Source: https://www.clearinghouse.net/detail.php?id=10219&amp;search=
Timestamp: 2019-04-25 12:24:38+00:00

Document:
Plaintiff lawyers, indigent clients, and grantees filed suit in the U.S. District Court for the Eastern District of New York, alleging that government restrictions on the activities of organizations who accepted federal funds distributed by the Legal Services Corporation ("LSC") were unconstitutional.
LSC was a federally-chartered nonprofit corporation created and funded by Congress to distribute federal funds to local legal assistance programs that provided basic legal services for the indigent. 42 U.S.C. § 2996b (a); see Legal Services Corporation Act of 1974. To ensure that federal funds were not diverted by recipients toward activities that Congress specifically desired not to subsidize, Congress placed certain restrictions on the funds. For instance, the LSC Act prohibited the use of funds for litigation concerning nontherapeutic abortions, political activity, criminal proceedings, secondary school desegregation, military desertion, or violations of the Selective Service statute. Additional restrictions were put in place by § 504 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (1996 Act). Among the additional restrictions, the 1996 Act prohibited representation of certain aliens and litigating challenges to existing welfare law. The Act also forbade LSC recipients from using non-LSC funds for prohibited activity, although such activity by an affiliate not under the control of the recipient was allowed. The LCS issued regulations which interpreted and implemented the restrictions set out in the 1996 Act. See e.g., LSC's program integrity regulation, 45 C.F.R. § 1610.8.
Plaintiffs challenged the LCS' program integrity regulation and the 1996 Act's restrictions relating to a recipient's lobbying and welfare reform activities as violating the First Amendment.
The District Court (Judge Frederic Block) denied plaintiffs' motion for a preliminary injunction. Velazquez v. Legal Services Corp., 985 F.Supp. 323 (E.D.N.Y. 1997). Plaintiffs appealed. The Second Circuit Court of Appeals (Circuit Judge Leval) reversed the denial of the preliminary injunction solely with respect to the restriction on challenging the constitutionality of existing welfare laws. In all other respects, the Court of Appeals affirmed. Velazquez v. Legal Servs. Corp., 164 F.3d 757 (2d Cir. 1999). Certiorari was granted in part. Legal Servs. Corp. v. Velazquez, 529 U.S. 1052 (2000).
The Supreme Court (Justice Kennedy) affirmed the Second Circuit, holding that the restriction which prohibited recipients of LSC funds from engaging in litigation to challenge the validity of existing welfare laws violated the First Amendment. The Court reasoned that the government could not design a subsidy to effect such a "serious and fundamental restriction on advocacy of attorneys and the functioning of the judiciary." Legal Servs. Corp. v. Velazquez, 531 U.S. 533 (2001). The Supreme Court declined to review the rest of the Second Circuit opinion. Legal Servs. Corp. v. Velazquez, 532 U.S. 903 (2001).
On remand to the District Court, plaintiffs sought a preliminary injunction against defendant LSC to prevent enforcement of portions of LSC's program integrity regulation, 45 C.F.R. § 1610.8, and § 504 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (1996 Act). In support of their request for injunctive relief, plaintiffs made the following challenges: (1) an "as-applied" challenge to the program integrity regulation under the First Amendment; (2) a facial challenge to the regulation and the 1996 Act on the grounds that they violated "fundamental principles of federalism" under the Tenth Amendment; and (3) a facial challenge under the First Amendment to the 1996 Act's restrictions on class action litigation, attorneys' fees, and soliciting clients.
The District Court granted partial injunctive relief as to the as-applied challenge to the program integrity regulation on First Amendment grounds. The District Court reasoned that the regulation created an undue burden on plaintiffs' right under the First Amendment to use non-federal funds to engage in constitutionally protected activity. Velazquez v. Legal Servs. Corp., 356 F. Supp. 2d 267 (E.D.N.Y. 2005); Velazquez v. Legal Servs. Corp., 349 F. Supp. 2d 566 (E.D.N.Y. 2004). The parties appealed.
On September 8, 2006, the Second Circuit vacated the grant of the partial preliminary injunction and remanded for further proceedings. It also ordered the District Court to dismiss Plaintiffs' Tenth Amendment claims due to lack of standing. Servs. Corp. v. Legal Servs. Corp., 462 F.3d 219 (2d Cir. 2006). Certiorari was denied. Legal Servs. for N.Y.C. v. Legal Servs. Corp., 128 S. Ct. 44 (2007).
A status conference was held on September 24, 2008 to discuss how the remainder of the litigation would proceed. The Court denied plaintiffs' motion for a preliminary injunction on its remaining claims, and suggested that it hold an evidentiary hearing to adjudicate the remaining issues in the case.
On May 6, 2009, the parties stipulated to adjourn all proceedings, as the plaintiffs believed that Congress would enact that year new acts and statutes amending or repealing some or all of the challenged acts or statutes. The case remained adjourned until July 23, 2013, when the parties stipulated to voluntary dismissal of the case.
The Oyez Project, Legal Services Corp. v. Velazquez, 531 U.S. 533 (2001).

References: § 2996
 § 504
 § 1610
 v. 
 v. 
 v. 
 v. 
 v. 
 § 1610
 § 504
 v. 
 v. 
 v. 
 v. 
 v.