MEGAN SMITH V DEPARTMENT OF HUMAN SERVICES DIRECTOR (Authored Opinion)
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STATE OF MICHIGAN
COURT OF APPEALS
MEGAN SMITH, NICOLE KELLY,
ROSHAWNDA WILLIAMS, and NICOLE
JOHNSON,
FOR PUBLICATION
June 26, 2012
9:05 a.m.
Plaintiffs-Appellees,
v
Nos. 309447; 309894
Genesee Circuit Court
LC No. 11-097052-CZ
DEPARTMENT OF HUMAN SERVICES
DIRECTOR,
Defendant-Appellant.
Advance Sheets Version
Before: SERVITTO, P.J., and METER and FORT HOOD, JJ.
METER, J.
These consolidated appeals involve a class action by individuals whose benefits under a
cash-assistance program administrated by the Department of Human Services (DHS) in
accordance with the Social Welfare Act, MCL 400.1 et seq., were terminated. In Docket No.
309447, defendant, the DHS Director, appeals as of right the circuit court’s order granting
summary disposition in favor of plaintiffs with respect to their claim that the DHS Director
exceeded her authority by implementing a 60-month time limit for receiving cash-assistance
benefits for members of plaintiffs’ class. In Docket No 309894, the DHS Director appeals as of
right the injunctive relief ordered by the circuit court on the basis of that determination. We
affirm in part and reverse in part.
I. BACKGROUND
This case involves cash-assistance benefits provided to individuals under the Family
Independence Program (FIP), as established under the Social Welfare Act and amended by 2011
PA 131, effective October 1, 2011. Pursuant to MCL 400.57a(1), “[t]he department[1] shall
1
The “department” is defined in the Social Welfare Act to mean the Family Independence
Agency. MCL 400.1(4). The Family Independency Agency was renamed the Department of
Human Services pursuant to an executive reorganization order effective March 15, 2005. See
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establish and administer the family independence program to provide assistance to families who
are making efforts to achieve independence.” The time limit established by the Legislature for
FIP assistance to be paid to an individual, beginning October 1, 2007, is “not longer than a
cumulative total of 48 months during that individual’s lifetime.” MCL 400.57r. A recipient of
FIP assistance who does not comply with his or her individual family-self-sufficiency plan is
penalized by having payments temporarily or permanently terminated, and those penalty months
are still counted toward the 48-month total. MCL 400.57g(4). The Social Welfare Act also
contains exclusions from the 48-month limit, even though payment is made to a recipient. MCL
400.57p.
The instant class action arose because the DHS uses federal Temporary Assistance for
Needy Families (TANF) funds to administer the FIP, and application of the 48-month limit under
the Social Welfare Act with the exemptions established by the Legislature leaves some
individuals eligible for FIP benefits even though they have exhausted TANF funds.
The purpose of TANF is to provide flexibility for states in operating a program designed
to:
(1) provide assistance to needy families so that children may be cared for
in their own homes or in the homes of relatives;
(2) end the dependence of needy parents on government benefits by
promoting job preparation, work, and marriage;
(3) prevent and reduce the incidence of out-of-wedlock pregnancies and
establish annual numerical goals for preventing and reducing the incidence of
these pregnancies; and
(4) encourage the formation and maintenance of two-parent families. [42
USC 601(a).]
42 USC 601(b) specifies that the statutory provisions concerning TANF funds “shall not
be interpreted to entitle any individual or family to assistance under any State program funded”
by TANF. Federal law generally provides for a 60-month limit on the use of TANF funds, 2 42
USC 608(a)(7)(A), but that limit is subject to the following express rules of interpretation:
MCL 400.226. The executive order states that all statutory references to the Family
Independence Agency shall be deemed references to the Department of Human Services. See id.
2
While a state may exempt a family from the 60-month limitation by reason of hardship subject
to certain limitations under 42 USC 608(a)(7)(C), it is undisputed in this case that the DHS’s
current policy does not allow for hardship exemptions.
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(E) Rule of interpretation
Subparagraph (A) shall not be interpreted to require any State to provide
assistance to any individual for any period of time under the State program funded
under this part [42 USC 601 through 42 USC 619].
(F) Rule of interpretation
This part shall not be interpreted to prohibit any State from expending
State funds not originating with the Federal Government on benefits for children
or families that have become ineligible for assistance under the State program
funded under this part by reason of subparagraph (A). [42 USC 608(a)(7).]
Each of the four plaintiffs in this case received a “NOTICE OF CASE ACTION” from
the DHS, dated October 11, 2011, which specified that FIP benefits were being cancelled
effective November 10, 2011, for the following reason:
The intended action results from a change in law and policy that placed a
lifetime time limit on the receipt of assistance through the Family Independence
Program. Your group is no longer eligible for the Family Independence Program
because the person(s) listed below has received 60 months or more of benefits,
which is the time limit allowable for eligibility.
The notice informed each plaintiff that they had the right to a hearing to contest the
DHS’s calculation that assistance should stop because of the 60-month limit. The notice was
provided to affected recipients of the cash-assistance benefits pursuant to an action in the United
States District Court in which the adequacy of prior notices provided by the DHS was challenged
by various individuals on procedural due-process grounds. See Kelly v Corrigan, unpublished
order of the United States District Court for the Eastern District of Michigan, entered October 4,
2011 (Docket No. 11-14298).
On October 28, 2011, plaintiffs filed this action against the DHS Director on behalf of
themselves and other similarly situated individuals 3 to challenge the DHS Director’s authority to
impose the 60-month time limit through the implementation of an administrative policy. The
circuit court initially granted plaintiffs’ motion for a preliminary injunction to enjoin the DHS
Director from terminating the cash-assistance benefits on the basis of the 60-month limit. The
circuit court also ordered that the case could proceed as a class action on behalf of “all current
and future FIP recipients who have been or will be denied or terminated from FIP assistance
based on a 60 month limit when they have not received FIP for 48 countable months under the
Social Welfare Act.”
3
Plaintiffs also filed the action as next friends of their minor children, but the circuit court did
not rule on their motions to be appointed as next friends.
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In an earlier interlocutory appeal in this case, this Court, in lieu of granting leave to
appeal, peremptorily reversed and vacated the preliminary injunction because “[p]laintiffs failed
to establish a likelihood of prevailing on the merits of their claim.” Smith v Dep’t of Human
Servs Dir, unpublished order of the Court of Appeals, entered November 3, 2011 (Docket No.
306846). Following this decision, the DHS Director moved for reconsideration of the circuit
court’s order granting the class certification. The DHS Director also moved for summary
disposition under MCR 2.116(C)(8) and (C)(10) with respect to plaintiffs’ substantive claim,
while plaintiffs moved for summary disposition under MCR 2.116(C)(10).
The circuit court denied the DHS Director’s motion for reconsideration. In addition, it
resolved the cross-motions for summary disposition in favor of plaintiffs on the basis of its
determinations that (1) the Social Welfare Act created an entitlement to FIP assistance for
individuals who comply with the FIP’s family-self-sufficiency plan and (2) the DHS Director
exceeded her authority under the separation of powers doctrine by imposing time limits that are
not authorized by the Social Welfare Act. On the basis of those determinations, the circuit court
entered a judgment (1) permanently enjoining the DHS Director from terminating or denying
cash-assistance benefits “based on time limits unless and until it is determined that [class
members] have received [benefits] for more than forty-eight countable months under the time
limits set by the Social Welfare Act” and (2) enjoining the DHS Director from terminating or
denying cash-assistance benefits “to Plaintiffs and members of the Class based on a 60 month
limit that starts counting months prior to the October 1, 2007 started [sic] date established by
statute and does not have the exemptions required by the Social Welfare Act[.]”
The DHS Director filed two appeals with this Court to challenge the circuit court’s
determinations. In Docket No. 309447, the Michigan Supreme Court denied the DHS Director’s
bypass application for leave to appeal, but directed this Court to consider the case on an
expedited basis, stating:
The Court of Appeals is directed to decide this case on an expedited basis,
considering whether (1) the circuit court erred in concluding that defendant may
not implement limits on the duration of welfare benefits as part of its authority to
establish eligibility criteria for family independence program recipients under
MCL 400.57a(3) and/or MCL 400.57b(1)(f) and, if so, (2) whether plaintiffs are
entitled to summary disposition on the alternative ground that defendant failed to
comply with the requirements of the Administrative Procedures Act [APA], MCL
24.201 et seq. [Smith v Dep’t of Human Servs Dir, 491 Mich 898 (2012).]
II. STANDARD OF REVIEW
We review de novo a circuit court’s decision concerning a motion for summary
disposition. Driver v Naini, 490 Mich 239, 246; 802 NW2d 311 (2011). Issues involving
statutory construction are also reviewed de novo. Id. Whether the constitutional principle of
separation of powers was violated is also reviewed de novo. People v Garza, 469 Mich 431,
433; 670 NW2d 662 (2003).
Although the circuit court did not state the subpart of MCR 2.116(C) on which it relied to
resolve the parties’ cross-motions for summary disposition, because the parties’ motions relied
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on evidence that went beyond the documentary evidence filed with plaintiffs’ complaint, we find
review under MCR 2.116(C)(10) appropriate. See Healing Place at North Oakland Med Ctr v
Allstate Ins Co, 277 Mich App 51, 55; 744 NW2d 174 (2007). A motion under MCR
2.116(C)(10) tests the factual sufficiency of a claim based on substantively admissible evidence.
MCR 2.116(G)(6); Maiden v Rozwood, 461 Mich 109, 120-121; 597 NW2d 817 (1999). A court
should grant the motion if the submitted evidence fails to establish a genuine issue of material
fact and the movant is entitled to judgment as a matter of law. Allison v AEW Capital Mgt, LLP,
481 Mich 419, 424-425; 751 NW2d 8 (2008).
III. SEPARATION OF POWERS
Because the circuit court’s decision to invalidate the DHS Director’s action rested on a
determination that the separation of powers doctrine was violated, we shall first address the
applicability of this doctrine to the parties’ dispute. Const 1963, art 3, § 2, states, “The powers
of government are divided into three branches: legislative, executive and judicial. No person
exercising powers of one branch shall exercise powers properly belonging to another branch
except as expressly provided in this constitution.” Under this provision, the executive branch
has the duty of executing the laws enacted by the legislative branch. See Kyser v Kasson Twp,
486 Mich 514, 535; 786 NW2d 543 (2010). “An administrative agency that acts outside its
statutory boundaries usurps the role of the legislature.” Herrick Dist Library v Library of Mich,
293 Mich App 571, 583; 810 NW2d 110 (2011). Accordingly, whether the circuit court erred by
finding a violation of the separation of powers doctrine depends on the powers conferred by the
Legislature on the DHS. We turn to the Social Welfare Act to determine if the DHS Director
had authority to terminate FIP assistance on the basis of the 60-month time limit for TANF
funds.
In interpreting the DHS’s authority under the Social Welfare Act, our primary goal is to
ascertain the legislative intent by first examining the plain language of the statute. Driver, 490
Mich at 246-247. “Statutory provisions must be read in the context of the entire act . . . .” Id. at
247. An undefined statutory term is given its plain and ordinary meaning unless it is a term of
art with a unique legal meaning. Mich AFSCME Council 25 v Woodhaven-Brownstown Sch
Dist, 293 Mich App 143, 156; 809 NW2d 444 (2011). “When a statute specifically defines a
given term, that definition alone controls.” Haynes v Neshewat, 477 Mich 29, 35; 729 NW2d
488 (2007). If a statute is unambiguous, it is applied as written. Driver, 490 Mich at 247. “A
statutory provision is ambiguous if it irreconcilably conflicts with another provision or is equally
susceptible to more than a single meaning.” AFSCME, 293 Mich App at 155. If a statutory
provision is ambiguous, judicial interpretation is appropriate. Capitol Props Group, LLC v 1247
Ctr Street, LLC, 283 Mich App 422, 434; 770 NW2d 105 (2009). An administrative agency’s
construction of a statute that it is charged with executing is entitled to respectful consideration,
but is not binding on courts and cannot conflict with the plain language of a statute. In re
Complaint of Rovas Against SBC Mich, 482 Mich 90, 103, 111-112; 754 NW2d 259 (2008).
The circuit court began its review of the DHS’s authority by considering whether the
Social Welfare Act created an entitlement program. However, because the present issue does not
involve whether the DHS Director took action that deprived the class members of due process,
but rather whether the DHS Director had authority under the Social Welfare Act to apply the 60month limit applicable for TANF funds to FIP assistance, we find it unnecessary to address
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whether an entitlement program existed for due-process purposes. Upon review de novo of the
relevant statutory provisions in light of the act as whole, we hold that the circuit court erred by
finding that the DHS Director violated the Social Welfare Act—in particular, the exemptions to
the 48-month limit established by MCL 400.57p—by imposing a 60-month limit on FIP
assistance.
MCL 400.57p states:
Any month in which a recipient has been exempted from the JET
program[4] under section 57f(3) or (4)(b) shall not be counted toward the
cumulative total of 48 months in a lifetime for family independence program
assistance. Any month in which a recipient has been exempted from the JET
program under section 57f(4)(e) or (f) may, in the department’s discretion, be
excluded from the count toward the cumulative total of 48 months in a lifetime for
family independence program assistance.
Read in the context of MCL 400.57r, which establishes an individual’s lifetime limit for FIP
assistance as “not longer than a cumulative total of 48 months,” it is clear that the Legislature
contemplated that actual payments could extend beyond the 48-month limit if a recipient has
been exempted from the JET program.
There is no statutory language that limits actual payments to 60 months. However,
considering that the 60-month limit approved by the DHS Director in this case arises from
limitations on TANF funding for individuals, the circuit court erred by concluding that the DHS
Director has no authority under the Social Welfare Act to impose this limitation. Other statutory
provisions, which operate independently of MCL 400.57p, authorize the DHS to use the
exhaustion of TANF funding as an eligibility criterion for individuals.
Initially, we note that we reject the DHS Director’s argument that the duties imposed on
the DHS under MCL 400.57a(3) with respect to the “composition of the program group,”
standing alone, provide authority to establish an individual’s exhaustion of TANF funds as an
eligibility criterion. MCL 400.57a(3) provides:
The department shall establish income and asset levels for eligibility, types
of income and assets to be considered in making eligibility determinations,
payment standards, composition of the program group and the family
independence program assistance group, program budgeting and accounting
methods, and client reporting requirements to meet the following goals:
(a)
Efficient, fair, cost-effective administration of the family
independence program.
4
“JET program” is defined in MCL 400.57(1)(i) as “the jobs, education and training program
administered by the Michigan economic development corporation or a successor entity for
applicants and recipients of family independence program assistance or a successor program.”
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(b) Provision of family independence program assistance to families
willing to work toward eventual self-sufficiency. [Emphasis added.]
In interpreting a statute, a court considers both the plain meaning of a critical word or
phrase and its placement and purpose in the statutory scheme. Sun Valley Foods Co v Ward, 460
Mich 230, 237; 596 NW2d 119 (1999). A court may consult a dictionary to determine the
ordinary meaning of an undefined term. Haynes, 477 Mich at 36. The words in a statute should
be read together to harmonize the meaning and give effect to the act as a whole. G C Timmis &
Co v Guardian Alarm Co, 468 Mich 416, 421; 662 NW2d 710 (2003).
Random House Webster’s College Dictionary (1997) defines the word “eligible,” in
relevant part, as “meeting the stipulated requirements; qualified.” The word “eligibility” as used
in MCL 400.57a(3), examined in context, plainly depends on income and asset levels. The
Random House Webster’s College Dictionary (1997) defines “composition,” in relevant part, as
“the manner of being composed; arrangement or combination of parts or elements” and “the
parts or elements of which something is composed; makeup; constitution.” As used in MCL
400.57a(3), the term “composition” requires a determination of the “program group” and the
“family independence program assistance group.” While the DHS is permitted to take action
that serves the goal of a cost-effective FIP, “program group” and “family independence program
assistance group” are both statutorily defined phrases. “Program group” is defined as “a family
and all those individuals living with a family whose income and assets are considered for
purposes of determining financial eligibility for family independence program assistance.” MCL
400.57(1)(n). “Family independence program assistance group” is defined as “all those members
of a program group who receive family independence program assistance.” MCL 400.57(1)(f).
As a whole, MCL 400.57a(3) permits the DHS to determine issues involving financial
eligibility using income and asset information. The DHS is also authorized to determine which
individuals make up the program group. However, standing alone, the statute does not authorize
the DHS to add an eligibility criterion based on whether TANF funding has been exhausted for
an individual because of the federal 60-month limit. Nonetheless, MCL 400.57b(1) provides:
An individual who meets all of the following requirements is eligible for
family independence program assistance:
(a) Is a member of a family or a family independence program assistance
group.
(b) Is a member of a program group whose income and assets are less
than the income and asset limits set by the department.
(c) In the case of a minor parent, meets the requirements of subsection
(2).
(d) Is a United States citizen, a permanent resident alien, or a refugee. If
the applicant indicates that he or she is not a United States citizen, the department
shall verify the applicant’s immigration status using the federal systematic alien
verification for entitlements (SAVE) program.
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(e) Is a resident of this state as described in section 32.
(f) Meets any other eligibility criterion required for the receipt of federal
or state funds or determined by the department to be necessary for the
accomplishment of the goals of the family independence program. [Emphasis
added.]
“The commonly understood word ‘any’ generally casts a wide net and encompasses a
wide range of things.” People v Lively, 470 Mich 248, 253; 680 NW2d 878 (2004). Therefore,
it is plain that the Legislature authorized the DHS to add an eligibility criterion that is not
required for federal or state funds but is necessary to accomplish the goals of the FIP. Further,
MCL 400.57a(3)(a) establishes that one goal of the FIP is to achieve an efficient, fair, costeffective administration of the FIP, and the DHS Director’s affidavit filed in support of her
motion for summary disposition indicates that “fiscal soundness” is one of the purposes for
terminating FIP assistance when TANF funds are exhausted. Thus, MCL 400.57a(3) and MCL
400.57b(1)(f), read together, are reasonably construed as permitting the DHS to consider its
added eligibility criterion for purposes of deciding the composition of the program group and the
family independence program assistance group. In addition, the DHS had no duty to consider
hardship criteria to extend the 60-month period because the use of the phrase “[t]he State may
exempt” in the applicable federal law, 42 USC 608(a)(7)(C)(i), denotes permissive action. See
Manuel v Gill, 481 Mich 637, 647; 753 NW2d 48 (2008) (noting that the word “may” is
generally an indication of permissive action).
In sum, the circuit court erred by granting plaintiffs summary disposition based on the
doctrine of separation of powers. MCL 400.57a(3)(a) and MCL 400.57b(1)(f) provide statutory
authority for the DHS Director’s reliance on fiscal soundness to add an eligibility criterion that
would disqualify individuals from FIP assistance based on the exhaustion of federal TANF
funds.
IV. ADMINISTRATIVE PROCEDURES ACT
Plaintiffs nevertheless contend that they are entitled to summary disposition because the
DHS did not follow the rulemaking procedures of the APA. This issue requires consideration of
general provisions in the Social Welfare Act, see MCL 400.6, that are applicable to the DHS, as
well as consideration of relevant provisions of the APA. MCL 400.6, provides, in pertinent part:
(1) The family independence agency may promulgate all rules necessary
or desirable for the administration of programs under this act. Rules shall be
promulgated under the administrative procedures act of 1969, Act No. 306 of the
Public Acts of 1969, being sections 24.201 to 24.328 of the Michigan Compiled
Laws. Beginning 2 years after the effective date of subsection (2), if the
Michigan supreme court rules that sections 45 and 46 of Act No. 306 of the Public
Acts of 1969, being sections 24.245 and 24.246 of the Michigan Compiled Laws,
are unconstitutional and a statute requiring legislative review of administrative
rules is not enacted within 90 days after the Michigan supreme court ruling, this
subsection does not apply.
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(2) The family independence agency may develop regulations to
implement the goals and principles of assistance programs created under this act,
including all standards and policies related to applicants and recipients that are
necessary or desirable to administer the programs. These regulations are effective
and binding on all those affected by the assistance programs. Except for policies
described in subsections (3) and (4), regulations described in this subsection,
setting standards and policies necessary or desirable to administer the programs,
are exempt until the expiration of 12 months after the effective date of this
subsection from the rule promulgation requirements of the administrative
procedures act of 1969, Act No. 306 of the Public Acts of 1969, being sections
24.201 to 24.328 of the Michigan Compiled Laws. Upon the expiration of 12
months after the effective date of this subsection, regulations described in this
subsection are not effective and binding unless processed as emergency rules
under section 48 of Act No. 306 of the Public Acts of 1969, being section 24.248
of the Michigan Compiled Laws, or promulgated in accordance with Act No. 306
of the Public Acts of 1969.
(3) The family independence agency may develop policies to establish
income and asset limits, types of income and assets to be considered for
eligibility, and payment standards for assistance programs administered under this
act. Policies developed under this subsection are effective and binding on all
those affected by the assistance programs. Policies described in this subsection
are exempt from the rule promulgation requirements of Act No. 306 of the Public
Acts of 1969. Not less than 30 days before policies developed under this
subsection are implemented, they shall be submitted to the senate and house
standing committees and appropriation subcommittees with oversight of human
services.
(4) The family independence agency may develop policies to implement
requirements that are mandated by federal statute or regulations as a condition of
receipt of federal funds. Policies developed under this subsection are effective
and binding on all those affected by the programs. Policies described in this
subsection are exempt from the rule promulgation requirements of Act No. 306 of
the Public Acts of 1969. [Emphasis added.]
The DHS Director argues that MCL 400.6(4) applies to the pertinent policy because the
DHS is implementing a federal requirement that TANF funds not be paid to persons for more
than a cumulative period of 60 months. To the extent that only federal monies are involved, we
agree. 42 USC 608(a)(7)(A) states:
A State to which a grant is made under section 603 of this title shall not
use any part of the grant to provide assistance to a family that includes an adult
who has received assistance under any State program funded under this part
attributable to funds provided by the Federal Government, for 60 months (whether
or not consecutive) after the date the State program funded under this part
commences, subject to this paragraph.
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By cutting off federal funds from individuals after they have received 60 months of benefits, the
DHS is following a federal mandate and need not follow the rulemaking procedures outlined in
the APA. MCL 400.6(4). Plaintiffs argue that the federal 60-month limit is not a mandate (even
assuming, arguendo, that only federal funds are at issue) because the federal law also allows for
optional hardship exemptions that can extend the 60-month limit. However, we conclude that (1)
there is a clear mandate involving a 60-month limit, (2) there are optional exemptions, and (3)
the existence of the option for exemptions does not somehow extinguish the mandate.
While there is an exemption from the rulemaking requirements for the cutting off of
federal monies, it is clear that some state funds are used in administering the FIP program. To
the extent that plaintiffs would be entitled to FIP benefits derived from state funds, we find a
violation of the APA in connection with the challenged policy. Indeed, the deprivation of state
funding otherwise provided by state law cannot reasonably be deemed a federal mandate under
MCL 400.6(4). The DHS Director focuses on the amendment of the “Group Composition”
section of Michigan’s TANF State Plan and related policies, but the DHS’s authority to exclude
a person from a group stems, as previously discussed, from its authority to add an eligibility
criterion that the DHS determines is necessary to accomplish the FIP goals under MCL
400.57b(1)(f). The eligibility criterion plainly falls within the broad provision in MCL 400.6(2),
which requires rulemaking under the APA for “all standards and policies related to applicants
and recipients that are necessary or desirable to administer the programs.”
The DHS Director has also failed to establish any provision of the APA that would
exempt the DHS from developing its policy as a rule under the APA. “Rule” is defined in the
APA as “an agency regulation, statement, standard, policy, ruling, or instruction of general
applicability that implements or applies law enforced or administered by the agency, or that
prescribes the organization, procedure, or practice of the agency, including the amendment,
suspension, or rescission of the law enforced or administered by the agency.” MCL 24.207. The
APA also specifies numerous agency actions that do not constitute a rule. MCL 24.207. The
DHS Director relies on the exception set forth in MCL 24.207(j): “ A decision by an agency to
exercise or not to exercise a permissive statutory power, although private rights or interests are
affected.” 5 We reject the DHS Director’s claim that the exception set forth in MCL 24.207(j)
applies. MCL 400.57a(3) provides that the DHS “shall establish . . . composition of the program
group and the family independence program assistance group . . . .” The word “shall” denotes
mandatory action. Costa v Community Emergency Med Servs, Inc, 475 Mich 403, 409; 716
NW2d 236 (2006). A mandatory action does not fall within the exception set forth in MCL
24.207(j). Spear v Mich Rehab Servs, 202 Mich App 1, 4-5; 507 NW2d 761 (1993).
The DHS Director’s claim could, at first blush, have merit if it is considered in light of
the DHS’s authority to add an eligibility criterion under MCL 400.57b(1)(f). However, MCL
400.6(2) mandates that the DHS process such regulations as emergency rules or promulgated
rules under the APA. The APA provides that “[t]his act shall not be construed to repeal
5
The DHS Director also relies on MCL 24.207(o), an exception for federal mandates. The
cutting off of state funds, as noted earlier, cannot be considered a federal mandate.
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additional requirements imposed by law.” MCL 24.211. Because the Social Welfare Act
mandates rulemaking under the APA, the DHS’s added eligibility criterion is not exempt from
the APA. See Detroit Base Coalition for the Human Rights of the Handicapped v Dep’t of
Social Servs, 431 Mich 172, 186-188; 428 NW2d 335 (1988) (concluding that the agency’s
attempt to implement a mandatory hearing policy did not constitute the exercise of permissive
statutory authority under MCL 24.207(j) when the statute applicable to the agency mandated that
hearings be conducted pursuant to promulgated rules). 6
An agency’s failure to substantially comply with the procedural requirements for
promulgating rules under the APA renders a rule invalid and precludes it from having the force
of law. MCL 24.243; Goins v Greenfield Jeep Eagle, Inc, 449 Mich 1, 9-10; 534 NW2d 467
(1995). Because the DHS’s policy constitutes a rule, no exception to the rulemaking
requirements of the APA applies, and the DHS failed to follow the procedures for promulgating
rules, the circuit court correctly concluded that the rule is invalid to the extent that state funding
is involved. 7
V. CLASS CERTIFICATION
The DHS Director also argues that the circuit court erred by certifying the plaintiffs’ case
as a class action under MCR 3.501. We disagree.
We review de novo the proper interpretation of MCR 3.501. Henry v Dow Chem Co, 484
Mich 483, 495; 772 NW2d 301 (2009). We review for clear error any factual findings made by
the circuit court. Id. We review the court’s discretionary decisions for an abuse of discretion.
Id. “[A]n abuse of discretion occurs only when the trial court’s decision is outside the range of
reasonable and principled outcomes.” Saffian v Simmons, 477 Mich 8, 12; 727 NW2d 132
(2007).
Contrary to the DHS Director’s argument on appeal, the circuit court was not required to
apply the federal “rigorous analysis” approach to determine whether to certify the class action.
MCR 3.501(A) provides sufficient guidance for considering a request for class certification.
Henry, 484 Mich at 502. MCR 3.501(A)(1) contains the following prerequisites for a class
action:
(a) the class is so numerous that joinder of all members is impracticable;
(b) there are questions of law or fact common to the members of the class
that predominate over questions affecting only individual members;
6
Because MCL 400.6(2) applies, it is unnecessary to consider plaintiffs’ argument based on
Palozolo v Dep’t of Social Servs, 189 Mich App 530; 473 NW2d 765 (1991).
7
The record is not clear regarding how the FIP program operates in terms of distributing state
funds versus federal funds. Further proceedings may serve to clarify this issue.
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(c) the claims or defenses of the representative parties are typical of the
claims or defenses of the class;
(d) the representative parties will fairly and adequately assert and protect
the interests of the class; and
(e) the maintenance of the action as a class action will be superior to other
available methods of adjudication in promoting the convenient administration of
justice.
The DHS Director focuses on subparts (b) and (e). We reject the DHS Director’s
argument that plaintiffs’ class fails the commonality requirement of MCR 3.501(A)(1)(b). This
prerequisite only requires “the common issue or issues to predominate over those that require
individualized proof.” Hill v City of Warren, 276 Mich App 299, 311; 740 NW2d 706 (2007).
The circuit court did not clearly err by finding a predominating issue of law concerning the
validity of the DHS Director’s implementation of a 60-month time limit for receiving cashassistance benefits.
With respect to MCR 3.501(A)(1)(e), the court rule provides a number of factors that a
trial court should consider when evaluating whether a class action would be superior to other
forms of adjudication. MCR 3.501(A)(2). This prerequisite to class certification is essentially a
practicality test that promotes the convenient administration of justice. Hill, 276 Mich App at
314. A court should not evaluate the merits of the case when determining whether to certify a
class action. Henry, 484 Mich at 504-505. Therefore, we reject the DHS Director’s argument
that the possible effect of this case on funding for FIP assistance weighs against the circuit
court’s finding that a class action was a superior means of adjudication.
We also reject the DHS Director’s argument that plaintiffs should have pursued their
claim by requesting a declaratory ruling from the DHS, followed by an action to obtain a
declaratory judgment, under the APA. See MCL 24.263 and MCL 24.264. An action for a
declaratory judgment authorized by MCL 24.264 was not applicable to plaintiffs’ claim because
it does not involve promulgated rules. See Jones v Dep’t of Corrections, 185 Mich App 134,
137; 460 NW2d 575 (1990), and Bentley v Dep’t of Corrections, 169 Mich App 264, 270; 425
NW2d 778 (1988). In addition, MCL 24.263 did not apply because plaintiffs were not seeking to
apply a rule to an actual set of facts, but rather to have an administrative policy that was not
promulgated as a rule declared invalid. See Mich Farm Bureau v Dep’t of Environmental
Quality, 292 Mich App 106, 119 n 7; 807 NW2d 866 (2011). In any event, it is clear from the
record that the circuit court’s concern was that individual actions could lead to different rulings
on a question of law. We conclude that the DHS Director has failed to establish any basis for
reversal of the circuit court’s decision that the class action was a superior means of adjudicating
the question of law in this case.
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Affirmed in part, reversed in part, and remanded 8 for further proceedings consistent with
this opinion. We do not retain jurisdiction.
/s/ Patrick M. Meter
/s/ Deborah A. Servitto
/s/ Karen M. Fort Hood
8
Certain aspects of the circuit court’s decision were erroneous, and we thus remand for entry of
an order that comports with our decision today.
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