Several lawsuits have raised issues important to LSC-funded programs. Litigation has been filed challenging the LSC restrictions in Hawaii, New York and Oregon, the ability of both independent auditors in Indiana and the Office of Inspector General in Maryland, New York and Georgia to review confidential client information, and merger decisions in Virginia and California.

Cases Challenging LSC Restrictions

Legal Aid Society of Hawaii v. LSC

The first case challenging the LSC restrictions, LASH v LSC, was filed in the U.S. District Court of Hawaii by the Legal Aid Society of Hawaii and several other LSC recipients. The plaintiffs were initially successful at the District Court level, but LSC revised its regulations, and in May 1998, the U.S. Court of Appeals for the Ninth Circuit found that the restrictions on grantees' use of non-LSC dollars did not amount to a violation of the First Amendment protection of free speech. The plaintiffs filed a petition for certiorari which was denied.

Velazquez v LSC

The second case challenging the LSC restrictions is Velazquez v LSC, 121 S. Ct. 1043 (2001). The United States Supreme Court issued an opinion in the case on February 28, 2001. The case arose out of a challenge to many of the restrictions placed on LSC funding in 1996. The Supreme Court found one of the restrictions, the welfare reform prohibition in the "suits for benefits" provision to be an unconstitutional limitation on First Amendment free speech guarantees. The Supreme Court ultimately denied certiorari on the challenges to other restrictions in Velazquez.

Detailed analyses and links to the opinion follow:

• March 5, 2001 NLADA Update on Supreme Court Ruling in Velazquez
• Linda Perle Velazquez analysis in Cornerstone
• Brennan Center Analysis
• Opinion

Dobbins v. LSC

The third challenge to the LSC restrictions was filed in December 2001 following the U.S. Supreme Court decision in Velazquez, seeking a preliminary injunction barring LSC from enforcing several of the 1996 restrictions, including the restrictions on private funds and the program integrity regulations, as well as the restrictions on attorneys' fees and class action. The plaintiffs in the Dobbins case include private foundations that wish to contribute to LSC recipients, a private attorney who wishes to donate pro bono time to MFY Legal Services to do a class action and several LSC recipients.

In June 2002, NLADA joined numerous LSC recipients and other legal services providers in an amicus brief in support of the plaintiffs in the Dobbins case. On December 20, 2004, the U.S. District Court ordered (pdf, 368 Kb) LSC to stop enforcing the physical separation requirement against the plaintiff civil legal aid programs. The court agreed with the plaintiffs that, as applied to them, the requirement violated the First Amendment to the Constitution. Having made this ruling, the court did not overturn the private money restriction. The court also declined to overturn the specific restrictions that plaintiffs had challenged concerning class actions, attorneys' fee awards, and public interest solicitation.

In 2005, LSC appealed the district court's ruling and the United States joined the appeal. The plaintiffs filed a cross-appeal and NLADA joined another amicus brief in support of plaintiffs. On September 8, 2006, a panel of three judges of the U.S. Court of Appeals for the Second Circuit issued a decision (pdf, 107 Kb) that:

• lifted the preliminary injunction entered by the district court,
• required the district court to apply a different legal standard to determine whether the burdens imposed on the plaintiff legal services programs by the physical separation requirement effectively deny them adequate alternative channels through which to spend their non-LSC funds on the activities prohibited by the funding restrictions, and
• affirmed the part of the district court's order that declined to overturn the specific restrictions on class actions, attorneys' fee awards and public interest solicitation.

In December, 2006, the Second Circuit denied the plaintiffs' petition for a rehearing. In May, 2007, the plaintiffs filed a petition with the U.S. Supreme Court, asking it to hear the case, which was denied in October 2007, meaning that the case continues at the District Court level.

Legal Aid Services of Oregon v. LSC

In April 2008, Judge Paul Papak of the U.S. District Court of Oregon granted the Legal Services Corporation’s motion for summary judgment (pdf, 181 Kb) to dismiss a legal challenge to LSC’s application of 45 C.F.R Part 1610, its program integrity regulation. The suit had been filed by the LSC-funded Legal Aid Services of Oregon and the non-LSC funded Oregon Law Center, along with lawyers employed by those programs, low-income clients, and private donors who have contributed funds to legal aid programs in Oregon. The plaintiffs had argued that the LSC’s rejection of a proposal to reconfigure the two separate legal services programs in Oregon into one entity results in the unnecessary expenditure of funds that would be enough to finance the opening of another office to provide legal services in the rural areas of the state. Judge Papak ruled that LSC’s enforcement of the regulation against the plaintiffs did not violate their constitutional rights under the First and Fifth Amendments.

Judge Papak had previously dismissed the plaintiffs’ claims that the regulation was unconstitutional as written, and also dismissed a suit brought by the State of Oregon, which had argued that LSC’s rejection of the reconfiguration proposal "infringes on Oregon’s right to establish, provide and maintain a legal services program for low-income Oregonians consistent with state policy. . . ." The State had also argued that this infringement constituted a violation of the Tenth Amendment "and the principles of federalism established in the structure of the Unites States Constitution. . . " and exceeds LSC’s authority under the Spending Clause. Both lawsuits had been filed in September 2005.

Cases Relating to Confidentiality of Client Files

Several cases have been filed regarding access to certain client records by independent auditors and the Office of Inspector General.

Indiana

A petition filed by Legal Services of Northern Indiana before the Indiana Supreme Court on May 25, 2000 sought to have the court prohibit access to certain client-related information by the program's Independent Public Accountant (IPA). The petition was dismissed by the Supreme Court in an order essentially finding it improper for the Supreme Court to answer "non-adversarial, abstract questions of law. . ." No further remedy was sought by Legal Services of Northern Indiana.

Read more on the theory of the claim in the NLADA Update piece on the Indiana case.

• June 19, 2000 NLADA Update

Legal Aid Bureau of Baltimore and Legal Services of New York

The Legal Aid Bureau of Baltimore and Legal Services of New York were both involved in a case brought by the LSC Inspector General in the federal district court in the District of Columbia to enforce OIG subpoenas to force the programs to provide client names pursuant to an OIG review of grantee reporting under the Case Service Reporting system (CSR) at LSC. Legal Services of New York initially filed suit on May 4, 2000 in the U.S. District Court for the Eastern District of New York asking for relief from the OIG subpoena seeking disclosure of client names. The New York case was ultimately joined for hearing with a case brought in the District of Columbia by the Inspector General to enforce his subpoenas against the Legal Aid Bureau of Maryland.

The U.S. District Court for the District of Columbia found in favor of the Inspector General, and the Legal Aid Bureau of Maryland complied with the order. Legal Services of New York appealed to the U.S. Court of Appeals for the District of Columbia. NLADA joined in an amicus curiae brief in the LSNY appeal. On May 25, 2001, the DC Circuit affirmed the District Court's decision enforcing the OIG subpoenas.

For more information, read the NLADA Update pieces on LSNY/LAB litigation.

• March 31, 2000 NLADA Update
• May 26, 2000 NLADA Update
• June 8, 2000 NLADA Update
• June 19, 2000 NLADA Update
• June 1, 2001 NLADA Update

Georgia Legal Services and Atlanta Legal Aid

In this case, the US Department of Justice filed suit on behalf of the LSC Inspector General in the U.S. District Court for the District of Columbia seeking to enforce subpoenas against the two Georgia programs to require disclosure of client-sensitive information over a 10-year period of time. The information was being sought by the Inspector General to assist him in a study as part of an evaluation of demographic data in Georgia. NLADA joined in an amicus brief (pdf, 60 Kb) in support of the Georgia programs. In July 2001, a settlement was reached between the OIG and the Georgia programs and the suit was dismissed.

• August 9, 2000 NLADA Update article on Georgia subpoena
• December 8, 2000 NLADA Update article on DOJ subpoena enforcement
• January 24, 2001 NLADA Update article on Georgia amicus
• July 23, 2001 NLADA Update article on settlement
• Amicus Brief (pdf, 60 Kb)

California Rural Legal Assistance

On October 17, 2006 California Rural Legal Assistance (CRLA) received a subpoena from LSC's Office of Inspector General (OIG) in connection with the OIG’s ongoing investigation of allegations made by a confidential source against CRLA. The subpoena sought a broad range of documents and information, some of which dates as far back as January 1998. Among other things, the data requested includes detailed client information for all of CRLA’s cases that were open from January 1, 2003 through October 31, 2005, which CRLA estimates comprise more than 39,000 cases. In addition, the OIG seeks comprehensive information regarding numerous specific CRLA cases and activities, including work with group clients, task forces and conferences.

To protect the confidentiality of its clients, CRLA declined to disclose client records, claiming the burden of sifting through 39,000 client records to identify privileged information would consume thousands of hours of attorney and staff time — effectively grinding the group's real client work to a halt — as CRLA reviews which of its records must be withheld on confidentiality grounds.

The OIG does not have authority to enforce the subpoena itself, but enlisted the assistance of the U.S. Department of Justice to seek enforcement in the U.S. District Court for the District of Columbia.

On September 21, 2007 NLADA filed an amicus brief in support of CRLA and several CRLA staff attorney-interveners in the subpoena enforcement action brought by the OIG and the Department of Justice.

• October 27, 2006 NLADA Update article on CRLA subpoena
• September 21, 2007 NLADA Update article on CRLA amicus

Cases Challenging LSC Decisions on Merger under the State Planning Process

Two cases have been filed in federal court seeking to overturn decisions made by the Legal Services Corporation to consolidate service areas under its state planning process.

Southwest Virginia

In February 2000, Client Centered Legal Services in Castlewood filed suit in U.S. District Court for the Western District of Virginia against the Legal Services Corporation for its decision to merge a number of service areas in Virginia. The LSC decision merged the service area of Client Centered Legal Services into adjoining programs. On June 5, 2000, the District Court entered a ruling in favor of LSC, dismissing the claims brought by Client Centered Legal Services. The plaintiffs appealed the case to the U.S. Court of Appeals for the Fourth Circuit which ruled on June 25, 2001 that there was no private right of action against LSC. Client Centered Legal Services sought certiorari in the US Supreme Court, but the petition was denied.

For more information, read:

• February 24, 2000 NLADA Update article on Virginia lawsuit
• June 8, 2000 NLADA Update
• August 14, 2001 NLADA Update

Pasadena, California

On August 4, 2000 the Legal Aid Society of Pasadena and San Gabriel-Pomona Valley (Pasadena) sued the Legal Services Corporation in the U.S. District Court for the Central District of California over LSC's decision to merge its service area into a an adjoining program. Pasadena alleged that LSC had not complied with statutory mandates to institute and continue a system of competitive bidding and to award grants and contracts consistent with that system. Pasadena also alleged that the LSC decision was arbitrary and capricious. On December 22, 2000, the Court denied Pasadena's Motion for a Preliminary Injunction, and on February 9, 2001, the Court denied the LSC Motion to Dismiss. The case was dismissed with prejudice after the parties reached a settlement.

For more information, read:

• August 9, 2000 NLADA Update article on Pasadena lawsuit
• January 12, 2001 NLADA Update
• February 23, 2001 NLADA Update

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