Opinion ID: 3065248
Heading Depth: 2
Heading Rank: 3

Heading: Velazquez Litigation3

Text: In 1997, legal aid organizations in New York, together with individual legal aid attorneys, clients, and donors, brought an action challenging several of the 1996 Act’s funding restrictions.4 See Velazquez v. Legal Serv. Corp., 985 F. Supp. 323 (E.D.N.Y. 1997) (“Velazquez I”). The Velazquez plaintiffs sought a preliminary injunction declaring, in relevant part, that the challenged restrictions were facially violative of the First Amendment. Id. at 326. The district court denied the preliminary injunction motion, reasoning that the PIR was in all relevant respects identical to the program integrity regulations upheld in Rust; thus, that the plaintiffs were unlikely to succeed on the merits of their claim. Id. at 326-27. The Second Circuit affirmed in part, and reversed in part. It agreed with the district court that, as a facial matter, the PIR provided LSC grantees with adequate alternative channels for engaging in protected expression, and thus there was no unconstitutional conditions violation. See Velazquez II, 164 F.3d at 767. The court concluded, however, that one of the challenged restrictions — the so-called “suits-for-benefits exception” — ran afoul of the First Amendment. See id. at 769-72. The suits-for-benefits exception provided that an LSC grantee could represent an eligible client seeking specific relief from a welfare agency, but only if the grantee refrained from challenging the validity of the underlying statutes and regulations. Id. at 769. Because it permitted funding for legal actions that accepted the validity of existing welfare laws, but denied it with respect to those that challenged the status quo, the Velazquez II court concluded that the suits-for-benefits 3 Because the Velazquez litigation sequence addressed the legal questions at issue in this case, we summarize it at length here. 4 In addition to several restrictions not at issue in this appeal, the Velazquez I plaintiffs challenged the 1996 Act’s bar on seeking attorneys’ fees, participating in class actions, engaging in lobbying, and soliciting clients. Velazquez I, 985 F. Supp. at 328. 15500 LEGAL AID v. LEGAL SERVICES CORP. exception was viewpoint discrimination subject to strict First Amendment scrutiny. Id. at 769-70. The Supreme Court granted the LSC’s certiorari petition, but declined to review the Second Circuit’s judgment insofar as it upheld the other substantive restrictions. 532 U.S. 903 (Mem.) (2001) (denying the Velazquez plaintiffs’ petition for certiorari). The Supreme Court — in a 5-4 decision that we discuss at length infra — agreed with the Second Circuit that the suits-for-benefits exception was unconstitutional. Velazquez III, 531 U.S. at 549. The litigation then returned to the district court where the Velazquez plaintiffs pursued both an as-applied challenge to the PIR, and a facial challenge to the class action, attorneys’ fees, and solicitation restrictions. Velazquez v. Legal Serv. Corp., 349 F. Supp. 2d 566 (E.D.N.Y. 2004) (“Velazquez IV.”). The district court dismissed the plaintiffs’ facial challenge, but granted their application for a preliminary injunction on the as-applied challenge to the PIR, concluding that LSC’s enforcement of the PIR “unduly burden[ed]” the plaintiffs’ ability to use non-federal funds to engage in restricted activities. Id. at 611. The Second Circuit affirmed in part, reversed in part, and vacated the district court’s injunction. Brooklyn Legal Serv. Corp. v. Legal Serv. Corp., 462 F.3d 219, 236 (2d Cir. 2006) (“Velazquez V”). The court agreed that the Velazquez plaintiffs’ facial challenge to the substantive restrictions failed to state a claim, id. (summarily adopting the reasoning and conclusions of the district court with respect to plaintiffs’ facial challenge), but concluded that the district court erred in applying an undue burden standard to the as-applied challenge to the PIR, see id. at 231. The proper standard, the court concluded, was whether grantees had “demonstrated as a factual matter that the [PIR] ha[d] not left them adequate alternative channels for protected expression.” Id. LEGAL AID v. LEGAL SERVICES CORP. 15501