Grice v. Colvin

MARY L. GRICE, et al. Plaintiff, v. CAROLYN W. COLVIN, (Acting Commissioner of the Social Security Administration) Defendant.

Case No.: GJH-14-1082

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Southern Division

March 14, 2016

MEMORANDUM OPINION

In this putative class action lawsuit. Plaintiffs John Jones and Denise Hart,¹ on behalf of themselves and others similarly situated, and Mary Grice, for herself,² (collectively, "Plaintiffs") allege several constitutional and statutory violations in connection with the Social Security Administration's (the "SSA") practice of confiscating portions of Plaintiffs' tax refunds, without proper notice, to satisfy social security overpayments that occurred over ten years prior. Carolyn W. Colvin, the acting Commissioner of the SSA ("Defendant"), having been unsuccessful in seeking dismissal of all of Plaintiffs' claims in an earlier motion to dismiss for lack of jurisdiction and failure to state a claim, see ECF Nos. 25, 46 & 47, again moves to dismiss this suit, this time on the ground of mootness. ECF No. 62. Plaintiffs oppose the Motion to Dismiss, ECF No. 65, and have filed several of their own motions: a Motion for Leave to File a Second Amended Complaint and Add Two New Party-Plaintiffs, ECF No. 63, a Second Motion toCertify a Class, ECF No. 64, and a Corrected Motion for Issuance of a Scheduling Order and Leave to Commence Discovery, ECF No. 67. A hearing was held on November 5, 2015, and, pursuant to the Court's January 20, 2016 Order, ECF No. 82, the Parties each submitted supplemental memoranda in support of their arguments on Defendant's Motion to Dismiss. ECF Nos. 83 & 84. For the reasons that follow, Defendant's Motion to Dismiss is granted and Plaintiffs' Motions are denied.

I. BACKGROUND

Having previously addressed in some depth the relevant statutory and factual background that is at issue in this case, the Court will not repeat that discussion here. See Grice v. Colvin, 97 F. Supp. 3d 684, 689-95 (D. Md. 2015) ("Grice I"). Rather, the Court will only summarize the facts necessary to resolve the motions currently pending.

In 2011, the SSA amended its regulations to allow for the collection of social security overpayments through a tax offset program, regardless of when such an overpayment was made. See 76 Fed. Reg. 65107-01 (Oct. 20, 2011) & 20 C.F.R. § 404.520(b). Previously, the tax offset program would only be used to collect debts that were less than ten years old. Under the new regulations, the SSA sent notice of an overpayment and notice of its intent to collect the overpayment through a tax offset to Plaintiffs at their address of record. Plaintiffs, however, no longer lived at the addresses where the notices were sent—some having moved from those addresses several decades earlier—and only became aware of the overpayments when they received a letter from the Department of the Treasury indicating that they would not be receiving a tax refund because it was used to pay their SSA debt. When Plaintiffs attempted to contact the SSA to assert that they never received notice and did not owe an overpayment, they received avariety of unsatisfactory responses.³ See Grice I, 97 F. Supp. 3d at 692-95. The instant lawsuit was then initiated in this Court on April 8, 2014. ECF No. 1. Before Defendant answered the Complaint, on June 23, 2014, Plaintiffs filed an Amended Complaint seeking declaratory and injunctive relief and asserting that the notices sent to Plaintiffs were not in accordance with their due process rights and that the collection of the overpayments violated the law. See ECF No. 15; Grice I, 97 F. Supp. 3d at 689-95.

Defendant filed a motion to dismiss the Amended Complaint for lack of jurisdiction and for failure to state a claim upon which relief can be granted on August 15, 2014, ECF No. 25, which the Court granted, in part, and denied, in part. As is relevant to the present Motion, Defendant argued in her first Motion to Dismiss that each of the individual Plaintiffs' claims were moot because the SSA had already refunded the amounts withheld from Plaintiffs' tax returns. See ECF No. 25-1 at 20—21.⁴ The Court denied Defendant's Motion in this regard, holding that Plaintiffs still had a legally cognizable interest in the outcome of this case because, "[w]hile the SSA has returned the Plaintiffs' refunds, the SSA maintains that Plaintiffs owe money due to overpayments." Grice I, 97 F. Supp. 3d at 706. Indeed, the letter accompanying the return of Plaintiffs' tax refunds stated that "[t]his refund does not eliminate your overpayment. If you want to discuss repayment options or request a waiver, please contact us. To request a waiver, you can also complete the enclosed SSA-632 waiver form." Id. Thus, the Court concluded that, where "the SSA still maintain[ed] that the Plaintiffs owe[d] debts to the agency, Plaintiffs' claims [were] real and substantial." Id. The Court also rejected Defendant's argumentthat the Court lacked jurisdiction over Plaintiffs' claims for failure to exhaust their administrative remedies.⁵ Because "Plaintiffs ha[d] attempted to proceed through administrative channels and the SSA ha[d] . . . frustrated their efforts to exhaust [their administrative] remedies," the Court concluded that exhaustion was not necessary. Id. at 703. Indeed, the Court noted that "[i]t would be difficult to find a better case for waiving exhaustion [than] one where the SSA did not permit exhaustion in the first place.'' Id. at 704.

After this Court's ruling on Defendant's first Motion to Dismiss, rather than answering the Amended Complaint, Defendant filed a Motion to Remand this case to the SSA so that the agency could develop a factual record for resolution of Plaintiffs' claims, which Plaintiffs opposed. ECF Nos. 50 & 52. Before the Court could rule on that Motion, however, it was withdrawn, and Defendant represented that the SSA had, as a matter of its statutory authority, granted waivers to each of the remaining named Plaintiffs. See ECF Nos. 57 & 60; see also Grice I, 97 F. Supp. 3d at 690-91 (explaining that the SSA may waive an individual's overpayment "if the individual shows that he or she is without fault in causing the overpayment and that 'adjustment or recovery would either defeat the purpose of title II of the Act or be against equity and good conscience.'" (quoting 20 C.F.R. § 404.506(c)). Upon the granting of such waivers, each Plaintiff's prior overpayment balance was reduced to zero; in other words, the SSA no longer "maintains that Plaintiffs still owe the amount of the overpayment." See ECF Nos. 57 & 60; Grice I, 97 F. Supp. 3d at 706. Defendant now moves to dismiss the Amended Complaint on the ground that this Court no longer has subject matter jurisdiction over Plaintiffs' claims because those claims are moot. See ECF No. 62. Plaintiffs oppose dismissal, and argue that their claims are not moot, but that even if they are, Plaintiffs Jones and Hart may still pursuethis case in their capacity as class representatives. See ECF No. 65. Plaintiffs also seek leave to file a Second Amended Complaint to add two additional plaintiffs, Ida Greer and Laritta Fry, as class representatives. See ECF No. 63. Greer, a resident of New York, and Fry, a resident of Texas, have claims similar to those of Jones and Hart, the would-be class representatives whose claims the SSA argues are now moot. See ECF No. 63-1 at ¶¶ 92-118. Plaintiffs argue that, even if Jones' and Hart's claims are moot, this case can proceed with Greer and Fry as class representatives. See ECF No. 65 at 6.

II. DISCUSSION

Article III of the United States Constitution limits federal court jurisdiction to "cases" and "controversies." The Supreme Court has interpreted this requirement "to demand that an actual controversy . . . be extant at all stages of review, not merely at the time the complaint is filed." Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 669 (2016) (internal quotation marks and citations omitted). Thus, if a plaintiff's case is moot, the court lacks subject-matter jurisdiction. Iron Arrow Honor Soc'y v. Heckler, 464 U.S. 67, 70, 104 S. Ct. 373 (1983). "If an intervening circumstance deprives the plaintiff of a 'personal stake in the outcome of the lawsuit,' at any point during litigation, the action can no longer proceed and must be dismissed . . . ." Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1528 (2013) (quoting Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477-78, 110 S.Ct. 1249 (1990)); see also Simmons v. United Mortgage & Loan Inv., LLC, 634 F.3d 754, 763 (4th Cir. 2011) ("[A] case is moot when the issues presented are no longer 'live' or the parties lack a legally cognizable interest in the outcome." (quoting United States v. Hardy, 545 F.3d 280, 283 (4th Cir.2008)). "This requirement ensures that the Federal Judiciary confines itself to its constitutionally limited role of adjudicating actual and concrete disputes, the resolutions of which have direct consequences on the parties involved." GenesisHealthcare, 133 S. Ct. at 1528. Indeed. "[n]o matter how vehemently the parties continue to dispute the lawfulness of the conduct that precipitated the lawsuit, the case is moot if the dispute 'is no longer embedded in any actual controversy about the plaintiffs' particular legal rights.'" Already, LLC v. Nike, Inc., 133 S. Ct. 721, 727 (2013) (quoting Alvarez v. Smith, 558 U.S. 87, 93, 130 S. Ct. 576 (2009)).

Before the Court's ruling on Defendant's first Motion to Dismiss, each Plaintiff had already received a refund of the money recouped through the tax offset program, but, at that time, the Court determined that Plaintiffs' claims were not moot because "the SSA still maintain[ed] that the Plaintiffs owe debts to the agency . . . ." Grice I, 97 F. Supp. 3d at 706. That is no longer true now that each Plaintiff's debt has been waived by the SSA as a matter of its statutory authority. It can no longer be said, therefore, that John Jones. Denise...