In the case of Califano v. Yamasaki, the U.S. Supreme Court ruled in 1978 that the Secretary of Health, Education and Welfare did not have authority to recover overpayments made by Social Security without providing a hearing for recipients prior to recoupment. The court held that due process required such hearings under the Fifth Amendment's Due Process Clause before recovery could be initiated by offsetting against future benefits or requiring repayment from other assets. Additionally, it was determined that while there is no constitutional bar to combining claims against multiple beneficiaries into one action for administrative convenience, individual notice and opportunity for hearing must still be provided.

In the dissenting opinion for Califano v. Yamasaki, Justice Rehnquist argued that the majority had overstepped its bounds by mandating nationwide class action suits in cases involving Social Security benefits. He contended that such a broad ruling was unnecessary and inappropriate given the specific circumstances of this case, which involved only two district courts out of 95 across the country. Furthermore, he believed it was not within the Court's purview to dictate how lower courts should manage their dockets or handle class actions generally. Instead, these matters should be left to Congress and federal rulemakers who have more expertise in procedural issues. Finally, he expressed concern about potential negative consequences of allowing large-scale litigation against government agencies without clear legislative authorization.