Reply Brief — Bowen v. Gilliard

No. 86-564

In The

Supreme Court of the United

October Term, 1986

fa’

Vv

DAVID T. FLAHERTY, Secretary, North Carolina

Department of Human Resources,

in his official capacity, et al.,

Appellants,

v.

BEATY MAE GILLIARD, et al.,

Appellees.

fy

Vv

On Appeal from the United States District Court

for the Western District of North Carolina

Ly.

APPELLANTS’ REPLY BRIEF TO

APPELLEES’ BRIEF ON THE MERITS

.

w

Lacy H. THornBurRG

Attorney General for the

State of North Carolina

CaTHERINE C. McLams*

Assistant Attorney General

Lemve. W. Hinton

Assistant Attorney General

N.C. DEPARTMENT

OF JUSTICE

Post Office Box 629

Raleigh, North Carolina 27602

(919) 733-4618

Attorneys for Appellants

*Counsel of Record

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

or call collect (402) 342-2831

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES |...

ARGUMENT TI:

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

VIOLATE THE FIFTH AND FOURTEENTH

AMENDMENTS TO THE UNITED STATES

CONSTITUTION

ARGUMENT IIL:

THE DISTRICT COURT ERRED IN ORDER-

ING THE STATE DEFENDANTS TO MAKE

RETROACTIVE PAYMENTS TO THE INDI-

VIDUAL CLASS MEMBERS

CONCLUSION

14

il

TABLE OF AUTHORITIES

Page

Cases ;

Alamance County Hospital v. Neighbors, 315 N.C.

365, 338 S.E.2d 87 (1986) ...... 3

Atascadero State Hospital v. Scanlon, 473 U.S. 234

(1985) —

Brake v. Mills, 270 N.C. 441, 154 S.E.2d 526 (1967) 13

Cartrette v. Cartrette, 73 N.C. App. 169, 325

S.E.2d 671 (1985) ............ 6, 14

Cheff v. Schnackenberg, 384 U.S. 373 (1966) 20

Cox v. Cox, 44 N.C. App. 339, 260 S.E.2d 812 (1979) ...5, 14

Edelman v. Jordan, 415 U.S. 651 (1974) ... 16

Gilliard v. Craig, 331 F. Supp. 587 (W.D.N.C. 1971) ...... 17

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

A a mr passim

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

Ee Oe 11,13

Gunn v. University Committee, 399 U.S. 383 (1970) _.... 17

Heckler v. Turner, 470 U.S. 184 (1985) 20, 19

Hutto v. Finney, 437 U.S. 678 (1978) 20

Johnson v. Johnson, 14 N.C. App. 378, 188 S.E.

I i a cent dasse dita imnidemenliiendiien 3

Jolly v. Wright, 300 N.C. 83, 265 S.E.2d 135 (1980) —. 14

Lackey v. Department of Human Resources, 306

NC. 21, 93 SES 171 (1863) ——__ __. 10, 19

Layton v. Layton, 263 N.C. 453, 139 S.E.2d 732 (1965) = 3

Lee v. Coffield, 245 N.C. 570, 96 S.E.2d 726 (1957) .... 3

Local 28 of Sheet Metal Workers v. E.E.O.C.,

— US. —, 106 8.Ct. 3019 (1966) _$___.. 20

——

TABLE OF AUTHORITIES—Continued

Page

Martin v. Martin, 35 N.C. App. 610, 242 S.E.2d

393, cert. denied, 295 N.C. 261, 245 S.E.2d 778

(1978) . + Ae ERSTE ALN ANA eo 4

Milliken v. Bradley, 433 U.S. 267 (1977) ccccccccccccccesneme 19

Pace v. Pace, 244 N.C. 698, 94 S.E.2d 819 (1956) .......... 2

Papasan v. Allain, — U.S. —, 106 S.Ct. 2932 (1986) ..16, 20

Parham v. J.RB., 442 U.S. 584 (1979) ccc cccscssesseenesnee 12

Parker v. Moore, 263 N.C. 89, 128 S.E.2d 821 (1964) ..... 3

Pasadena City Board of Education v. Spangler,

Tee ein 16

Pennhurst State School & Hospital v. Halderman,

SIE 18

Pickelsimer v. Critcher, 210 N.C. 779, 188 S.E. 313

a __scsmieelniuaesibabntseleinantnenaeenenm 4

Plott v. Plott, 313 N.C. 63, 326 S.E.2d 863 (1985) .......... 11

Rhodes v. Henderson, 14 N.C. App. 404, 188 S.E.2d

SEES iC 13

Sanders v. Sanders, 167 N.C. 319, 83 S.E. 490 (1914) ..... 11

Schmidt v. Lessard, 414 U.S. 473 (1974) 17

Small v. Morrison, 185 N.C. 577, 118 S.E. 12 (1923) ....... 13

State ex rel. Crews v. Pender County Child Support

Enforcement Agency v. Parker, — N.C. —, —

S.E.2d — (No. 549PA86; April 7, 1987) .....6, 7, 12, 14, 19

_ Tidwell v. Booker, 290 N.C. 98, 225 S.E.2d 816 (1976) .. 11

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

CEE ERS SS se 11

United States v. United Mine Workers of America,

IS 16

iv

TABLE OF AUTHORITIES—Continued

Page

Walker v. City of Birmingham, 338 U.S. 307 (1967) . 16

Wilkes County v. Gentry, 311 N.C. 580, 319 S.E.

£8 ere sacibeiichinasiinateialll 8, 11,14

Wyman v. James, 400 U.S. 309 (197D) nnn neeeeneenennnenenenen 12

Zande v. Zande, 3 N.C. App. 149, 164 S.H.2d

523 (1968) 13

STATUTES

NI Gh III Snsecsernssnssstnvmeiciinteal nachna 2,4,7,8

N.C.G.8. § 50-13.4(b) ...................- sateiltcilnstaaad jaa talon 11

Teeter rectriee 8

I I a cseaeiasasasicnn dv 4

N.C.G.S. § 50-13.5 (0) (1) eccecceeccsne S nesannensaabuanicidleaaaiiale 3

EE SE DEEL OTRAS 9,19

a atc na 9, 10, 19

N.O.G.S. § 108A-B1 on BEIM SAN Mam Pan 9,10, 19

AT TOO IT 13

I Se oS cealnalioambinnheanticaes ike 9

I a ahd lect leeelinlbsaneminiiben a

UO cecal adele’ 5, 7, 8,11

I aa iia 9

N.C.G.S. § 110-141

42 U.S.C. § 602(a) (26) (A) ............... sicastidieabeiileaaniesaCaaiai a ae

Vv

TABLE OF AUTHORITIES—Continued

Pages

42 U.S.C. (Supp. III) § 602(a) (38) 1, 8, 12, 14, 15, 18, 19, 20

42 U.S.C. § 657 (D) (1) ccncececeeeevnerennee 12

42 U.S.C. (& Supp. II) 1396a(a)(10)(A)(i)(1)) ......... 14

CONSTITUTIONAL PROVISION

Eleventh Amendment, United States Constitution ......15, 17

ARGUMENT I

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

THE FIFTH AND FOURTEENTH AMENDMENTS TO

THE UNITED STATES CONSTITUTION

Although the State appellants firmly believe that the

district court in Gilliard v. Kirk' ,633 F.Supp. 1529

(W.D.N.C. 1986) was in error in many aspects of its opin-

ion, the State is in accord with the court’s conclusion that

the State of North Carolina had indeed properly inter-

preted 42 U.S.C. (Supp.III) § 602(a)(38) by requiring

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

to be included as a family resource. /d. at 1543. For rea-

sons more fully stated in the Reply Brief of the federal

appellants, that portion of the Gilliard opinion should be

upheld.

However, the district court then held that the amended

statute worked an unconstitutional taking of private prop-

erty, in the ferm of child support, based upon its erroneous

interpretation of North Carolina child support laws. Gul-

liard v. Kirk, 633 F.Supp. 1529, 1548-1549 (W.D.N.C.

1986). This intrinsic error in the district court’s overly

simplified reading of this area of North Carolina law is

perpetuated throughout the Brief for the Appellees (as

well as in the various amicus briefs) filed with this Court.

In North Carolina, ‘‘child support’’ is not termed a

property right but is an obligation of a parent to support

his or her minor child. This personal duty to support is

enforceable on behalf of the child and cannot be abrogated

or contracted away as long as the status of parent and

minor child endures. ‘This State’s courts and legislature

recognize that not only should this obligation be enforced

for the child’s benefit, but also that the person having cus-

tody of and responsibility for the child should be permitted

flexibility in determining what is in the child’s best inter-

t Effective April 8, 1987, David T. Flaherty, became the Sec-

retary of the North Carolina Department of Human Re-

sources. Appropriate caption changes have been made

in this Court.

1

2

ests and for his benefit. Therefore, both North Carolina

statutes and case law specifically permit the custodial

parent to assign the right to enforce a child support obli-

gation in order to accept public assistance. Where, as a

condition of eligibility, a public assistance program re-

quires an assignment of the right to support, the custodian

may weigh this requirement against the custodian’s deter-

mination of what is in the child’s best interest in deciding

whether to voluntarily participate in the program. If the

custodian elects to participate in the program by fulfilling

the eligibility requirements, there has been no ‘‘taking”’

of property by the State or Federal governments. Rather,

the custodian has made a voluntary assignment which is

authorized and validated under North Carolina law.

The following detailed analysis of North Carolina law

regarding child support in general, as well as the State’s

AFDC program, reveals the inherent fallacy of the dis-

trict court’s ruling.

It is the public policy of the State of North Carolina

that parents must support their children. Pace v. Pace,

244 N.C. 698, 94 S.E. 2d 819 (1956). The State’s child sup-

port statute is basically codified at N.C.G.S. § 50-13.4. This

statute sets out a procedure to enforce child support obli-

gations in which the father and mother are primarily liable

for the support of the minor child, payments are to be

ordered to meet the reasonable needs of the child, and pay-

ments are to be paid to the custodian of the child for its

benefit. It should be noted that although appellees argue

throughout their brief (examples at pp. 19, 65, 68, 71)

that the only focus should be placed on the child support

funds themselves as constituting ‘‘private property’’ of

the child, this proposition is not supported by the case law

of this State. In North Carolina the primary emphasis is

placed upon the child’s right to enforce the support obliga-

tion of the parent. ‘‘ ‘The relationship of parent and child

is a status, and not a property right.’ ... The common law

obligation of a father to support his child is not ‘a debt’ in

the legal sense, but an obligation imposed by law... . It is

3

not a property right of the child but is a personal duty of

the father which is terminated by his death.’’ Layton v.

Layton, 263 N.C. 453, 456, 139 S.E. 2d 732, 734 (1965).?

The Supreme Court of North Carolina has recently re-

emphasized the nature of this State’s child support laws

as being in the form of the obligation of the parent to sup-

port his child. In Alamance County Hospital v. Neighbors,

315 N.C. 365, 367, 338 S.E.2d 87, 89 (1986), the Court

stated: ‘‘The father’s duty of support is not a debt but

an obligation imposed by law which arises from his status

as father. A father cannot contract away or transfer to

another his responsibility to support his children.’’

N.C.G.S. § 50-13.5(¢)(1) provides that ‘‘The jurisdic-

tion of the courts of this State to enter orders providing

for the support of a minor child shall be as in actions or

proceedings for the payment of money or the transfer of

property.’’ This subsection (c)(1) has been determined

by our State court to mean that an action for child support

is in the nature of an action to enforce a civil obligation

and is in personam in nature. Johnson v. Johnson, 14 N.C.

App. 378, 188 S.E.2d 711 (1972). ‘hus, North Carolina

views child support actions as being the enforcement of

the obligation of the parent to support his or her minor

child.

North Carolina courts do recognize that in certain in-

stances a child may have an exclusive private property

right. For example, in Parker v. Moore, 263 N.C. 89, 138

S.E.2d 821 (1964), the North Carolina court held that the

parents of a minor had no right to divert the proceeds of a

life insurance policy payable to the minor. Indeed, before

any part of a minor’s separate estate may be used for his

support, it must be shown that the responsible parent

lacked the ability to provide the necessary support. Lee v.

Coffield, 245 N.C. 570, 96 S.E.2d 726 (1957). The obliga-

tion of the parent to support his minor child is paramount,

7 Parents may obligate themselves to support a child beyond

death or past majority by consent judgment or contract. /d.

4

‘‘\hether the child has property or not.’’ Pickelsimer v.

Critcher, 210 N.C. 779, 780, 188 S.E. 313 (1936). Again,

in the area of child support, the child’s right to enforce the

obligation of parental support is viewed as a right distinct

from the child’s exclusive property right in certain forms

of tangible goods or money.

Appellees’ arguments throughout their brief, which

center on the illegality of the diversion of specific child

support money from one child to another, ignore the reali-

ties of life as well as the underlying rationale of North

Carolina law. By focusing on the obligation of a parent to

support his minor child rather than the explicit accounting

of funds, practical realities of family life can be accommo-

dated. For instance, in North Carolina, possession of the

home may be awarded as part of child support. N.C.G.S.

§ 50-13.4(e) ; Martin v. Martin, 35 N.C. App 610, 242 S.E.

2d 393, cert. denied, 295 N.C. 261, 245 S.E.2d 778 (1978).

In such an instance would any rational judge order that

half-brothers or sisters be banished from the home because

the minor child’s support was being diverted to them?

Such an absurd result is avoided because the non-custodial

parent’s obligation to support his or her child is legally

fulfilled by the support order, irrespective of whether other

children may derive incidental benefit. Although in practi-

cal terms the other children are benefiting from the sup-

port order, in law the parent is only fulfilling his legal obli-

gation to support his or her minor child. Once the support

obligation is enforced, it is within the discretion of the

custodial parent to determine in the interests of the child

exactly what would best benefit the child. See, N.C.G.S.

§ 50-13.4 and discussion infra.

42 U.S.C. § 602(a)(26)(A), enacte? m 1975, requires

AFDC applicants as a condition of eligibility to assign

to the State any accrued right to child support. The States

must administer their AFDC programs pursuant to plans

which conform to applicable federal statutes and regula-

tions. Heckler v. Turner, 470 U.S. 184 (1985). In con-

formity with federal law, North Carolina enacted in 1975 a

5

statute which mandates the assignment of child support

upon acceptance of public assistance by a dependent child.

This statute is codified at N.C.G.S. § 110-137.

‘*$ 110-137. Acceptance of public assistance consti-

tutes assignment of support rights to the

State or county.

By accepting public assistance for or on behalf of

a dependent 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.

The State or county shall be subrogated to the right

of the child or children or the person having custody

to initiate a support action under this Article and to

recover any payments ordered by the court of this or

any other state. (1975, ¢. 827, s. 1; 1977, 2nd Sess., ¢.

1186, s. 13.)’’ See also, N.C.G.S. § 110-135 (J.S. at

A-167 to A-168).

The validity and binding effect of the assignment provi-

sions of this North Carolina statute have been recognized

many times by our courts.

813

In Cox v. Cox, 44 N.C. App. 339, 341, 260 S.E.2d 812,

(1979), the Court stated the following:

‘‘Under the law of North Carolina, when the

people, through the state, provide support for minor

children by AFDC, there arises a debt owed to the

state by any parent obligated to support such minor

children. N.C. Gen. Stat. 110-135. The county attorney

shall represent the state in proceedings to collect such

debts. N.C. Gen. Stat. 110-135. The recipient of such

public assistance for minor children shall be deemed

to have made an assignment to the state of the right to

any child support, up to the amount of public assist-

ance received. The state is subrogated to the right

of the person having custody of such children te re-

cover any payments ordered by the courts of this state.

N.C. Gen. Stat. 110-137.”’

6

In Cartrette v. Cartrette, 73 N.C. App. 169, 170-171,

325 S.E.2d 671, 673 (1985), the Court upheld the controlling

provisions of the State’s assignment statute. In constru-

ing a consent judgment lacking child support provisions,

the Court held that modification was necessary due to the

later receipt of public assistance by the minor child. The

court stated:

‘¢ |. The law provides for the modification of

child support orders, upon a showing of changed cir-

cumstances, to provide for the financial support of de-

pendent children. A parent cannot contract away-his

or her obligation to support dependent children, nor

can a parent by contract diminish the rights of the

State or a county under G.S. 110-135., et.seq.’’ (Em-

phasis added).

Recently, in State ex rel. Crews v. Pender Co, Child

Support Enforcement Agency v. Parker, — N.C. —, —

S.E.2d —(No. 549PA86; April 7, 1987), the North Carolina

Supreme Court analyzed this area of North Carolina law,

emphasizing the requirement that the state laws must stay

in conformity with federal law and regulations. In this

action, the appellate court allowed Mrs. Crews to intervene

in an action for child support brought against the minor

child’s father by the State of North Carolina. Mrs. Crews’

intervention was allowed upon her allegation that the

State had failed to assist her in obtaining compensation

from the child’s father for amounts she had spent to sup-

port the child before she began receiving public assistance.

In its examination of North Carolina’s assignment statute

and its interrelation with federal law, the Court stated:

‘Title IV of the Social Security Act establishes

AFDC and sets forth requirements that the states

must meet under the Federal Child Support Enforce-

ment Program. 42 U.S.C. §§ 601-615, 651-665 (1983 &

Cum. Supp. 1986). In order to receive federal AFDC

funding, a state must submit its public assistance plan

for approval. 42 U.S.C. § 601 (1983). This plan must

provide, inter alia, that recipients of assistance

7

assign the State any rights to support from any

other person such applicant may have (i) in his

own behalf or in behalf of any other family mem-

ber for whom the applicant is applying for or

receiving aid, and (ii) which have accrued at the

time such assignment is executed.

42 U.S.C. § 602(a)(26)(A) (Cum. Supp. 1986) ; see also

45 C.PLR. § 232.11(a) (1986).

The Crews court held that under N.C.G.S. § 110-137, in

compliance with federal law, the assignment of child sup-

port is made only up to the amount of public assistance

received. This is of course the literal reading of N.C.G.S.

§ 110-137 and comports with the policies and procedures

of the North Carolina AFDC program.? The North Caro-

lina Supreme Court in Crews sanctioned the authority and

discretion of the child’s custodian to participate in the

State’s AFDC program and comply with its assignment

requirements as a condition of eligibility.

The appellees apparently would have this Court be-

lieve that the whole of North Carolina law regarding the

support of minor children rests solely in Chapter 50 of

the North Carolina General Statutes, centering primarily

in N.C.G.S. § 50-13.4. In the language of subsection (d) of

§ 50-13.4 lies appellees’ primary argument: the contention

that a statutory requirement that a parent assign child

support rights to the State is contrary to state law, because

it could not be for the sole ‘‘benefit of such child.’’ (Ap-

pellees’ Brief, pages 17, 92). However, appellees over-

look the essential fact that the basic foundation of North

3 Ifa family receives income in the form of child support

which was in excess of the payment standard for their

family unit, the family would not be initially eligible for

AFDC and the assignment provisions would never come

into effect. In the case of a family already participating

in the AFDC pregram who later received child support in

excess of the payment standard, the family unit would be-

come ineligible for AFDC assistance because the family’s

income level would then be in excess of the payment

standard. (J.A. at pp. 41-53, 76-91).

8

Carolina child support laws, i.e., the ‘‘obligation’’ of a

parent to support his or her minor child, is not affected by

the enactment of 42 U.S.C. (Supp.III) 602(a)(38). Ap-

pellees’ contention that ‘‘(t)he inescapable effect of the

disputed HHS regulations is to strip state judges of the

power to direct an award of child support to a child

who happens to reside with siblings on AFDC’’ is

simply untrue. (Appellees’ brief, page 59). State

courts are still legally obligated to set child support

payments owed by a supporting parent in accordance with

the reasonable needs of the child. This continuing judicial

requirement was amply illustrated in Wilkes County v.

Geniry, 311 N.C. 580, 319 S.E.2d 224 (1984). In this case

the County Department of Social Services instituted an

action to recover past public assistance paid on behalf of

defendant’s minor child and to secure an order for future

child support. The North Carolina Supreme Court held

that the defendant as a responsible parent was liable for

the amount of past public assistance paid. It then re-

manded the case for a determination of the reasonable

needs of the minor child and the ability of the father to pay

them in accordance with N.C.G.S. § 50-13.4(b) and (c). The

assignment provisions of North Carolina public assistance

law in no way affected the obligation of the parent to sup-

port his or her minor child. The amount of child support

would still be determined in accordance with N.C.G.S.

§ 50-13.4. The amount ordered would then be assigned to

the State in compliance with eligibility requirements of

the AFDC program and pursuant to N.C.G.S. § 110-137.

Appellees’ analysis, which focuses solely on Chapter

50, ignores completely the State’s Child Welfare laws as

contained in Chapter 110 of the North Carolina General

Statutes. Article 9, Child Support, sets out a comprehen-

sive scheme for the enforcement of child support laws in

the State of North Carolina. Sections of Chapter 110

which are important to the State’s argument, in addition

to § 110-137, are as follows:

§ 110-128. Purposes.

The purposes of this Article are to provide for the

financial support of dependent children; to enforce

spousal support when a child support order is being

enforced; to provide that public assistance paid to de-

pendent children is a supplement to the support re-

quired to be provided by the responsible parent; to

provide that the payment of public assistance creates

a debt to the State; to provide that the acceptance of

public assistance operates as an assignment of the right

to child support; to provide for the location of absent

parents; to provide for a determination that a respon-

sible parent is able to support his children; and to pro-

vide for enforcement of the responsible parent’s obli-

gation to furnish support and to provide for the estab-

lishment and administration of a program of child

support enforcement in North Carolina.

§ 110-140. Conformity with federal requirements. —

Nothing in this article is intended to con-

flict with any provision of federal law or

to result in the loss of federal funds.

§ 110-141. Effectuation of intent of Article.

The North Carolina Department of Human Re-

sources shall supervise the administration of this pro-

gram in accordance with federal law and shall cause

the provisions of this Article to be effectuated and to

secure child support from absent, deserting, abandon-

ing and nonsupporting parents.

Chapter 108A of the General Statutes, entitled Social

Services, provides for the establishment and supervision

of the AFDC program in North Carolina in Article 2,

Part 2. N.C.G.S. 108A-25, 108A-27, 108A-31 provide as

follows:

§ 108A-25. Creation of programs.

(a) The following programs of public assistance

are hereby established, and shall be administered by

the county department of social services or the De-

partment of Human Resources under federal regula-

tions or under rules and regulations adopted by the

10

Social Services Commission and under the supervision

of the Department of Human Resources:

(1) Aid to families with dependent children ;

(c) The Department of Human Resources is

hereby authorized to accept all grants-in-aid for pro-

grams of public assistance which may be available to

the State by the federal government. The provisions

of this Article shall be liberally construed in order that

the State and its citizens may benefit fully from such

grants-in-aid.

§ 108A-27. Authorization of Aid to Families with De-

pendent Children Program.

The Department is authorized to establish and

supervise an Aid to Families with Dependent Children

Program. This program is to be administered by

county departments of social services under federal

regulations and rules and regulations of the Social

Services Commission.

§ 108A-31. Application for assistance.

Any person or his representative who believes that

he or another person is eligible to receive aid to fam-

ilies with dependent children may apply for assist-

ance to the county department of social services in

the county in which the applicant resides. It shall be

made in such form and shall contain such information

as the Social Services Commission and federal reg-

ulations may require.

Thus, it is clear from a reading of the entire body of

law pertinent to this argument that the child support laws

of North Carolina are in no way violated by the federal

law. Indeed, the law of the State in this area is that

North Carolina must be in accord with federal law. C/.,

Lackey v. Department of Human Resources, 306 N.C. 231,

293 S.E.2d 171 (1982) (Medicaid regulations). Hence

appears the consistent reiteration in the above-quoted

statutes that child support programs and the AFDC pro-

gram are to be administered in conformity with federal

law.

11

North Carolina has legislated by statute and approved

by case law the principle that a custodian of a minor child

may act in its best interests by assigning the child’s right

to support in order to receive public assistance. At com-

mon law, the duty of a parent to support his child was

well recognized. Sanders v. Sanders, 167 N.C. 319, 83

S.E. 490 (1914). At common law, as well as under prior

North Carolina statute, this duty was placed primarily

on the father. N.C.G.S. § 50-13.4(b); Tidwell v. Booker,

290 N.C. 98, 225 S.E.2d 816 (1976). However, legislative

enactments can of course alter the common law as well as

former statutory law. Thus, in 1981, North Carolina

amended the child support statute, N.C.G.S. § 50-13.4(b),

to change prior decisions and statute by making both the

father and mother primarily liable for the support of

their children in the absence of pleading and proof that

the circumstances otherwise warrant. Plott wv. Plott, 313

N.C. 63, 326 S.E.2d 863 (1985). The 1962 and 1967 deci-

sions, relied upon by the district judge in Gilliard to sup-

port his holding that the mother may not legally assign

the right to enforce child support to the State because it

is the exclusive property of the child, were Goodyear v.

Goodyear, 257 N.C. 374, 126 S8.E.2d 113 (1962) and Tyndall

v. Tyndall, 270 N.C. 106, 153 S.E.2d 819 (1967). However,

in 1975 the North Carolina legislature enacted N.C.G.S.

§ 110-137. The enactment of this statute makes it very

clear that under North Carolina law a custodial parent

may indeed assign the right to enforce a child support

obligation in order to receive public assistance. This was

precisely the situation presented in Wilkes County v.

Gentry, 311 N.C. 580, 319 S.E.2d 224 (1984) and other

eases construing N.C.G.S. 110-137 cited throughout this

reply brief. To the extent that Goodyear and Tyndall may

be read to reach the conclusion of the district court (a con-

clusion Defendants contend is far too restrictive and in

error), the validity of the lower court’s decision cannot

be upheld in view of the later statutory enactments and

court opinions. No North Carolina appellate cases have

been decided upon facts other than the assignment of

12

child support in a family which did not include half-sib-

lings. Although 42 U.S.C. (Supp.I11) § 602(a) (38) has not

been placed in issue before our appellate courts, all of

the opinions which review the assignment provisions con-

sistently emphasize that under state statutes and federal

law, the public assistance programs of North Carolina

must be administered in conformity with federal law.‘

Thus, the district court’s analysis in Gilliard has not been

the law of the State of North Carolina for at least a dozen

years.

Notwithstanding the statutory law of North Carolina,

appellees seem to argue that the inclusion of a child receiv-

ing child support into the AFDC standard filing unit, as

required by 42 U.S.C. (Supp. LI) § 602(a)(38), is not in

the child’s best interests as a matter of law. This argu-

ment of course completely eviscerates any discretion of

the custodial parent in determining exactly what would

best benefit his or her minor child. This Court has rec-

ognized that the exercise of parental discretion in decisions

is often not easy: ‘‘The law’s concept of the family rests

on a presumption that parents possess what a child lacks in

maturity, experience, and capacity for judgment required

for making life’s difficult decisions .... (and there exists)

the traditional presumption that the parents act in the

best interests of their child... .’’ Parham v. J.R., 442

U.S. 584, 602-604 (1979) (voluntary commitment of a

minor). Participation in the AFDC program is a volun-

tary choice on the part of a parent of an eligible child(ren).

Wyman v. James, 400 U.S. 309 (1971). North Carolina

courts have recognized that money, although an important

factor in life, is not the sole determinative of what is

best for a child. ‘‘There are some things that are worth

4 Indeed State ex rel. Crews v. Pender Co. Child Support

Enforcement Agency v. Parker, — N.C. —, — S.E.2d —

(No. 549PA86; April 7, 1987), points out the application

of 42 U.S.C. §657(b)(1) to the State assignment statutes.

This statute was passed as a companion statute to 42 U.S.C.

§ 602(a)(38) as part of the 1984 DEFRA legislation. (Brief

for the Federal Appellant, p. 14).

13

more than money. One of these is the peace of the fire-

side and the contentment of the home... .’’ Small v. Mor-

rison, 185 N.C. 577, 585, 118 S.E. 12, 16 (1923). In ecus-

tody matters, North Carolina courts have consistently rec-

ognized that the best interests of the child may not nec-

essarily coincide with living with the person who possesses

the most money. See, Brake v. Mills, 270 N.C. 441, 154

S.E.2d 526 (1967); Rhodes v. Henderson, 14 N.C. App.

404, 188 §.E.2d 565 (1972). In this State, absent abuse

or neglect, it is the custodiai parent who possesses the

discretion to determine what is in the best interests of

the minor child. See, Zande v. Zande, 3 N.C. App. 149, 164

S.E.2d 523 (1968). In Goodyear v. Goodyear, 257 N.C.

374, 379, 126 S.E.2d 113, 117 (1962), the court quoted with

approval the following language: ‘‘‘[The mother] was

merely the custodian of the funds with the right and duty

to use them as provided in the decree. Having the chil-

dren under her custody, care, and control, she is the one

best situated and best fitted to know what is needed and

best for them. In this she mey use a sound discretion.’ ”’

(Emphasis added). Appellees’ argument (Appellees’

brief, page 86), that the child has not consented to the

assignment of his right to enforce his parents’ support

obligation, ignores the legal fact that a minor cannot give

such consent. N.C.G.S. § 110-44.1. Certainly, a custodial

parent could determine in his or her sound judgment that

it would be in the best interests of the child to participate

in the AFDC program, thereby assigning the right to

enforce a child support obligation, because (1) a steady

source of AFDC income would be received instead of

erratic or unpaid child support,’ (2) the child would be

5 In the period from October 1, 1984 through June 30, 1985,

in both AFDC and Non-AFDC cases, an average of approxi-

mately 30°/o of individuals obligated to make child support

payments oy an amount sufficient to equal or exceed

their monthly support obligations, approximately 18°/o paid

an amount less than their monthly obligations, and approxi-

mately 52°%/o paid no support within any given month.

(Affidavit of Dan Miles, J.A. at p. 92).

14

automatically entitled to receive free medical care under

the Medicaid program as a result of inclusion in the

AFDC filing unit (see 42 U.S.C. (& Supp. II) 1396(a)

(10)(A)(i)(1)), and (3) the standard of living of the

family in which the child lives would be enhanced. A\l-

though the decision to participate or not participate in

the AFDC program may be a difficult one, it is a voluntary

decision which rests within the discretion of the custodial

parent. An assignment of the right to enforce a child

support obligation in order to receive public assistance

can indeed be in the best interests and ‘‘benefit’’ the minor

child, in accordance with the statutes and case law of the

State of North Carolina.

The assignment provisions of the federal law, as in-

corporated into North Carolina law by statute, have re-

peatedly been sustained and enforced by the appellate

courts of this State. State ex rel. Crews v. Pender Co.

Child Support Enforcement Agency v. Parker, — N.C.

—, — §.E.2d — (No. 549PA-86; April 7, 1987); Wilkes

County v. Gentry, 311 N.C. 580, 319 S.E.2d 224 (1984);

Cartrette v. Cartrette, 73 N.C. App. 169, 325 S.E.2d 671

(1985); Cox v. Cox, 44 N.C. App. 339, 260 S.E.2d 812

(1979); see also, Jolly v. Wright, 300 N.C. 83, 265 S.E.2d

135 (1980). Appellees’ arguments, if upheld by this Court,

would not only affect 42 U.S.C. (Supp. IIT) § 602(a) (38),

but would essentially alter or nullify the comprehensive

child support system established by federal and state law.

ARGUMENT II

THE DISTRICT COURT ERRED IN ORDERING

THE STATE DEFENDANTS TO MAKE RETROAC-

TIVE PAYMENTS TO THE INDIVIDUAL CLASS

MEMBERS.

In its Final Order, filed July 3, 1986, the district

court ordered ‘‘Prospective Relief’’ in the form of an

injunction prohibiting the implementation of 42 U.S.C.

15

(Supp.III) § 602(a)(38). (J.S. at A-123). The court then

ordered ‘‘Retroactive Relief’’ in the form of payment to

individual class members of past benefits they had been

denied because of the implementation of 42 U.S.C. (Supp.

IIT) § 602(a)(38). (J.S. at A-!24). Retroactive notice

relief was also ordered by the court. (J.S. at A-124 to

127). Throughout this portion of the order the district

court consistently refers to ‘‘retroactive payment’’ (J.S.

at A-124) and ‘‘retroactive benefit(s)’’. (J.S. at A-125

to 127). The opinion of the Court, dated May 7, 1986,

of course makes it very clear that the district judge was

ordering the state defendants to pay ‘‘retroactive benefits’’

to the individual class members. Gilliard v. Kirk, 633

F.Supp. 1529, 1563-1564 (W.D.N.C. 1986). As more fully

explained in the State’s Brief on the Merits (pp. 32-42),

this type of award by a federal court is absolutely barred

by the Eleventh Amendment to the Constitution of the

United States. There has been no unequivocal expression

of congressional intent to waive the State’s Eleventh

Amendment iunmunity in this case. See, Atascadero State

Hospital v. Scanlon, 473 U.S. 234 (1985). There is no

statute nor constitutional provision enacted by the State

of North Carolina which would waive its Eleventh Amend-

ment immunity to suit in federal court.® Id.

¢ In their Brief, appellees express their view that the State

appellants agreed to “return all funds improperly seized

or withheld” in a Memorandum of Law in Support of Stay

Pending Appeal (Appellees’ brief, p. 122, n.20) and that

state officials “expressly acknowledged .. . that they could

be required to return the disputed child support funds’

if later determined to be improperly withheld, citing a

Memorandum submitted to the district court by the State

concerning the Eleventh Amendment. (Appellees’ brief,

pp. 139-140). Of course, these alleged statements in a

Memorandum fall far short of the unequivocal waiver by

a State of its Eleventh Amendment immunity in a specific

statute or constitutional provision as required under

Atascadero. Furthermore, the State has never conceded

that retroactive benefits could be awarded by the district

(Continued on following page)

16

The district court ordered retroactive payments in

Gilliard because ‘‘the state defendants did not seek relief

from the provisions of the original injunction by formal

motion until after plaintiffs filed for further relief... .’’

Gilliard v. Kirk, 633 F.Supp. 1529, 1564 (W.D.N.C. 1986).

The court cited authority from this Court for its order

of retroactive payments as follows: Pasadena City Board

of Education v. Spangler, 427 U.S. 424 (1976); Walker

v. City of Birmingham, 388 U.S. 307 (1967); and United

States v. United Mine Workers of America, 330 U.S. 258

(1947). These cases are inapposite because they deal

solely with the contempt powers of a federal court when

presented with a violation of its orders. They simply do

not address the question of an award of retroactive dam-

ages against a sovereign state. Federal courts may not

award retroactive compensatory damages against a sov-

ereign state under the guise of its contempt powers. See,

Papasan v. Allain, — U.S. —, 106 S.Ct. 2932 (1986) ; Edel-

man v. Jordan, 415 U.S. 651 (1974). Retroactive relief

cannot be ordered by a federal court against a state ‘‘if

the relief is tantamount to an award of damages for a past

violation of federal law, even though styled as something

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

(1986). The district court in Gilliard did not hold the

(Continued from previous page)

court. On September 9, 1985, the State filed a motion “to

dismiss the plaintiffs’ claims for retroactive payments” .. .

“on the grounds that these claims are barred by the Elev-

enth Amendment to the United States Constitution.” (J.A.

at p. 98). The Memorandum filed that same day was explicit

that an order of retroactive damages was barred by the

Eleventh Amendment. Similiarly, in its Memorandum in

Support of a Stay, the State referred solely to the restora-

tion of the “rights to receive AFDC” in the sentence quoted

by the appellees in their brief. Indeed, an entire section

in this Memorandum is devoted to the district court’s error

in its award of retroactive payments. These erroneous

statements by the Appellees’ concerning the State’s posi-

tion on the award of retroactive benefits is totally unfound-

ed and should be disregarded by this Court.

17

State Defendants in contempt, but instead awarded retro-

active damages for the alleged violation of its injunction.

This order was barred by the Eleventh Amendment to

the United States Constitution.

Furthermore, the district court could not legally

hold the State of North Carolina in contempt because the

1971 injunction was never violated. Appellees suggest to

this Court that the 1971 injunction should be read in a

vacuum, disregarding the opinion in Gilliard v. Craig, 331

F.Supp. 587 (W.D.N.C. 1971). (Appellees’ Brief at pp.

127). This novel theory would directly contradict well-

established principles holding that ‘‘(s)inee an injunctive

order prohibits conduct under threat of judicial punish-

ment, basic fairness requires that those enjoined receive

explicit notice of precisely what conduct is outlawed.’’

Schmidt v. Lessard, 414 U.S. 473, 476 (1974). In order

to ascertain exactly what conduct was prohibited, it was

absolutely necessary that state officials read the injunction

and opinion together in an effort to understand the

meaning of the injunction itself. See, Gunn v. University

Committee, 399 U.S. 383 (1970). As discussed more fully

in the State’s Brief on the Merits (pp. 17-24), the opin-

ion in Gilliard v. Craig prohibited, by injunction, conduct

which was illegal under the Social Security Act as written

in 1971. This statutory basis for the injunction was later

eonfirmed by the judge who issued the injunction in his

Order denying the State’s motion for a three-judge court

(J.S. at A-115 through A-120) and in his opinion in Gilliard

v. Kirk, 633 F.Supp. 1529, 1543 (W.D.N.C. 1986). Indeed,

the court’s reasoning in Gilliard v. Kirk is internally in-

consistent in that (1) it acknowledges that the 1971 in-

junction was issued when the court invalidated the State’s

AFDC policy because it ‘‘violated the intent of the Social

Security Act as then written’’, a statutory basis, and (2)

then holds that the 1971 injunction was violated when the

State altered its policy to conform with the intent of the

malas (il

18

Social Security Act as amended in 1984. Gilliard v. Kirk,

633 F.Supp. 1529, 1543, 1546-1548 (W.D.N.C. 1986).

Although appellees state to this Court that ‘‘state of-

ficials believed they were in violation of the 1971 injunc-

tion’? (Appellees’ brief p. 126), such is not the case. For

this argument, appellees rely on a State memo, concerning

the effect of 42 U.S.C. (Supp.II1) § 602(a) (38), which indi-

cates initial uncertainty as to the action the State was ob-

ligated to pursue in view of the amended statute. (J.S. at

A-79). The district court in Gilliard interpreted this memo

to evidence that state officials were aware of ‘perceived

conflicting obligations’’ and chose to implement the sta-

tute rather than return to the court for a ruling. Gilliard v.

Kirk, 633 F. Supp. 1529, 1564 (W.D.N.C. 1986). This Court

in Pennhurst State School & Hospital v. Halderman, 460

U.S. 89 (1984), succinctly invalidates this reasoning of the

Gilliard court relied upon to uphold its award of retro-

active damages. Justice Powell writing for the Court

stated: ‘*. .. The Court in Larson explicitly rejected the

view... ‘that an officer given the power to make decisions

is only given the power to make correct decisions’. . . (A)n

officer might make errors and still be acting within the

scope of his authority. ... (A)t least insofar as injunctive

relief is sought, an error of law by state officers acting

in their official capacities will not suffice to override the

sovereign immunity of the State where the relief effec-

tively is against it.... Any resulting disadvantage to the

plaintiff was *outweigh(ed)’ by ‘the necessity of permitting

the Government to carry out its functions unhampered by

direct judicial intervention.’’ 7d. at 112, n.22, and 113-114.

The emphasis is upon the effective operation of govern-

ment which is facilitated by the ability of its officials to

exercise their best judgement when carrying out their duties

in the scope of their authority. The district court in Gilli-

ard had no authority to award retroactive damages against

the State of North Carolina simply because its officials

were aware of an injunction but chose to implement its

19

AFDC policy in accordance with the mandates of present

federal law based upon their judgment that the amended

statute superseded an injunction which enforced prior law.

Appellees also argue to this Court that in order to be

in compliance with the 1971 injunction, State officials were

obligated to make the determination that child support

income was ‘“‘legally available to all members of the family

group’’ under state law. (App2llees’ brief, pp. 124, 131-

132). As discussed more fully in the State’s Brief on the

Merits (pp. 19-24), the enactment of 42 U.S.C. (Supp.IT)

§ 602(a)(38) did in fact make the determination that this

income was legally available. North Carolina statutes gov-

erning the AFDC program mandate that the State program

is to be conducted in accordance with federal statutes and

regulations. N.C.G.S. §§ 108A-25, 108A-27, 108A-31. North

Carolina case law, See, State ex rel. Crews v. Pender Co.

Child Support Enforcement Agency v. Parker, — N.C. —,

— §.E.2d — (no. 549PA86; April 7, 1987); ¢.f., Lackey v.

Department of Human Resources, 306 N.C. 231, 293 S.E.

2d 171 (1982) (Medicaid regulations), as well as federal

opinions, see, Heckler v. Turner, 470 U.S. 184 (1989), con-

sistently hold that the State’s AFDC program must be in

conformity with federal law. Therefore, income which is

‘‘legally available’? under federal law is perforce “legally

available’’ under state law. As was demonstrated in Argu-

ment I of this Reply Brief, there is no conflict between fed-

eral and state law in the implementation of the

§ 602(a) (38) standard filing unit, with its attendant assign-

meut requirements.

Finally, appellees argue to this Court that without

the ability to order retroactive benefits against a state

treasury, a federal court would be powerless to enforce its

injunction against a State defendant. (Appellees’ Brief pp.

142-148). This contention has no basis in law or fact. A

full range of contempt sanctions is still available to federal

courts. These sanctions may take the form of ancillary

remedies to ongoing violations of federal law as in Milliken

20

v. Bradley, 433 U.S. 267 (1977); the imposition of attor-

neys fees as in Hutto v. Finney, 437 U.S. 678 (1978); a

conditional jail term as in Cheff v. Schnackenberg, 384

U.S. 373 (1966); or a civil fine as in Local 28 of Sheet

Metal Workers v. E.E.0.C., — U.S. —, 106 S.Ct. 3019,

3033 (1986). However, the federal Court may not order a

contempt sanction which is essentially the award of retro-

active damages in another form. Papasan v. Allain, — U.S.

—, 106 S.Ct. 2932 (1986). Moreover, in structuring its

contempt sanction, a federal court must take care that the

sanction is not so large or unexpected that it interferes

with the State’s budgeting process, see, Hutto v. Finney,

437 U.S. 678, 692 n.18 (1978), but these considerations cer-

tainly do not demean the power of the court.” The district

court’s award of retroactive benefits in Gilliard was totally

without any basis in law and should be reversed by this

Court.

..

—_—

CONCLUSION

The district court’s ruling on the constitutionality of

42 U.S.C. (Supp.111) § 602(a) (38) and its award of retro-

active benefits against State appellants should be reversed.

Respectfully submitted,

Lacy H. THornsureG

Attorney General

CatHEeRINE C. McLams

Assistant Attorney General

y In answering appellees’ argument on this point, State ap-

pellants are not implying to this Court that the district

judge did hold the State in contempi or that contempt

sanctions were in any way authorized.