The opinion of the court was delivered by: BECHTLE
The four named plaintiffs (Herman Notgernic, Albert F. Ceres, Jr., Emanuel Mazer and Harry Seder) are individuals who have attained age 65 and are entitled to receive full monthly old-age retirement insurance benefit payments under the Social Security Act, 42 U.S.C. § 301 et seq.
They brought this action on March 20, 1973, on behalf of themselves and those individuals between the ages of 65 and 72 who, although being entitled to monthly old-age retirement benefits payments under the Act, have been denied some or all payments by the Secretary of Health, Education and Welfare ("HEW") because their wages or self-employment income were in excess of a certain amount. The earnings limitation is presently set at $2,400 in a calendar year or $200 in each month of that year. The payments are withheld or suspended pursuant to § 203(b) of the Act, 42 U.S.C. § 403(b).
The Secretary does not suspend or make any deductions from the benefits of qualified individuals after they attain age 72 or because they have income from sources other than wages or self-employment in excess of the amount set by the Act.
The primary purpose of their action is to have § 203(b) and related subsections of the Act declared unconstitutional, to enjoin the Secretary from further suspending monthly benefit payments pursuant to those subsections, and to recover the suspended payments. Another purpose is to recapture the Federal Insurance Contribution Act ("FICA") taxes deducted from their wages or earnings pursuant to 26 U.S.C. §§ 3101-02 while they were working for wages or earning income from self-employment after becoming entitled to receive monthly benefit payments.
A statutory Three-Judge Court was convened pursuant to 28 U.S.C. §§ 2282 - 2284(1), since plaintiffs seek to restrain the enforcement of an Act of Congress for repugnance to the Constitution.
The Secretary of HEW has filed a motion, now before us for decision, to dismiss the complaint for lack of jurisdiction over the subject matter and for failure to state a claim upon which relief may be granted, or, in the alternative, for summary judgment in his favor.
The asserted grounds for lack of jurisdiction are, first, that plaintiffs have failed to exhaust their statutory administrative remedies under § 205(g) of the Act, 42 U.S.C. § 405(g); and, second, the claim of each plaintiff does not meet the jurisdictional amount of $10,000 under 28 U.S.C. § 1331(a).
Three of the plaintiffs, Ceres, Mazer and Seder, did not contest the suspensions of their monthly old-age retirement benefits by recourse to any of the remedies allowed by § 205(g). Notgernic need not have done so for his benefits were not suspended. Since this case does not involve an appeal from a final decision of the Secretary, plaintiffs may not validly invoke the jurisdiction of this Court under § 205(g). Section 205(g), as the embodiment of the exhaustion of remedies requirement, is inapplicable here.
Gainville v. Richardson, 319 F. Supp. 16, 18 (D. Mass. 1970). Plaintiffs attack the constitutionality of provisions of the Act. However, the Secretary is powerless to evaluate and deal with such a challenge. See, Oestereich v. Selective Service Bd., 393 U.S. 233, 242, 21 L. Ed. 2d 402, 89 S. Ct. 414 (1968); Williams v. Richardson, 347 F. Supp. 544, 548 (W.D.N.C. 1972).
The claims of each plaintiff regarding the unconstitutionality of § 205(b) and related subsections of the Act raise issues that arise under the Constitution,
and not the Act. Johnson v. Robison, 415 U.S. 361, 367, 94 S. Ct. 1160, 1166, 39 L. Ed. 2d 389 (1974). For a resolution of a constitutional problem, a proper plaintiff may bring an independent civil action in a Federal District Court without having exhausted his statutory administrative remedies. If the question posed is nonfrivolous, as it is here, the District Court would have jurisdiction under 28 U.S.C. § 1331(a), if the amount in controversy, exclusive of interest and cost, exceeds the sum or the value of $10,000. To avoid the jurisdictional amount hurdle, plaintiffs insist that constitutional question involvement in a case does not require a jurisdictional amount, even under 28 U.S.C. § 1331(a). In the alternative, they argue that even if the jurisdictional amount requirement must be met under that section, this Court would have jurisdiction under one or more of a number of statutes
or by reason of the doctrine of pendent jurisdiction. We find it necessary to discuss only § 1331 and two of the additional jurisdictional statutes cited by the plaintiffs, 28 U.S.C. §§ 1340 and 1346. We find the doctrine of pendent jurisdiction to be inapposite. Accordingly, we turn first to the problem of ascertaining whether the jurisdictional amount is met in this case.
Notgernic will be 72 in January of 1980. He is retired and at the time of the filing of the complaint in March, 1973, he was receiving his monthly benefits. He has given no indication that he will return to work for wages in excess of $2,400 per year. Whatever the value of his benefits is between the filing of the complaint and his attaining age 72, they are not in controversy here. Ceres is over 72 years of age and his future benefits are no longer subject to the possibility of being suspended for excess earnings. He had lost a total of $4,195.50 in benefits prior to his attaining age 72 in October, 1969. The amounts of $6,145.80 and $844.80 have been withheld from Mazer and Seder, respectively, up to the date of the filing of the complaint in March of 1973. None of these amounts reach the jurisdictional level. The claim of each plaintiff is separate and distinct. They may not be aggregated to reach the requisite jurisdictional level. Zahn v. International Paper Co., 414 U.S. 291, 94 S. Ct. 505, 38 L. Ed. 2d 511 (1973); Snyder v. Harris, 394 U.S. 332, 89 S. Ct. 1053, 22 L. Ed. 2d 319 (1969); Clark v. Paul Gray, Inc., 306 U.S. 583, 83 L. Ed. 1001, 59 S. Ct. 744 (1939). The claim of each plaintiff must satisfy the jurisdictional amount or his claim must be dismissed.
Mazer will attain age 72 in January of 1978, while Seder will reach that age in December of 1979. If these two individuals continue to work for wages or have earnings from self-employment, or both, annually in excess of the maximum set by the Secretary, Mazer stands to lose at least $21,113 in total benefits while Seder will have a minimum of $17,740 withheld from him. Each of these amounts are in excess of $10,000. Therefore, we have two plaintiffs over whose claims the District Court has jurisdiction under 28 U.S.C. § 1331(a).
Under this theory of jurisdiction, the claims of Notgernic and Ceres will have to be dismissed. Clark v. Paul Gray, Inc., supra.
We address ourselves to the question of the jurisdiction of the District Court to entertain the claims of Mazer and Seder, as set forth in paragraph 16 of the complaint, that the suspension of payments further deprives them "of their property without due process of law by failing when benefits are so reduced or forfeited to return any part of the Social Security taxes which the employees and employers were compelled to pay in prior years." A claim for refund of taxes allegedly erroneously paid is not such a claim as could be properly presented to the Secretary under the Act. The Secretary has no authority over the collection of taxes, even though it is within his province to make a ruling that a party is in a status -- employer or employee, for example -- as would render him liable for them. Collection of FICA taxes is the responsibility of the Internal Revenue Service ("IRS"). Claims for such refunds must be brought by a separate action, jurisdiction for which is to be found under 28 U.S.C. § 1340, regarding Internal Revenue matters, or 28 U.S.C. § 1346(a), when the United States is a defendant, to recover taxes paid. We may not treat this case as such an action, for neither the United States nor an appropriate IRS officer has been named as a party defendant. Moreover, when, as here, injunctive relief is sought, the District Court has no jurisdiction under 28 U.S.C. § 1346(a). Richardson v. Morris, 409 U.S. 464, 34 L. Ed. 2d 647, 93 S. Ct. 629 (1973).
One of the grounds for the motion to dismiss the complaint as not stating a claim upon which relief may be granted is similar to the one made by the Secretary regarding jurisdiction; i.e., the plaintiffs have not exhausted their administrative remedies before seeking court help. For the reasons stated in deciding the jurisdictional question, they, under the circumstances of this case, need not have exhausted those remedies before seeking relief here. The motion will be denied on this ground.
III. CLASS ACTION DETERMINATION
Of no little importance to Mazer and Seder is their motion, emphatically opposed by the Secretary, for a determination under Fed. R. Civ. P. 23(c) whether this action may be maintained as a class action. These two plaintiffs vigorously proclaim and emphasize the superiority of the class action device as the only means by which a final, nationwide decision can be made binding on all persons concerned. They claim to represent all individuals between the ages of 65 and 72 years who are entitled to receive old-age monthly ...