

cases by holding that the State of North Carolina was

free to ignore the federal injunction because it was in-

valid or unconstitutional. Rather, it is the State’s conten-

tion that with the passage of 42 U.S.C. (Supp. IT)

§ 602(a)(38), which in 1984 mandated the conduct form-

erly unauthorized by the Social Security Act and thus

forbidden on statutory grounds by the 1971 injunction,

the amended Social Security Act vacated the prior order

as a matter of law.

It is of course well-established that injunctions are

always subject to modification. ‘‘A continuing decree of

injunction directed to events to come is subject to adapta-

tion as events may shape the need.’’ United States v.

Swift & Co., 286 U.S. 106, 114 (1932). This is necessarily

required in order that the injunction not be ‘‘turned

through changing circumstances into an instrument of

wrong.’’ Id., 286 U.S. at 115.

State Defendants are not unmindful of the provisions

of Rule 60(b) of the Federal Rules of Civil Procedure

under which they could have applied to the district court

for an order reversing the 1971 injunction in light of the

passage of 42 U.S.C. (Supp. II) § 602(a)(38). Indeed,

since the new circumstances involved a change in the sta-

tutory law rather than facts, it would have been an abuse

of discretion for the district court to have denied the

State’s request. See, System Federation No. 91, Railway

Employes’ Department, AFL-CIO, et al. v. Wright, 364

U.S. 642 (1961). However, the opinion of the district court

in Gilliard v. Kirk leads inevitably to the conclusion that

because the State Defendants did not apply to the court

26

before complying with the amended Congressional man-

date, the court had the power to continue to enforce rights

which no longer had any basis in the law. Such an anomal-

ous situation is the very essence of an injunction turning

into ‘‘an instrument of wrong.’’

The State Defendants are not postulating to this

Court that just any equitable change in circumstances

would obviate the necessity of the enjoined party follow-

ing established judicial procedures in petitioning the

proper federal forum for relief. The State would limit

its argument, that the 1971 injunction was vacated as a

matter of law, to the specific factual situation presented

by this case, i.e., an injunction based on statutory grounds

which are later directly undercut by an Act of Congress.

By so narrowly restrictly the question before the Court,

ample precedent can be found to uphold the premise that

damages cannot be awarded to compensate parties for the

violation of an injunction that was no longer in effect as

a matter of law.

The principal case to be found in this area of law is

Pennsylvania v. Wheeling & Belmont Bridge Co., 18 How.

(59 U.S.) 421 (1855). In Wheeling, this Court was ex-

plicitly presented with the effect upon an outstanding in-

junction of a later change in the law by Congress. In that

case, the Supreme Court ordered that a navigational ob-

struction created by a bridge across the Ohio River be

eliminated inasmuch as the bridge interfered with river

traffic in such a way as to be in conflict with certain Acts

of Congress. Before the bridge was destroyed, Congress

enacted legislation, at odds with «he prior decision, de-

claring the bridge to be a post road and stating tht it

was a lawful structure in its present position and eleva-

27

tion. The plaintiffs nevertheless moved to enforce the

original decree of the Court, contending that Congress

had no authority to review or reverse a decision of the

Supreme Court. This Court refused to enforce its original

decree, noting that although a private right might ensue

from a publie right such as the obstruction of the water-

way, that the part of the decree which directed the abate-

ment of the obstruction, THE PUBLIC RIGHT, is execu-

tory and depends on whether the bridge continues to re-

main an obstruction under the terms of the present sta-

tute. The Court stated:

‘“‘SO FAR, THEREFORE, AS THIS BRIDGE

CREATED AN OBSTRUCTION TO THE FREE

NAVIGATION OF THE RIVER, IN VIEW OF

THE PREVIOUS ACTS OF CONGRESS, THEY

ARE TO BE REGARDED AS MODIFIED BY

THIS SUBSEQUENT LEGISLATION; AND, AL-

THOUGH IT STILL MAY BE AN OBSTRUCTION

IN FACT, IS NOT SO IN THE CONTEMPLATION

OF LAW. eae

But it is urged, that the ACT OF CONGRESS

cannot have the effect and operation to ANNUL THE

JUDGMENT OF THE COURT ALREADY REN-

DERED, or the righ’; determined thereby in favor of

the plaintiff. This, as a general proposition, is cer-

tainly not to be denied, especially as it respects adjudi-

cation upon the private rights of parties. When they

have passed into judgment the right becomes abso-

lute, and it is the duty of the court to enforce it.

BUT THAT PART OF THE DECREE, DI-

RECTING THE ABATEMENT OF THE OB.-

STRUCTION, IS EXECUTORY, A CONTINUING

DECREE, which requires not only the removal of

the bridge, but enjoins the defendants against any

reconstruction or continuance. Now, whether it is a

future existing or continuing obstruction depends up-

28

on the question whether or not it interferes with the

right of navigation. IF, IN THE MEAN TIME,

SINCE THE DECREE, THIS RIGHT HAS BEEN

MODIFIED BY THE COMPETENT AUTHORITY,

so that the bridge is no longer an unlawful obstruction,

IT IS QUITE PLAIN THE DECREE OF THE

COURT CANNOT BE ENFORCED. There is no

longer any interference with the enjoyment of the

public right inconsistent with law, no more than there

would be where the plaintiff himself had consented

to it, after the rendition of the decree. Suppose the

decree had been executed, and after that the passage

of the law in question, can it be doubted but that the

defendants would have had a right to reconstruct it?

And is it not equally clear that the right to maintain

it, if not abated, EXISTED FROM THE MOMENT

OF THE ENACTMENT?” (Emphasis added),

Id., 18 How. at 430-432,

The Wheeling Court held that the prior decree direct-

ing the alteration or abatement of the bridge could not ‘‘be

carried into execution SINCE THE ACT OF CONGRESS

[which amended the previous Act of Congress].’’ (Em-

phasis added). Id., 18 How. at 436. The Court also held

that no attachment would issue even though the defendants

did not obey a later injunction to discontinue rebuilding

the now-destroyed bridge since the Act of Congress af-

forded full authority to proceed in accordance with its

mandates from the date of its enactment. Jd. Thus, the

Wheeling Court acknowledged and adhered to the prin-

ciple that a decree or injunction of a federal court ground-

ed on statutory law would be abated as a matter of law

by a supervening Act of Congress which directly under-

cut the basis for the prior order of the court.

The precepts in Wheeling, being deep-rooted in equity,

see, Polites v. United States, 364 U.S. 426, 438 (1960),

29

have not been abandoned by later jurisprudence. In Ore-

gon & California Railroad Company v. United States, 238

U.S. 393 (1915), on appeal from the United States Dis-

trict Court of Oregon, this Court was presented with a

dispute involving United States land grants to certain

railroad companies. The Court construed the land grants

as a law, as well as a grant, which must be obeyed until

repealed. The land grants contained certain enforceable

conditions and this Court specifically enjoined the rail-

roads from violating the conditions contained therein.

Recognizing the inherent power of Congress to amend

its laws, the Court implicitly admonished the parties to

attempt to effect iegislative change. However, it empha-

sized that the railroads were still bound by the explicit

injunction not to violate any covenants or conditions con-

tained in the land grants themselves until Congress man-

dated different provisions in the applicable law. The

Court then stated:

‘*If Congress does not make such provision the de-

fendants may apply to the District Court within a

reasonable time, not less than six months, from the

entry of the decree herein, for a modification of so

much of the injunction herein ordered as enjoins any

disposition of the lands and timber until Congress

shall act, and the court in its discretion may modify

the decree accordingly.’’

Id., 238 U.S. at 439.

State Defendants would submit to this Court that inher-

ent in the final statement quoted above, is the Railroad

Company Court’s opinion that subsequent action of Con-

gress, if it amended the law upon which the Court’s in-

junction was based, would itself vacate the outstanding

injunction issued by the Court.

30

Other opinions of this Court have implicitly acknow]-

edged that outstanding injunctions may be modified, re-

versed, or vacated by legislative action. In System Fed-

eration No. 91, Railway Employes’ Department, AFL-CIO

v. Wright, 364 U.S. 642 (1961), the Court held that where

a change in the law made lawful what had previously been

unlawful, it was an absolute abuse of discretion to refuse

to modify an outstanding injunction based upon statutory

rights. The Court’s opinion relied heavily upon Wheeling

Bridge and stated ‘‘the principles of the Wheeling Bridge

case have repeatedly been followed by lower federal and

state courts. We find no reason to recede from them.”’

System Federation No. 91. Railway Employes’ Depart-

ment, AFL-CIO v. Wright, 364 U.S. 642, 650 (1961 ).

Additional authority for the State’s position can be

found in Hodges v. Snyder, 261 U.S. 600 (1923). In this

case the Supreme Court of South Dakota held that an at-

tempted organization of a consolidated school district was

not authorized by any law then in force. The South Da-

kota Legislature subsequently passed a curative act which

legalized and validated the school organization. However,

before the curative act went into effect, the State Cireuit

Court, in accordance with the Supreme Court decision,

entered judgment and permanently enjoined the defen-

dants from the school consolidation. The plaintiffs filed a

lawsuit and alleged that the later effective date of the

curative act deprived them of private property rights vest-

ed by the prior judicial order. This Court, relying on the

public right doctrine of Wheeling Bridge, held the plain-

tiffs’ contention without merit. The Hodges Court stated:

‘Tt is true that, as they contend, the private rights

of parvies which have been vested by the judgment of

31

a court cannot be taken away by subsequent legisla-

tion, but must be thereafter enforced by the court

regardless of such legislation. Pennsylvania v. Wheel-

ing Bridge Co., 18 How. 421, 429... .

THIS RULE, HOWEVER, AS HELD IN THE

WHEELING BRIDGE CASE DOES NOT APPLY

TO A SUIT BROUGHT FOR THE ENFORCEMENT

OF A PUBLIC RIGHT, WHICH, EVEN AFTER

IT HAS BEEN ESTABLISHED BY THE JUDG-

MENT OF THE COURT, MAY BE ANNULLED

BY SUBSEQUENT LEGISLATION AND SHOULD

NOT BE THEREAFTER ENFORCED... .” (Em-

phasis added).

Id., 261 U.S. at 603.

Without going into detailed analysis, the State of

North Carolina also brings to this Court’s attention United

States v. Kubrick, 444 U.S. 111, 125 (1979) (**But if we

have [misconceived the intent of Congress], or even if

we have not but Congress desires a different result, it

may exercise its prerogative to amend the statute so as to

effect its legislative will.’’); and United States v. South

Buffalo Railway Co., 333 U.S. 771, 774-775 (1948) (“* ...

when the questions are of statutory construction, not of

constitutional import, Congress can rectify our mistake,

if such it was, or change its policy at any time... .’’).

The AFDC program is a joint federal-state public

program to provide public welfare benefits. Heckler v.

Turner, 470 U.S. 184 (1985). There is no private con-

stitutional right to receive public assistance. Harris v.

McRa-, 448 U.S. 297 (1980); Dandridge v. Williams, 397

U.S. 471 (1970).

The prospective provisions of the 1971 injunction in

this case affected only an ongoing public right based upon

32

statutory grounds. It was thereby vacated as a matter

of law when the statutory grounds upon which it depend-

ed for its existence were abolished by the 1984 Act of

Congress.

C. The District Court erred in ordering the State

of North Carolina to pay retroactive benefits

to individual class members because this type

of monetary award against a State Defendant

in federal court is absolutely barred by the

Eleventh Amendment to the United States

Constitution.

The Eleventh Amendment reads:

‘“‘The Judicial power of the United States shall not

be construed to extend to any suit in law or equity,

commenced or prosecuted against one of the United

States by Citizens of another State, or by Citizens or

Subjects of any Foreign State.’’ U.S. CONSTITU-

TION, AMENDMENT XI.

As has been noted time and again, the applicable doc-

trines which surround the Eleventh Amendment do not

arise from a literal reading of the Amendment itself.

Rather they are the result of a long history of this Court’s

interpretation of the Constitutional Amendment primarily

beginning in 1890 with Hans v. Louisiana, 134 U.S. 1

(1890), continuing with Ex parte Young, 209 U.S. 123

(1908), and actively enduring until the present day. A

representative, but by no means exclusive, listing of more

recent decisions includes Employees v. Missouri Public

Health Department, 411 U.S. 279 (1973): Edelman v.

Jordan, 415 U.S. 651 (1974); Fitepatrick v. Bitzer, 427

U.S. 445 (1976) ; Milliken v. Bradley, 433 U.S. 267 (1977);

Quern v. Jordan, 440 U.S. 332 (1979); Hutto v. Finney,

437 U.S. 678 (1978) ; Pennhurst State School and Hospital

33

v. Halderman, 465 U.S. 89 (1984); Atascadero State Hos-

pital v. Scanlon, — U.S. —, 105 S.Ct. 3142 (1985); Green

v. Mansour, — U.S. —, 106 S.Ct. 423 (1985); County of

Oneida v. Oneida Indian Nation of New York, 470 U.S.

226 (1985) ; Kentucky v. Graham, — U.S. —, 105 S.Ct. 3099

(1985); Papasan v. Allain, — U.S. —, 106 S.Ct. 2932

(1986). A review of the above opinions reveals this Court’s

fundamental concern for the concept of federalism inher-

ent in our government and laws, equilibrating both state

autonomy and federal supremacy.

This Court recently reiterated its position that ‘*...

absent waiver by the State or valid congressional over-

ride, the Eleventh Amendment bars a damages action

against a State in federal court. ... This bar remains

in effect when State officials are sued for damages in

their official capacity.’’ Kentucky v. Graham, — U.S. —,

105 S.Ct. 3099, 3107 (1985).

Any Congressional ‘‘waiver’’ of a State’s Eleventh

Amendment immunity to suit must be unequivocably speci-

fied in the language of the federal statute under which

the State is brought into court. Atascadero State Hospi-

tal v. Scanlon, — U.S. —, 105 S.Ct. 3142, 3146-3148 (1985).

Although Congress has the power to abrogate Eleventh

Amendment immunity with respect to rights protected

by the Fourteenth Amendment, an ‘‘unequivocal expression

of congressional intent’’ is required. Pennhurst State

School and Hospital v. Halderman, 465 U.S. 89, 99 (1984).

Plaintiffs’ original complaint alleged that their action

arose under Title 42 U.S.C. Section 1983. (J.A. at 17).

This Court has held that 42 U.S.C. § 1983 does not override

States’ Eleventh Amendment immunity. Quern v. Jordan,

440 U.S. 332, 342 (1979). There is no congressional over-

34

ridge of a participating State’s sovereign immunity con-

tained in the federal law governing the AFDC program.

42 U.S.C. §§ 601-615; see also, Green v. Mansour, — U.S.

—, 106 S.Ct. 423 (1985).

Likewise, a State will not be deemed to have waived

its immunity unless such waiver is ‘‘unequivocal’’. Atas-

cadero State Hospital v. Scanlon, — U.S. —, 105 S.Ct. 3142,

3147 (1985). ‘*Thus, in order for a state statute or con-

stitutional provision to constitute a waiver of Eleventh

Amendment immunity, it must specify the State’s inten-

tion to subject itself to suit in federal court.’’ Id., 105

S.Ct. at 3147. This Court has refused to deem an implied

waiver to suit by a State from its mere participation,

along with receipt of federal funds, in public welfare pro-

grams. Atascadero State Hospital v. Scanlon, — U.S. —,

105 S.Ct. 3142, 3150 (1985); Edelman v. Jordan, 415 U.S.

651, 673 (1974). The State of North Carolina has en-

acted no constitutional nor statutory provisions which

would waive its Eleventh Amendment immunity to suit

in federal court. See, Dawkins v. Craig, 483 F.2d 1191

(4th Cir. 1973).

Any attempt by the district court to engraft a waiver

of the State’s Eleventh Amendment immunity because of

the prior 1971 injunction must fail. In Pennhurst State

School and Hospital v. Halderman, 465 U.S. 89, 98 (1984),

Justice Powell, writing for the majority, held that the

principle of state sovereign immunity as embodied in the

Eleventh Amendment is ‘‘a constitutional limitation on

the federal judicial power established in Art. ITI.’’ The

Pennhurst Court was faced with the application of the

Eleventh Amendment to pendent state-law claims and

dealt directly with the judicial power of a federal court

35

to decide certain claims against a state. This Court con-

cluded that the authority of the court to decide such

claims did not override the absolute bar of the State’s

sovereign immunity. In reaching its conclusion that the

Amendment removed the federal court’s jurisdiction in

Pennhurst, the Court analyzed as folows: ‘‘But pendent

jurisdiction is a JUDGE-MADE DOCTRINE inferred

from the general language of Art. III. The question pre-

sented is whether this doctrine may be viewed as dis-

placing the explicit limitation on federal jurisdiction con-

tained in the Eleventh Amendment.’’ Z7d., 465 U.S. at

117-118. (Emphasis added). The Court rejected argu-

ments that ‘‘judicial economy, convenience, and fairness

to litigants’’, i.e., consideration of judicial policy, could

‘‘override the constitutional limitation on the authority

of the federal judiciary to adjudicate suits against a

State.’’ Id., 465 U.S. at 121 and 123. It therefore logically

follows that in Gilliard v. Kirk, the authority of the fed-

eral judge in enforcing an allegedly outstanding injunc-

tion could not overbalance the absolute jurisdictional bar

of the Eleventh Amendment prohibiting the award of retro-

active damages against a sovereign state in a federal court.

A judge-made decree simply cannot abolish rights and

immunities guaranteed to the States by the United States

Constitution. ‘‘The Eleventh Amendment is an explicit

limitation of the judicial power of the United States. It

deprives a federal court of power to decide certain claims

against States that otherwise would be within the scope

of Art. III’s grant of jurisdiction. For example, if a

lawsuit against state officials under 42 U.S.C. § 1983 al-

leges a constitutional claim, the federal court is barred

from awarding damages against the state treasury even

36

though the claim arises under the Constitution.’’ Penn-

hurst State School and Hospital v. Halderman, 465 U.S.

89, 119-120 (1984). If the 1971 injunction issued by the

district court in Gilliard v. Craig were still in effect in

1984-1986, its mere presence did not confer on the district

court the jurisdictional authority to adjudicate a claim and

award retroactive damages against the State of North

Carolina. The State Defendants were absolutely entitled

to immunity from this type of relief under the Eleventh

Amendment.

The fact that a permanent injunction was entered in

1971 has no effect on the principle, consistently adhered

to by this Court, that the Eleventh Amendment bars a

federal court from the award of retroactive payment of

benefits by a State. See, Edelman v. Jordan, 415 U.S. 651

(1974). The district court below attempted to distinguish

its action from that barred in Edelman by pointing out

that in Edelman the state officials were under no court-

imposed obligation to conform to a different standard.

Gilliard v. Kirk, 633 F.Supp. 1529, 1563 (W.D.N.C. 1986).

Upon the facts of this case, this is a distinction without

a difference. This Court is very clear in its position that

a federal court cannot award retroactive damages against

a State. As was recently emphasized in Green v. Mansour,

— US. —, 106 S.Ct. 423, 426 (1985): ‘‘compensatory or

deterrence interests are insufficient to overcome the dic-

tates of the Eleventh Amendment.’’ Even where ‘‘[t]here

is a dispute about the lawfulness of respondent’s past ac-

tions, . . . the Eleventh Amendment would prohibit the

award of money damages or restitution if that dispute

were resolved in favor of petitioners.’’ Zd., 106 S.Ct. at

428.

37

The Green v. Mansour Court of course did not pro-

hibit all types of monetary relief ordered against a State.”

Such an award is proper under the Eleventh Amendment

if it is ancillary relief designed to remedy ongoing viola-

tions of federal law. As was true in the facts of Green v.

Mansour, there is not now before this Court a claimed

continuing violation of federal law nor any threat of state

officials violating the now amended statute. The district

court in Gilliard v. Kirk had no authority to order mone-

tary and notice relief against the State of North Carolina

designed to compensate the individual class members for

alleged wrongful withholding of money by the State in

the past.

An analogous factual and legal setting to Gilliard

v. Kirk was even more recently presented in Papasan v.

Allain, — U.S. —, 106 S.Ct. 2932 (1986), wherein this

Court reaffirmed the absolute bar of the Eleventh Amend-

ment in awarding retroactive damages to be paid from

a state treasury. In that case, plaintiffs brought an action

against state officials alleging, among other things, that

the sale of certain school lands and unwise investment of

the proceeds violated the State’s trust obligation estab-

lished on public school lands over 100 years ago. This

Court was faced with the question of whether the plain-

tiffs’ claims were barred by the Eleventh Amendment.

The Court based its holding on the jurisdictional bar of

the Eleventh Amendment and denied this aspect of the

plaintiffs’ claim. The Court very succinctly analyzed the

2 Although the State’s discussion of the Gilliard v. Kirk retro-

active relief centers on monetary relief, it should also be noted

that retroactive notice and declaratory relief are prohibited as

well under Green v. Mansour, — U.S. —, 106 S.Ct. 423 (1985).

38

present posture of the law -egarding the Eleventh Amend-

ment and the award of retroactive damages against a

state as follows:

‘« . . this Court long ago held that the [Eleventh]

Amendment bars suits against a State by citizens of

that same State ... ‘[I]n the absence of consent a

suit in which the State or one of its agencies or de-

partments is named as the defendant is proscribed

by the Eleventh Amendment.’ ... This bar exists

whether the relief sought is legal or equitable .. .

Ex parte Young, 209 U.S. 123 (1908), held that a suit

to enjoin as unconstitutional a state ofticial’s action

was not barred by the Amendment... [Young] does

not foreclose an Eleventh Amendment challenge where

the official action is asserted as a matter of state law

alone . . . Youna’s applicability has been tailored to

conform as precisely as possible to those specific sit-

uations in which it is ‘‘necessary to permit the fed-

eral courts to vindicate federal rights and hold state

officials responsible to ‘the supreme authority of the

United States.’ ’’... Consequently, Young HAS BEEN

FOCUSED ON CASES IN WHICH A VIOLATION

OF FEDERAL LAW BY A STATE OFFICIAL IS

ONGOING AS OPPOSED TO CASES IN WHICH

FEDERAL LAW HAS BEEN VIOLATED AT ONE

TIME OR OVER A PERIOD OF TIME IN THE

PAST, AS WELL AS ON CASES IN WHICH THE

RELIEF AGAINST THE STATE OFFICTATL DI-

RECTLY ENDS THE VIOLATION OF FEDERAL

LAW AS OPPOSED TO CASES IN WHICH THAT

RELIEF IS INTENDED INDIRECTLY TO EN-

COURAGE COMPLIANCE WITH FEDERAL LAW

THROUGH DETERRENCE OR DIRECTLY TO

MEET THIRD-PARTY INTERESTS SUCH AS

COMPENSATION. As we have noted: ‘Remedies

designed to end a continuing violation of federal law

are necessary to vindicate the federal interest in as-

suring the supremacy of that law. BUT COMPEN-

SATORY OR DETERRENCE INTERESTS ARE

eee 0 0 ene ere ee.

NS TO

39

INSUFFICIENT TO OVERCOME ‘HE DIC-

TATES OF THE ELEVENTH AMENDMENT.’ ”’

(Emphasis added).

Id., 106 S.Ct. at 2939-2940.

The Papasan opinion clearly dictates that the Gilliard

retroactive damages designed to compensate for past

wrongs are absolutely barred by the Eleventh Amendment :

“RELIEF THAT IN ESSENCE SERVES TO

COMPENSATE A PARTY INJURED IN THE

PAST BY AN ACTION OF A STATE OFFICIAL

IN HIS OFFICIAL CAPACITY THAT WAS ILLE-

GAL UNDER FEDERAL LAW IS BARRED EVEN

WHEN THE STAT*® OFFICIAL IS THE NAMED

DEFENDANT. THIS IS TRUE IF THE RELIEF

IS EXPRESSLY DENOMINATED AS DAMAGES.

See, e.g., Ford Motor Co. v. Department of Treasury

of Indiana, 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389

(1945). IT IS ALSO TRUE IF THE RELIEF IS

TANTAMOUNT TO AN AWARD OF DAMAGES

FOR A PAST VIOLATION OF FEDERAL LAW,

EVEN THOUGH STYLED AS SOMETHING ELSE.

See, e.g., Green v. Mansour, supra, 474 U.S., at —,

106 S.Ct., at —; Edelman v. Jordan, 415 U.S. 651, 664-

668, 94 S.Ct. 1347, 1356-1358, 39 L.Ed.2d 662 (1974).

On the other hand, relief that serves directly to bring

an end to a present violation of federal law is not

barred by the Eleventh Amendment even though ac-

companied by a substantial ancillary effect on the

state treasury. See, Milliken v. Bradley, 433 U.S. 267,

289-290, 97 S.Ct. 2749, 2761-2762, 53 L.Ed.2d 745

(1977); Edelman, supra, 415 U.S., Id. at 667-668, 94

S.Ct., at 1357-1358.’’ (Emphasis added).

Papasan v. Allain, — U.S. —, 106 S.Ct. at 2932, 2940

(1986).

Most significantly, the Papasan Court concluded that

the damages awarded by the lower court were barred

40

even if the land grants in question were regarded as a

breach by the defendants of a continuing legal obligation.

The petitioners in Papasan had contended that because

the State was bound by a continuing legal obligation es-

tablished in the past, they were seeking ‘‘only a prospec-

tive, injunctive remedy, permissible under Ex parte

Young.”’ Id., 106 S.Ct. at 2941. This argument was re-

jected out-of-hand by this Court as follows:

“BUT EVEN IF PETITIONERS’ LEGAL CHAR-

ACTERIZATION IS ACCEPTED, THEIR TRUST

CLAIMS ARE BARRED BY THE ELEVENTH

AMENDMENT. THE DIST. XNCTION BETWEEN

A CONTINUING OBLIGATION ON THE PART

OF THE TRUSTEE AND AN ONGOING LIA-

BILITY FOR PAST BREACH OF TRUST IS

THE SORT WE REJECTED IN EDELMAN.

ESSENTIALLY A FORMAL DISTINCTION OF

There, the Court of Appeals had upheld an award

of ‘equitable restitution’ against the state offic-

ial, requiring the payment to the plaintiff class

of ‘all AABD benefits wrongfully withheld.’ 415

U.S., at 656, 94 S.Ct., at 1352. We found, to the con-

trary, that the ‘retroactive award of monetary relief

. is in practical effect indistinguishable in many as-

pects from an award of damages against the State.’

Id. at 668, 94 S.Ct. at 1358.

THE CHARACTERIZATION IN THAT CASE

OF THE LEGAL WRONG AS THE CONTINUING

WITHHOLDING OF ACCRUED BENEFITS IS

VERY SIMILAR TO THE PETITIONERS’ CHAR-

ACTERIZATION OF THE LEGAL WRONG HERE

AS THE BREACH OF A CONTINUING OBLIGA-

TION TO COMPLY WITH THE TRUST OBLIGA-

TIONS. We discern no substantive difference between

a not-yet-extinguished liability for a past breach of

trust and the continuing obligation to meet trust re-

sponsibilities asserted by the petitioners. In both

41

cases, the trustee is required, because of the past loss

of the trust corpus, to use its own resources to take the

place of the corpus or the lost income from the corpus.

Even if the petitioners here were seeking only the pay-

ment of an amount equal to the income from the lost

corpus, such payment would be merely a substitute for

the return of the trust corpus itself. That is, con-

tinuing payment of the income from the lost corpus is

essentially equivalent in economic terms to a one-time

restoration of the lost corpus itself: It is in sub-

stance the award, as continuing income rather than

as a lump sum, of ‘‘ ‘an accrued monetary liability.’ ’’

Milliken v. Bradley, 433 U.S., at 289, 97 S.Ct., at 2762

(quoting Edelman, 415 U.S., at 664, 94 S.Ct., at 1356).

Thus, we hold that the petitioners’ trust claim, like

the claim we rejected in Edelman, may not be sus-

tained.’’ (Emphasis added).

Td., 106 S.Ct. at 2941-2942.

The above quoted excerpts from Papasan specifically

do away with the district court’s order of retroactive dam-

ages in Gilliard v. Kirk. Violation of a ‘‘continuing legal

obligation’? will not be held of sufficient injury to over-

come the Constitutional protection which a State possesses

from an award of retroactive damages to individual plain-

tiffs in a federal forum. A federal courtroom is not an

appropriate locale for adjudication of this type of claim.

The 1971 injunction in Gilliard, even if considered by this

Court to still be in effect, is not sufficient in law to over-

come the jurisdictional bar of the Eleventh Amendment

and permit the award of retroactive damages against the

State of North Carolina by a federal district court.

The State Defendants ure of course aware that, as

this Court stated in Hutto v. Finney, 437 U.S. 678, 690

(1978), ‘‘{iJn exercising their prospective powers under

42

Ex parte Young and Edelman v. Jordan, federal courts

are not reduced to issuing injunctions against state offi-

cers and hoping for compliance.’’ Ancillary remedies to

ongoing violations of federal law, such as that approved

in Millikin v. Bradley, 433 U.S. 267 (1976), are not pro-

hibited by the Eleventh Amendment. The contempt pow-

ers of the court, including the imposition of attorneys fees,

are well-established. Hutto v. Finney, 437 U.S. 678 (1978).

However, the above general language quoted from Hutto

v. Finney may not be extended to allow a lower court to

award retroactive compensatory damages against a sov-

ereign state under the guise of its contempt powers. In

Kentucky v. Graham, — U.S. —, 105 S.Ct. 3099 (1985), this

Court declined to extend the above rationale enunciated

in Hutto to the area of Eleventh Amendment jurispru-

dence. The Court stated: ‘‘Hutto holds only that, when

a State in a § 1983 action has been prevailed against for

relief on the merits, either because the State was a proper

party defendant or because State officials properly were

sued in their official capacity, fees may also be available

from the State under § 1988.’’ 7d., 105 S.Ct. at 3108. The

award of retroactive damages against a State by a federal

eourt cannot be justified by simply suing state officials

in their official capacities for supposed violation of an

injunction. See, Kentucky v. Graham, — U.S. —, 105

S.Ct. 3099 (1985). As this Court has repeatedly reaf-

firmed, in determining whether an award of ‘monetary

relief is the type of relief barred by the Eleventh Amend-

ment or permitted under Ex parte Young, the Court will

look to the substance rather than the form of the relief

sought. Edelman v. Jordan, 415 U.S. 651 (1974); Papasan

», Allain, — U.S. —, 106 S.Ct. 2932 (1986).

43

The award of retroactive benefits by the district court

below in order to compensate individual class members

for money allegedly wrongfully withheld in the past is

absolutely barred by the Eleventh Amendment to the

United States Constitution.

r

CONCLUSION

The judgment of the district court should be reversed

in its totality.

Respectfully submitted,

Lacy H. THornsurG

Attorney General

State of North Carolina

CatTHertne C. McLams

Assistant Attorney General for the

State of North Carolina