Reply Brief — Legal Services Corp. v. Velazquez

Supreme Court brief2001

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Nos. 99-603 and 99-9

IN THE |

Supreme Court of the Wnited ppiates:

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LEGAL SERVICES CORPORATION,

Petitioner,

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CARMEN VELAZQUEZ, et al.,

Respondents.

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UNITED STATES OF AMERICA,

Petitioner,

—)

CARMEN VELAZQUEZ, et al.,

Respondents.

ON WRITS OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

REPLY BRIEF FOR PETITIONER

LEGAL SERVICES CORPORATION

ALAN LEVINE

Counsel of Record

STEPHEN L. ASCHER

STEPHEN A. WIEDER

KRONISH LIEB WEINER

& HELLMAN LLP

1114 Avenne of the Americas

New York, New York 10036

(212) 479-6000

Counsel for Petitioner

Legal Services Corporation

TABLE OF CONTENTS

A. The Suit-for-Benefits Limitation

Does Not Exclude Welfare Claimants

from a Public Forum Based on their

WIE RES ae Cahn ees EKG ekas Le

1. The LSC Program Is Not a Public

Mo LD ee ee nr es ey ane

2. The Suit-for-Benefits Limitation

Does Not Discriminate Against

Any Particular Viewpoint..........

3. Respondents Do Not Identify a

Coherent Speaker for Purposes

of the First Amendment............

B. The Suit-For-Benefits Limitation

Does Not Violate the Associational

Rights of Welfare Claimants and LSC

SEES Fa Ohba acace crassa eeinkeciads

C. The Suit-for-Benefits Limitation

Does Not Prevent Welfare Claimants

from Challenging the Welfare Laws....

PAGE

D. LSC’s Program Integrity Regulations

Do Not Violate LSC Grantees’ First

Amondment Rages ooo. occcncccdiccexsiss 16

CONCLUSION... ... «caskeaneu duncan eeeeeeeees 20

ili

TABLE OF AUTHORITIES

Cases PAGE

Arkansas Education Television Com’n v.

Perea, 229 U.S. 666 (1996) ............50.0. 4

Blum v. Bacon, 457 U.S. 132 (1982)............. 6, 10

Califano v. Westcott, 443 U.S. 76 (1979)........ 10

City of Ladue v. Gilleo, 512 U.S. 43 (1994) ..... 16

City of Lakewood v. Plain Dealer Publishing

SOS Ree kL | 16

Goldberg v. Kelly, 397 U.S. 254 (1970).......... 10, 13

King v. Smith, 392 U.S. 309 (1968).............. 6, 11

McCoy v. Department of Health & Welfare,

pur ©.20 110 (idaho 1995) .................. 6, 11

NAACP v. Button, 371 U.S. 415 (1963).......... 9

National Endowment for the Arts v. Finely,

Oe Re OP CEP oi cic ives edvccs cocesecs 3-4,5

Niemotko v. State of Maryland, 340 U.S. 268

ee os boas pul cu Nba cae 17

Ortwein v. Schwab, 410 U.S. 656 (1973) ......... 13-14

Regan v. Taxation with Representation,

ON Pte OOO oo ia bo ove ss cies oesleance 17

Reno v. ACLU, 521 U.S. 844 (1997) ............. 16

Rist v. Missouri State Division of Family

Services, 595 S.W.2d 783 (Mo. Ct. App.

NE ehh Wien us ows suas Wied bhawle eeew kes 1]

Rosenberger v. Rector & Visitors of the

University of Virginia, 515 U.S. 819

LSP ee Ma icnancuedersuneme lenses ccedeons uc ce ae i

Rust v. Sullivan, 500 U.S. 173 (1991) ........... passim

Schneider v. State of New Jersey, 308 U.S. 147

Cee aka exe neh hacia ew amas 17

Shapiro v. Thompson, 394 U.S. 618 (1969)....... 10-11

Shuttlesworth v.:City of Birmingham, Ala.,

a Me PO te rear 17

Sullivan v. Zebley, 493 U.S. 521 (1990)......... 6, 10

Walters v. National Association of Radiation

Survivors, 473 U.S. 305 (1985)........... 5, 14, 18

Webster v. Reproductive Health Services,

Ok as EEE oxida 0k ks oak adkc ene 14

Statutes, Regulations and Legislative History

42 U.S.C. § GOl(a) (Aug. 1996) ... occ cccsceccces 18

SD Gs SE OED os on chk cvcadcnsinas 17

BF Ges BUFR CPF ov kacdctacdarivndonicas 1]

GS C.F. SUG TP. 20) CABO Eo vse sees civicciadcci 1]

S« Mop. No. TOG-S95 C1996) aac cscs cckccacecdas 19

—_——— — ———— ———————

PAGE

Other Authorities

ABA Comm. On Ethics and Professional

Responsibility, Formal Op. 96-399

PRS 5 xd dbceatncakinceee chee 8, 11, 12-13

Legal Services Corporation, 1996 Facts......... 10

Legal Services Corporation, 1997 Annual

ONE 5. i500 de nesenuuseceneredie ce 10

Legal Services Corporation, 1998 Fact Book

and Program Information.................... 10

Legal Services Corporation, Serving the

Civil Legal Needs of Low-Income

Americans, A Special Report to

Congress (Apeit 2000) «ooo cicccsccccsicccawas 10

National Center on Poverty Law Website,

<http://www.povertylaw.org/aboutncls/

WPI TI 5. kk xk anene case: 15

Preliminary Statement!

Respondents face a heavy task on their facialschal-

lenge to the suit-for-benefits limitation: establishing that

the government’s decision not to subsidize lawsuits chal-_

lenging existing welfare law violates welfare claimants’

constitutional rights, in all instances and under any

circumstances. To carry this burden, Respondents char-

acterize the suit-for-benefits limitation as “totalitarian,”

supposedly “the most egregious violation of viewpoint

neutrality to have come before the Court in recent

years. ” Resp. Br. at 14, 32.

Respondents are simply wrong, however, when they

brand the limitation a “self-interested” attempt by “the

government” to insulate its own laws from constitutional

challenge. The welfare laws are not the work of a mono-

lithic “government.” Although the suit-for-benefits lim-

itation was enacted by Congress, the limitation removes

funding from challenges to federal, state and local reg-

ulations, and state statutes, as well as Congress’s own

handiwork. Thus, the suit-for-benefits limitation does

not protect Congress’s viewpoint; it removes funding

from cases that allege contradictions between laws pro-

mulgated by different political bodies. Congress has

validly decided not to subsidize this discrete category of

controversial, politicized, and, presumably, expensive

cases.

In reply, Respondents insist that LSC lawyers cannot

determine, at the outset of a case, whether to assert

claims challenging existing law. Based on this assump-

tion, Respondents hypothesize a series of ethical dilem-

mas that face LSC lawyers who discover a challenge to

| We cite Respondents’ brief as “Resp. Br.,” and the briefs filed

on behalf of the various amici curiae as “NYSBA Br.,” “ACLU a

and “AJS Br.” Ali case and record citations are as in LSC’s initial

brief (“LSC Br.”).

existing law in the midst of an ongoing suit for benefits.

Respondents thus contend that the limitation does not

divert cases from the LSC program, but instead dictates

the arguments LSC lawyers can make within cases,

thereby disrupting lawyer-client relationships and muz-

zling speech in the courtroom.

This parade of horribles is disproven by a single fact:

Since enactment of the suit-for-benefits limitation, LSC

lawyers have handled thousands of benefits matters. Not

one of these lawyers is before the Court alleging that a

challenge to a welfare law materialized during a lawsuit,

leaving the lawyer-in an ethical quandary. This is not

surprising; although the nature-of a factual claim will

often evolve during the litigation process, it should ordi-

narily be clear at the outset of a litigation whether to

contend that the text of one law violates the provisions

of some higher law.

At bottom, Respondents are contending that since no

other lawyers are available to test the validity of welfare

reform laws, the suit-for-benefits limitation effectively

prevents any challenges to those laws. This contention is

legally irrelevant; the government has no obligation to

subsidize the exercise of a right, even if individuals

would be unable to exercise that right without the gov-

ernment’s assistance. This contention is also untenable;

much of the cutting edge welfare litigation excluded

from the LSC program will likely be handled by non-

LSC legal aid organizations, private lawyers, and bar

associations.

Granted, some welfare claimants may be unable to find

a lawyer to assert challenges to the welfare laws. But

other types of litigation for the indigent are also under-

funded. Allocating the federal subsidy between these

different types of cases is the prerogative of Congress,

not of the lawyers whose work Congress subsidizes.

For these reasons, the court of appeals’ invalidation of

the suit-for-benefits limitation should be reversed.

ARGUMENT

A. The Suit-for-Benefits Limitation Does Not

Exclude Welfare Claimants from a Public Forum

Based on their Viewpoint

Although Respondents try to defend the court of

appeals’ analogy to Rosenberger v. Rector & Visitors of

the University of Virginia, 515 U.S. 819 (1995), Respon-

dents’ reply papers suffer from the same three flaws as

the court of appeals’ opinion.

1. The LSC Program Is Not a Public Forum

Rather than satisfy the crucial “public forum” element

of Rosenberger, Respondents downplay it, contending

that the government must be viewpoint-neutral whenever

it subsidizes a private speaker’s speech, rather than the

government’s own speech.’ From this starting point,

respondents claim that since LSC lawyers are indepen-

dent of the government (and often adverse to it), they are

private speakers whose speech must be subsidized

regardless of viewpoint. Resp. Br. at 19-21; ACLU Br.

at 9-22.

The touchstone in Rosenberger was not, however, the

identity of the speaker (governmental or not), but the

nature of the program created by the subsidy (public

forum or not). See National Endowment for the Arts v.

Finley, 524 U.S. 569, 586 (1998) (explaining Rosenberger:

. Respondents also try to side-step the public forum element by

contending that speakers cannot be excluded even from non-public

fora on the basis of viewpoint. Resp. Br. at 28 n.27. The cited cases

are not applicable to a selective subsidy, however; they involved

direct restrictions on speech.

“by subsidizing the Student Activities Fund, the Uni-

versity had created a limited public forum, from which

it impermissibly excluded all publications with religious

editorial viewpoints”) and 598-99 (“Rosenberger . . .

found the viewpoint discrimination unconstitutional, not

because ‘private’ speech was involved, but because the

government had established a limited public forum. . . .”)

(Scalia, J., concurring). Moreover, the Rosenberger

Court explicitly noted that although the doctors in Rust

v. Sullivan, 500 U.S. 173 (1991) were “private speak-

ers,” the government could regulate their conduct within

its services program. Rosenberger, 515 U.S. at 833 (dis-

tinguishing Rust by noting that “the government did not

create a program to encourage private speech but instead

used private speakers to transmit specific information

pertaining to its own program’).

Similarly, although LSC lawyers are private speakers,

the services they perform are part of a federal program.

Since that program is not designed to promote expres-

sion, let alone the free expression of the public at large,

it is not a public forum governed by the principle of

viewpoint neutrality. In fact, the LSC program is “not a

forum at all.” See Arkansas Educ. Television Com'n v.

Forbes, 523 U.S. 666, 678-679 (1998).

Yet Respondents challenge the very notion of a gov-

ernmental services program, contending that the dis-

tinction between a program for the promotion of speech

and a program to deliver services is mere semantics.

Resp. Br. at 22-23 and n.19. Although Respondents are

correct that expression can come in many different

forms, there is an obvious difference between a program

to promote free and open expression and a program to

deliver specific services to eligible individuals: If the

government refuses, on the basis of viewpoint, to pro-

vide a speaker with a speech subsidy that is generally

available to other speakers in a public forum, then the

———

government’s action may have the effect of suppressing

speech. If, however, the government merely limits the

services offered in a defined program, the government is

simply promoting one policy without also supporting a

competing policy.

Even Respondents agree that the government is free to

take a particular viewpoint when it promotes policy

through expression per se (e.g., when the FDA warns

about the dangers of smoking (Finley, 524 U.S. at 610-

611(Souter, J., dissenting))). Resp. Br. at 19 n.17. The

government must have the same power to promote a par-

ticular policy through non-expressive means, including

by subsidizing a program to provide services. In this

context, the First Amendment simply has no relevance.’

2. The Suit-for-Benefits Limitation Does Not

Discriminate Against Any Particular View-

| point

| Even if the LSC program were somehow a public

| forum, Respondents have not shown that anyone is

excluded from it based on viewpoint. In our initial brief,

we explained the deficiencies in the court of appeals’

holding that the suit-for-benefits limitation is biased in

favor of the status quo. In reply, Respondents recharac-

3 Alternatively, Respondents try to defend the court of appeals’

holding that litigation is a public forum by analogizing litigation to a

university. Resp. Br. at 27-30; ACLU Br. at 17-21. But Respondents

do not address (let alone rebut) our point that the LSC program, not

the litigation process, is the proper subject of the forum analysis. LSC

Br. at 27-28. The analogy is, in any event, absurd; the courtroom is

not part of a “tradition of thought and experiment that is at the cen-

ter of our intellectual and philosophic tradition.” Rosenberger, 515

U.S. at 835. Thus, litigants’ First Amendment rights are not compa-

rable to those of a university, its professors, or its students. Cf. Wal-

ters v. National Ass’n of Radiation Survivors, 473 U.S. 305, 335 n.13

(1985) (litigants’ First Amendment rights different from individuals’

rights of political expression).

terize the limitation, claiming it operates in a “self-inter-

ested manner designed to insulate the government’s own

viewpoint about the validity of its laws from effective

challenge by the subsidized speaker.” Resp. Br. at 12-14.

But the “welfare laws” are a mosaic of federal, state

and local law. They reflect the “viewpoints” of legisla-

tures, judiciaries, and administrative agencies in all

these political systems. See NYSBA Br. at 8-9. While

Respondents focus on “challenges to existing law” alleg-

ing the unconstitutionality of a federal statute, these law-

suits more often contend that the federal statute which

created a given welfare program trumps an inconsistent

state or local law (or federal regulation) designed to

implement that program. In such a case, the welfare

claimant is not challenging Congress’s viewpoint, but

trying to enforce it.*

Thus, the suit-for-benefits limitation does not insulate

Congress’s viewpoint from challenge; it removes fund-

ing from a certain category of cases regardless of view-

point: expensive, politicized “test cases” that could

require a court to resolve alleged contradictions between

laws promulgated by different jurisdictions. This cate-

gorical restriction is consistent with all the other restric-

tions in the LSC statute that are designed to steer the

program clear of politics—none of which is viewpoint-

based. Pet. App. at 20a-23a.

4 Carmen Velazquez’s claim—that she was precluded from

arguing that New York State law violated federal law (C.A.J.A. 278-

79)—illustrates this point. So do many of the cases cited by Respon-

dents. E.g., Sullivan v. Zebley, 493 U.S. 521 (1990) (HHS regulation

violated federal statute); Blum v. Bacon, 457 U.S. 132 (1982) (New

York statute violated federal regulation); King v. Smith, 392 U.S. 309

(1968) (Alabama regulatior violated Social Security Act); McCoy v.

Department of Health & Welfare, 907 P.2d 110 (Idaho 1995) (Idaho

regulation violated Title X).

3. Respondents Do Not Identify a Coherent

Speaker for Purposes of the First Amend-

ment

Finally, in response to LSC’s argument that the court

of appeals misidentified LSC lawyers as the relevant

“speakers,” Respondents concede that “the primary

speaker in thiscase. . . is the indigent client for whom

the lawyer is acting as a speech-proxy. . . .” Resp. Br.

at 27.

Yet Respondents’ brief repeatedly invokes the rights

of LSC lawyers. For example, the brief includes a

lengthy challenge to LSC’s program integrity regula-

tions. Resp. Br. at 33-44. Since these rules are designed

to permit adequate alternative channels for grantees’

affiliates to conduct prohibited unsubsidized activities,

this challenge implicitly advocates the rights of lawyers,

not clients. Respondents also suggest there is no con-

stitutional distinction between regulating the speech of

a lawyer in Court and “prevent[ing] the subsidized

lawyer from entering the courtroom in the first place.”

Resp. Br. at 31. This rhetorical flourish contradicts

Respondents’ concession that the client is the one with

the First Amendment rights, because the client is cer-

tainly not “prevented from entering the courtroom.”

Respondents’ inability to identify a coherent speaker

further illustrates the inapplicability of free speech anal-

ysis to this case. The analogy to Rosenberger should be

rejected.°

* Respondents also ask the Court to reconsider its holding in

Rust. Resp. Br. at 19 n.17. As we explained in our initial brief, how-

ever, the central issue in Rust was a restriction on the speech between

the doctor and patient. LSC Br. at 17-18 and 23. Reconsidering that

issue would have no bearing on the Court’s resolution of the issue

here, namely, the validity of a restriction purely on the services the

lawyer can render. Thus, it would be inappropriate to reconsider Rust

in this case.

B. The Suit-For-Benefits Limitation Does Not

Violate the Associational Rights of Welfare

Claimants and LSC Lawyers

In addition to their free speech claim, Respondents

contend that the suit-for-benefits limitation violates wel-

fare claimants’ freedom to associate with competent

LSC counsel, because the limitation manipulates “the

representational judgments made by a government-

funded lawyer.” Resp. Br. at 17. Respondents’ primary

allegation is that challenges to existing law will become

apparent only after an LSC lawyer has initiated a bene-

fits claim, putting the LSC lawyer in an ethical dilemma:

either withdraw from an ongoing case, thereby preju-

dicing the subsidized claim, or forego the challenge to

existing law, thereby precluding the unsubsidized claim.

NYSBA Br. at 6-17.

Respondents’ argument depends entirely on dictum in

Rust, where this Court suggested that an “all encom-

passing” doctor-patient relationship might enjoy First

Amendment protection from “significant impingement”

by the government, even if the government subsidized

that relationship. 500 U.S. at 200. While Respondents put

great weight on these words, this Court rejected the claim,

for reasons that are equally applicable to the claim at hand.

First, as the court of appeals held, “the lawyer-client

relationships funded by LSC are no more ‘all-encom-

passing’ than the doctor-patient relationships . . . con-

sidered in Rust.” Pet. App. (99- 603) at 14a. The LSC

Act has always prohibited LSC lawyers from engaging

in political activities or from handling certain categories

of politicized cases within the LSC program. LSC Br. at

2-5. And LSC lawyers have an obligation to explain

these restrictions to their potential clients at the outset of

any representation. ABA Comm. On Ethics and Profes-

sional Responsibility, Formal Op. 96-399 (1996) (“ABA

Op.”). Thus, LSC clients cannot possibly believe they

are hiring lawyers who are in a position to express all of

their views, rather than render them specific services. As

a consequence, LSC lawyers and clients do not have the

kind of “expressive associational relationship” that was

crucial to the holdings in NAACP v. Button, 371 U.S.

415 (1963), and its progeny. See Resp. Br. at 14-17.

Even if the relationship between an LSC lawyer and

client were “all-encompassing,” the suit-for-benefits

limitation does not “significantly impinge” upon it. Cer-

tainly the suit-for-benefits limitation is nothing like the

criminal and ethical sanctions considered in Button and

its progeny, all of which prohibited relationships

between clients and the unsubsidized private counsel of

their choice. Moreover, in Rust, this Court held that for-

bidding a doctor to recommend abortion or to refer a

patient to an abortion-provider did not significantly

impinge upon the doctor-patient relationship. Rust, 500

U.S. at 192-95. Since the suit-for-benefits limitation

does not include comparable restrictions on advice and

referrals, it has even less impact on the lawyer-client

relationship. In fact, the limitation does not affect ongo-

ing relationships at all; it simply excludes certain cases

from the federal program.

To overcome this crucial distinction from Rust,

Respondents insist that “challenges to existing law” will

generally not be apparent at the outset of representa-

tions, but will arise midstream, leaving LSC lawyers

unable to raise certain arguments in lawsuits. While this

contention may be superficially plausible, it cannot with-

stand scrutiny, particularly on this facial challenge.°

° Respondents suggest that LSC has conceded that “the so-

called deflection to another lawyer will often take place long into the

case. . . .” Resp. Br. at 31 n.30 (citing LSC Br. at 7 n.4). LSC makes

no such concession; Respondents are misreading our initial brief.

Since the suit-for-benefits limitations went into effect

in August 1996, LSC-funded lawyers have handled more

than 150,000 benefits claims, six thousand of which

involved litigation.’ Of these cases, Respondents have

not identified a single LSC lawyer who learned, in the

middle of a case, that she ought to amend a complaint to

add a challenge to existing law.* LSC lawyers have obvi-

ously determined that thousands of cases could be han-

dled ethically and competently under the limitation.

To overcome this single dispositive fact, Respondents

manufacture a series of unsupportable claims:

¢ That challenges to existing law will arise as a

result of new facts learned during discovery.

Resp. Br. at 24-26; NYSBA Br. at 7-8. In fact,

the claims excluded by the suit-for-benefits lim-

itation are not fact-intensive, but turn on an

argument that the text of a regulation or statute

violates the text of some higher law.® Such

7 LSC lawyers have handled more than 500,000 “Income Main-

tenance” matters since August 1996. LSC has determined that about

150,000 of these matters involved welfare benefits of the sort covered

by the suit-for-benefits limitation. See Legal Services Corporation,

1996 Facts at 12-13; Legal Services Corporation, 1997 Annual Report

at 4; Legal Services Corporation, 1998 Fact Book and Program Infor-

mation, at 12-13; Legal Services Corporation, Serving the Civil Legal

Needs of Low-Income Americans, A Special Report to Congress

(April 2000) at 7. Of those matters, 0,039 were litigated to decision

or settled during litigation.

§ The lead Respondent, Carmen Velazquez, initiated her case

before enactment of the suit-for-benefits limitation. C.A.J.A. 276-79.

9 The cases cited by amicus NYSBA Br. at 26 n.11 illustrate

this point. E.g. Sullivan v. Zebley, 493 U.S. 521 (1990) (HHS regu-

lation violated federal statute); Blum v. Bacon, 457 U.S. 132 (1982)

(New York statute violated federal regulation); Califano v. Westcott,

443 U.S. 76 (1979) (federal statute violated due process clause);

Goldberg v. Kelly, 397 U.S. 254 (1970) (New York City regulations

violated due process clause); Shapiro v. Thompson, 394 U.S. 618

claims can be identified by an experienced ben-

efits practitioner at the outset of the represen-

tation—as evidenced by the thousands of

representations so far. Although that process

may require some investigation prior to taking a

case, lawyers must frequently gather certain

facts to determine whether they can handle a

potential new matter. This task does not violate

either the First Amendment or lawyers’ ethical

duties. See ABA Op. (“Before accepting a new

client a Legal Services Lawyer subject to LSC

funding restrictions must inform the client about

all of the restrictions . . . and must carefully

screen the client to ensure that the representation

will not endanger funding.”).

* To bolster their contention that LSC lawyers

cannot identify “challenges to existing law” at

the outset of a representation, Respondents argue

that the term “existing law” is too vague for con-

Sistent application. Resp. Br. at 24-27. But

LSC’s regulations explicitly define this term. See

45 C.F.R. § 1639.2 (1997 ). Respondents repeat-

edly fail to reckon with this definition. '°

(1969) (state and D.C. statutes violated due process clause); King v.

Smith, 392 U.S. 309 (1968) (Alabama regulation violated Social Secu-

rity Act); McCoy v. Department of Health & Welfare, 907 P.2d 110

(Idaho 1995) (Idaho regulation violated Title X).

10 Respondents argue that because the Constitution itself is

“existing law,” it is meaningless to allow suits under “existing law” but

to prohibit constitutional challenges to “existing law.” Resp. Br. at 24.

But the definition of “existing law” excludes constitutional law. See 45

C.F.R. § 1639.2(b) (1997). Similarly, although Respondents cite Rist

v. Missouri State Division of Family Services, 595 S.W.2d 783, 785-86

(Mo. Ct. App. 1980), for the proposition that it is often impossible to

determine whether an adverse welfare determination is based on “exist-

ing law” or mere “policy,” the unpublished state policy in Rist clearly

was not “existing law.” See 45 C.ER. § 1639.2(b) (1997).

¢ Finally, Respondents contend that claims chal-

lenging the fairness of an agency determination

will not become apparent until after the LSC

lawyer has already begun representing the client

before the agency. NYSBA Br. at 8. If LSC

lawyers determine that they must terminate the

representation at this discrete point—after an

agency decision but before any litigation has

begun—the lawyer’s withdrawal does not

threaten the client with claim preclusion; it

merely requires the client to find a new lawyer

for the next phase of the representation. This is

not a significant impingement of the lawyer-

client relationship.

Even if these contentions were correct, however, and

LSC lawyers sometimes discover challenges to existing

law in the middle of cases, they will not be faced with

the impossible dilemma posited by Respondents. There

is no reason to believe that other legal aid organizations

or pro bono lawyers will not handle these cases. See

infra. at p. 15. LSC grantees can even create their own

affiliates to litigate these matters. See infra at pp. 18-19.

This court should not presume “prejudice” on this facial

challenge.

In sum, Respondents have not established a “sub-

stantial probability” that the suit-for-benefits limitation

will disrupt ongoing attorney-client relationships, or that

any such disruption will work a “significant impinge-

ment” on the attorney-client relationship. Thus, LSC

rejects Respondents’ absurd allegation that it is inten-

tionally requiring its lawyers “to act in tension with, if

not in direct contravention of, ‘the high standards of the

profession.’ ” Resp. Br. at 48-50. There is nothing uneth-

ical about declining to accept a matter that is outside the

LSC program. See ABA Op. (“A Legal Services Lawyer

ee ee

is not obligated to find alternative counsel for a potential

client who has been turned away.”). Respondents’ free

association claim should be rejected.

C. The Suit-for-Benefits Limitation Does Not Pre-

vent Welfare Claimants from Challenging the

Welfare Laws

Respondents also contend that LSC grantees are often

the only lawyers available to challenge welfare reform

laws, and that the suit-for-benefits restriction therefore

“prevents an indigent client from addressing legitimate

arguments . . . through counsel.” Resp. Br. at 27: see

also NYSBA Br. at 18-27. While Respondents press this

point repeatedly, it is unclear whether they are trying to

resurrect their Fifth Amendment “access to the courts”

claims (Resp. Br. at 32 n.31)—which the district court

rejected as “rather casual,” Pet. App. (99-603) at 82a-

83a, and Respondents abandoned on appeal—or make a

First Amendment argument. Either way, the argument

should be rejected.

In Ortwein v. Schwab, 410 U.S. 656 (1973), recipients

of welfare benefits challenged a filing fee that effec-

tively prevented them from bringing lawsuits to review

agency decisions that reduced their benefits. This Court

dismissed their due process claim, holding that since

they had received all the pre-reduction process required

by Goldberg v. Kelly, 397 U.S. 254 (1970), they were

not entitled to “an appellate system” to challenge the

agency determinations in court. Ortwein, 410 U.S. at 659-

60. This Court also dismissed the equal protection claim,

holding that the filing fee satisfied the rational basis test

applicable to a rule that does not include a “suspect clas-

sification.” Jd. at 660-61. Last, the Court summarily con-

cluded that re-characterizing the claim under the First

Amendment added nothing. Jd. at 660 n.5 (“Our dis-

cussion of the Due Process Clause . . . demonstrates

that appellants’ rights under the First Amendment have

been fully satisfied.”).

Similarly, in Walters v. National Ass’n of Radiation

Survivors, 473 U.S. 305, 316, 330 (1985), veterans chal-

lenged a statutory $10 maximum fee that could be paid

to an attorney who represented a veteran seeking bene-

fits for service-connected death or disability. This Court

reversed a nationwide preliminary injunction against

enforcement of the limitation, holding that plaintiffs’

facial challenge did not make the “extraordinarily strong

Showing” necessary to prove they had been denied

meaningful access to the courts in violation of the Due

Process Clause. The Court also rejected the First Amend-

ment claim, holding it had no “independent signifi-

cance.” /d. at 335. In fact, the Court questioned whether

the First Amendment claim was appropriate at all, not-

ing that “the constitutional analysis of a regulation that

restricts core political speech. . . will differ from the

constitutional analysis of a restriction on the available

resources of a claimant in Government benefit pro-

ceedings. . . .” Id. at 335n.13.

The suit-for-benefits limitation is far less burdensome

than the provisions considered in Ortwein and Walters."!

While those provisions actually created obstacles to the

assertion of benefits claims, Respondents in this case

allege that welfare claimants could not challenge the

welfare laws with or without the suit-for-benefits limi-

tation. Thus, if Congress had not created the LSC pro-

gram in the first place, indigent welfare claimants would

“have the same choices as if [the government] had cho-

sen not to” create the program at all. Webster v. Repro-

ductive Health Services, 492 U.S. 490, 509 (1989). This

Although Walters involved veterans’ benefits rather than wel-

fare benefits, Walters is nevertheless instructive in that the Court

denied a facial challenge to a limitation on claimants’ ability to obtain

lawyers to contest government benefits determinations.

is not a constitutional violation. Rust, 500 U.S. at 203

(“Petitioners contend. . . that most Title X clients are

effectively precluded by indigency and poverty from

seeing a health-care provider who will provide abortion-

related services. But. . . these Title X clients are in no

worse position than if Congress had never enacted Title

X.”)

Finally, Respondents have not made the “extraordi-

narily strong showing” necessary to justify an injunction

against enforcement of a federal statute. Amicus NYSBA

contends that in 22 states, LSC funds constitute more

than 50% of the total funding available for civil legal

services for low-income individuals. NYSBA Br. at 20.

Here the NYSBA essentially ignores pro bono service:

law firms, bar associations, and private lawyers acting

individually may well be interested in lawsuits that

could vindicate the rights of thousands of welfare

claimants. Other non-LSC organizations, such as the

National Center on Poverty Law, are also filling the gap

created by the congressional restrictions by hiring for-

mer LSC lawyers to engage in welfare-related “class

action and individual cases with broad policy implica-

tions.” See National Center on Poverty Law website,

<http://www.povertylaw.org/about ncls/whatwedo.htm>.

In fact, the NYSBA cites a handful of recent cases in

which non-LSC lawyers successfully challenged welfare

laws. Id. at 26-27. These cases are vivid proof that wel-

fare reform litigation can and does take place notwith-

Standing the suit-for-benefits limitation.

From all the NYSBA’s facts and figures, one stands

out: No matter how this Court resolves the present case,

the legal services available to meet the needs of the poor

will be greatly insufficient. NYSBA Br. at 19. Invali-

dating the suit-for-benefits limitation will not alleviate

that shortage. It will transfer control of the LSC program

from Congress, which decided to fund an apolitical ben-

efits program, to LSC lawyers, some of whom want to

participate in the contentious debate on welfare reform

through their subsidized employment. But ultimately

Congress has the power to define—or eliminate—the

LSC program.’

D. LSC’s Program Integrity Regulations Do Not

Violate LSC Grantees’ First Amendment Rights

Finally, Respondents challenge LSC’s program

integrity regulations, claiming that overturning this lim-

itation on the use of non-federal funds would provide a

“less ifitrusive ground on which to affirm the decision

below.” Resp. Br. at 33 n.32. In fact, the challenge to the

program integrity regulations is far more intrusive,

because it would invalidate LSC’s enforcement of a cru-

cial element of all the provisions in the 1996 Act. Thus,

the Court should reject Respondents’ attempt to justify

review of the program integrity regulations; this Court

granted certiorari to review the court of appeals’ inval-

idation of the suit-for-benefits limitation, not its

approval of the program integrity regulations.

If the Court decides to hear this challenge, the pro-

gram integrity regulations should be upheld. Although

Respondents allege that the regulations cannot survive

“strict scrutiny,” the strict scrutiny cases cited by

Respondents involved direct restrictions on First

Amendment activity;'? insofar as we are aware, this

12 Respondents’ separation of powers argument is ironic when

one considers that the lawyer-Respondents are trying to arrogate

Congress’s spending power to themselves.

3 See, e.g., Reno v. ACLU, 521 U.S. 844 (1997) (prohibition on

transmission of obscene/indecent communications); City of Ladue v.

Gilleo, 512 U.S. 43 (1994) (city ordinance banning certain signs); City

of Lakewood v. Plain Dealer Publishing Co., 486 U.S. 750 (1988)

(statute giving mayor unbridled discretion to prohibit news racks);

Court has never applied strict scrutiny in a selective sub-

sidy case. See, Regan v. Taxation with Representation,

461 U.S. 540, 548-49 (1983) (“We have held in several

contexts that a legislature’s decision not to subsidize the

exercise of a fundamental right. . . is not subject to

Strict scrutiny.”) (citations omitted).

Once the correct rational basis standard is applied, it

is clear that the program integrity regulations serve two

proper purposes. First, they prevent indirect subsidiza-

tion of activities Congress chose not to subsidize

directly. Respondents claim the district court held that a

physically separate facility was not necessary to prevent

indirect subsidization. Resp. Br. at 42. But the regula-

tions do not require complete physical separation

between LSC and non-LSC programs; they provide only

that “the degree of separation” is a factor for LSC to

consider when reviewing a grantee’s relationship with an

affiliate. 45 C.F.R. § 1610.8(a) (1997). Under these cir-

cumstances, LSC reasonably determined that “mere

book-keeping separation” could allow federal funds to

“cross-subsidize” restricted activities.

The second valid purpose of the program integrity reg-

ulations is preventing public confusion over whether the

government is endorsing the activities of LSC lawyers.

Pet. Cert. (99-603) at 77a-80a. Respondents claim this

justification is inapplicable to the LSC program because

“there is no risk at all that the public will confuse fed-

eral government funding of litigation against itself with

federal endorsement.” Resp. Br. at 42-43. But the federal

government will not be the defendant in lawsuits seek-

ing welfare benefits from state and local agencies; in

Shuttlesworth v. City of Birmingham, Ala., 394 U.S. 147 (1969)

(restriction on participation in parades); Niemotko v. State of Mary-

land, 340 U.S. 268 (1951) (prosecution for Bible talks); Schneider v.

State of New Jersey, 308 U.S. 147 (1939) (prohibition on distribution

of handbills).

those cases, the federal government will appear to be

subsidizing suits against the states. Congress’s decision

not to subsidize these suits is valid, particularly in light

of Congress’s virtually simultaneous decision “to

increase the flexibility of States” to administer certain

welfare laws. 42 U.S.C. § 601(a) (Aug. 1996). Congress

legitimately decided that it cannot fairly delegate admin-

istration of the welfare laws to the states while simul-

taneously funding lawsuits alleging that the states are

administering those laws improperly.

On this facial challenge, Respondents cannot prove

that the program integrity regulations do not rationally

serve these two legitimate purposes. As the court of

appeals concluded, Respondents have not established

“that no set of circumstances exists under which the Act

would be valid.” Pet. Cert. (99-903) at 20a (citing Rust,

500 U.S. at 183). Thus, the Court should reject Respon-

dents’ suggestion that the regulations are so burdensome

and wasteful that no grantee can create an affiliate under

them.'4

The few facts before the Court dispell this contention.

At least two grantees have established affiliates in com-

pliance with the program integrity regulations. Resp. Br.

at 39. No Respondent alleges that LSC has questioned its

certification of program integrity with respect to an affil-

'4 Contrary to Respondents’ suggestion (Resp. Br. at 44-45 n.45),

they have brought a facial challenge because they are seeking relief

that would invalidate the 1996 Act and/or the program integrity reg-

ulations with respect to any LSC lawyer, donor or client, regardless

of their circumstances; Respondents are not seeking relief only for

themselves, based on how statutes or regulations have been applied to

their own individual circumstances. Walters, 473 U.S. at 316 and 336-

39 (O’Connor, J., concurring) (1985). It is particularly obvious that

Respondents’ challenge to the program integrity regulations is facial;

none of the Respondents is an LSC grantee who alleges that it tried to

set up an unsubsidized affiliate, but was unable to do so.

iate. In fact, LSC has notified only one grantee that its

attempt to create an affiliate did not meet the regula-

tions. That incident proves nothing, however, because

the grantee did not make a good faith effort to comply

with the regulations, but ‘instead simply created two sep-

arate corporations that shared all personnel, office space,

office equipment, and library facilities. CAJA 538-44.

There is no reason to conclude that the program integrity

regulations are facially unconstitutional.

Finally, Respondents contend that LSC did not have

the statutory authority to issue the program integrity

regulations, citing a portion of the section-by-section

analysis of a 1996 Senate bill. Resp. Br. at 34-35. The

language Respondents cite was a comment to a section

of similarly worded bill (S. Rep. No. 104-392 at 61-62

(1996)) that was deleted from the 1996 Act as enacted.

Thus, if anything can be gleaned from the legislative his-

tory of the 1996 Act, it is that Congress deliberately

decided not to prohibit affiliate corporations. As the

court of appeals correctly recognized, “LSC enjoys ‘the

full measure of interpretive authority under the [LSC

Act]’ to promulgate” the program integrity regulations.

Pet. App. (99-603) at lla. The program integrity regu-

lations should be upheld.

CONCLUSION

For the reasons stated above and in our opening brief,

the judgment of the court of appeals, insofar as it inval-

idated the suit-for-benefits limitation, should be reversed.

Dated: New York, New York

August 17, 2000

Respectfully submitted,