Court Opinion

ID: 3065248
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:30:09.208085+00
Date Added: 2024-06-11T11:49:43.792728
License: Public Domain

FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

LEGAL AID SERVICES OF OREGON;          
ARRON GUEVARA; JANICE MORGAN;
SHARON LEE SCHWARTZ; DONNA
SATHER,
             Plaintiffs-Appellants,
              and
OREGON LAW CENTER; DAVID
HENRETTY; DIANE SCHWARTZ SYKES;
                                            No. 08-35467
                                       
LOREY FREEMAN; COMMUNITY
ALLIANCE OF TENANTS;                          DC No.
CAMPAIGN FOR EQUAL JUSTICE,                CV 05-1444 PK
                         Plaintiffs,
                 v.
LEGAL SERVICES   CORPORATION,
                Defendant-Appellee,
UNITED   STATES OF AMERICA,
    Defendant-Intervenor-Appellee.
                                       

                           15487
15488        LEGAL AID v. LEGAL SERVICES CORP.

LEGAL AID SERVICES OF OREGON;           
ARRON GUEVARA; JANICE MORGAN;
SHARON LEE SCHWARTZ; DONNA
SATHER; OREGON LAW CENTER;
DAVID HENRETTY; DIANE SCHWARTZ
SYKES; LOREY FREEMAN;
COMMUNITY ALLIANCE OF TENANTS,
                       Plaintiffs,
                                             No. 08-35483
              and
CAMPAIGN FOR EQUAL JUSTICE,
                                              DC No.
                                            CV 05-1444 PK
                 Plaintiff-Appellant,
                 v.
LEGAL SERVICES   CORPORATION,
              Defendant-Appellee,
UNITED STATES OF AMERICA,
    Defendant-Intervenor-Appellee.
                                        
                LEGAL AID v. LEGAL SERVICES CORP.        15489

LEGAL AID SERVICES OF OREGON;             
ARRON GUEVARA; JANICE MORGAN;
SHARON LEE SCHWARTZ; DONNA
SATHER,
                            Plaintiffs,
CAMPAIGN FOR EQUAL      JUSTICE,
                             Plaintiff,
                  and                          No. 08-35492
                                                 DC Nos.
                                          
OREGON LAW CENTER; DAVID
HENRETTY; DIANE SCHWARTZ SYKES;               CV 05-1444 PK
LOREY FREEMAN; COMMUNITY                      CV 05-1443 PK
ALLIANCE OF TENANTS,                            OPINION
                Plaintiffs-Appellants,
                  v.
LEGAL    SERVICES CORPORATION,
                Defendant-Appellee,
UNITED   STATES OF AMERICA,
   Defendant-Intervenor-Appellee.
                                          
         Appeals from the United States District Court
                   for the District of Oregon
          Paul J. Papak, Magistrate Judge, Presiding

                     Argued and Submitted
                July 7, 2009—Portland, Oregon

                   Filed November 23, 2009
15490      LEGAL AID v. LEGAL SERVICES CORP.
    Before: Harry Pregerson, Pamela Ann Rymer, and
          A. Wallace Tashima, Circuit Judges.

              Opinion by Judge Tashima;
              Dissent by Judge Pregerson
15492        LEGAL AID v. LEGAL SERVICES CORP.

                       COUNSEL

Stephen S. Walters (argued), Allen Matkins Leck Gamble
Mallory & Natsis, San Francisco, California, and Beverly C.
              LEGAL AID v. LEGAL SERVICES CORP.            15493
Pearman, Stoel Rives, Portland, Oregon, for plaintiffs-
appellants Legal Aid Services of Oregon and LASO plaintiffs.

Don H. Marmaduke, Tonkon Torp, Portland Oregon, for
plaintiffs-appellants Oregon Law Center and OLC plaintiffs.

Kent B. Thurber, Davis Wright Tremaine, Portland, Oregon,
for plaintiff-appellant Campaign for Equal Justice.

William S. Freeman, Palo Alto, California, for defendant-
appellee.

Matthew M. Collette, Civil Division, U.S. Department of Jus-
tice, Washington, DC, for defendant-intervenor-appellant.

                          OPINION

TASHIMA, Circuit Judge:

   We must determine whether restrictions on lobbying, solic-
iting clients, participating in class actions, and seeking attor-
neys’ fees (collectively, the “Restrictions”) that Congress has
imposed on legal aid organizations that receive federal grants
through the Legal Services Corporation (“LSC”), comport
with the requirements of the First Amendment. In Legal Aid
Soc’y of Haw. v. Legal Serv. Corp., 145 F.3d 1017 (9th Cir.
1998) (“LASH III”), we upheld the Restrictions as facially
constitutional. We concluded that LSC’s program integrity
rule (“PIR”) permits grantees to channel restricted speech,
paid for with non-federal dollars, through unrestricted affili-
ates, and thus, the Restrictions do not unconstitutionally con-
dition the receipt of federal funds on the relinquishment of
First Amendment rights. Id. at 1025.

  Legal Aid Services of Oregon (“LASO”), Oregon Law
Center (“OLC”), individual LASO and OLC attorneys and
15494         LEGAL AID v. LEGAL SERVICES CORP.
board members, and organizations representing LASO clients
and private donors (collectively “Plaintiffs”), present a two-
pronged attack on the Restrictions and PIR. First, they con-
tend that the Supreme Court’s decision in Legal Serv. Corp.
v. Velazquez, 531 U.S. 533 (2001) (“Velazquez III”) super-
seded LASH III, and that under Velazquez III, the Restrictions
must be struck down as facially violative of the First Amend-
ment. Next, they contend that, even if LASH III remains good
law, LSC has applied the PIR to them in a manner that cuts
off alternative avenues for engaging in protected speech.

   The district court dismissed Plaintiffs’ facial challenge to
the Restrictions, granted summary judgment in favor of LSC
on their as-applied challenge to the PIR, and denied their
motion for a new trial.

   We have jurisdiction to review the final judgment of the
district court under 28 U.S.C. § 1291, and affirm.

               BACKGROUND AND PROCEEDINGS

I.   LSC and the Restrictions

   In 1974 Congress enacted the Legal Services Corporation
Act (the “1974 Act”), Pub. L. No. 93-355, 88 Stat. 378 (codi-
fied as amended at 42 U.S.C. §§ 2996-2996l), establishing
LSC as an independent nonprofit corporation. LSC’s mission
is to distribute congressionally appropriated funds to qualify-
ing organizations “for the purpose of providing financial sup-
port for legal assistance in noncriminal proceedings or matters
to persons financially unable to afford legal assistance.” 42
U.S.C. § 2996b(a).

   Congress has restricted the activities of LSC grantees since
the grant program’s inception, and the scope of those restric-
tions has expanded over time. The 1974 Act, for example,
provided that LSC funds could not be used to provide legal
assistance in school desegregation cases, cases in which a cli-
                 LEGAL AID v. LEGAL SERVICES CORP.                   15495
ent seeks to procure an abortion or compel an institution to
provide an abortion, military desertion cases, any “fee-
generating case,” and collateral attacks on criminal convic-
tions. Id. § 2996f(b). Further, every year between 1983 and
1996, Congress included an appropriations rider in its annual
spending bill “purport[ing] to eliminate legislative lobbying
and administrative advocacy” among LSC grantees. S. Rep.
104-392 at 3 (Sept. 30, 1996).

   In 1996, responding to concerns that LSC had strayed from
its core mission of “fund[ing] basic legal services for poor
individuals,” id. at 1, Congress imposed new restrictions on
the activities of LSC grantees. See Omnibus Consolidated
Rescissions and Appropriations Act of 1996, Pub. L. No. 104-
134, § 504, 110 Stat. 1321, 1321-53-57 (1996) (the “1996
Act”), reenacted in the Omnibus Consolidated Appropriations
Act of 1997, Pub. L. 104-208, § 502, 110 Stat. 3009, 3009-59-
60 (1997). The 1996 Act enacted, and subsequent LSC regu-
lations implemented, restrictions on: (1) attempts to influence
legislation and/or administrative rulemaking processes, 45
C.F.R. § 1612 et seq.; (2) initiation of, and participation in,
class action lawsuits, id. § 1617 et seq.; (3) claiming, collect-
ing or retaining attorneys’ fees available under any federal or
state law, id. § 1642 et seq.; and (4) soliciting clients, id.
§ 1638 et seq.1 The Restrictions apply to all of the activities
of an LSC grantee, including those paid for by non-LSC
funds. 45 C.F.R. § 1610.4.
  1
    The 1996 Act also prohibited LSC grantees from providing legal assis-
tance to certain classes of aliens, seeking to reform welfare, litigating on
behalf of prisoners, engaging in activity involving political redistricting,
supporting certain advocacy training programs, and litigating cases related
to abortion. See Velazquez v. Legal Serv. Corp., 164 F.3d 757, 760 & n.2
(2d Cir. 1999) (“Velazquez II”). Those restrictions are not at issue in this
appeal.
15496            LEGAL AID v. LEGAL SERVICES CORP.
II.   PIR and the LASH Litigation

   In 1997, in response to a federal district court’s injunction
declaring several of the 1996 Act’s restrictions facially uncon-
stitutional insofar as they applied to LSC grantees’ non-
federally funded activities, see Legal Aid Soc’y of Haw. v.
Legal Serv. Corp. , 961 F. Supp. 1402, 1422 (D. Haw. 1997)
(“LASH I”), LSC promulgated the PIR to clarify the circum-
stances under which a grantee could affiliate with an organi-
zation that engages in restricted activities.2 See 45 C.F.R.
§ 1610.8. The PIR provides that:

      (a) A[n] [LSC grant] recipient must have objective
      integrity and independence from any organization
      that engages in restricted activities.

A recipient will be found to have objective integrity and inde-
pendence from such an organization if:

      (1) The other organization is a legally separate
      entity;

      (2) The other organization receives no transfer of
      LSC funds, and LSC funds do not subsidize
      restricted activities; and

      (3) The recipient is physically and financially sepa-
      rate from the other organization. Mere bookkeeping
      separation of LSC funds from other funds is not suf-
      ficient. Whether sufficient physical and financial
      separation exists will be determined on a case-by-
      case basis and will be based on the totality of the
      facts. The presence or absence of any one or more
  2
   The LASH plaintiffs consisted of several LSC grantee organizations,
lawyers that worked for those organizations, an organization representing
legal aid clients, and two organizations that provided funding to legal aid
organizations. LASH I, 961 F. Supp. at 1406-07.
               LEGAL AID v. LEGAL SERVICES CORP.           15497
      factors will not be determinative. Factors relevant to
      this determination shall include but will not be lim-
      ited to:

          (i) The existence of separate personnel;

          (ii) The existence of separate accounting
          and timekeeping records;

          (iii) The degree of separation from facilities
          in which restricted activities occur, and the
          extent of such restricted activities; and

          (iv) The extent to which signs and other
          forms of identification which distinguish
          the recipient from the organization are pres-
          ent.

      (b) Each recipient’s governing body must certify to
      [LSC] within 180 days of the effective date of this
      part that the recipient is in compliance with the
      requirements of this section. Thereafter, the recipi-
      ent’s governing body must certify such compliance
      to [LSC] on an annual basis.

Id.

   LSC drafted the PIR to mirror the program integrity regula-
tions associated with federal grants provided under Title X of
the Public Health Service Act; regulations that withstood First
Amendment scrutiny in Rust v. Sullivan, 500 U.S. 173 (1991).
See Velazquez II, 164 F.3d at 761-62 (citing 62 Fed. Reg.
12101, 12101-04 (1997)). The restrictions at issue in Rust
prohibited Title X grantees from providing counseling con-
cerning the use of abortion as a method of family planning,
or engaging in any lobbying effort or legal action aimed at
encouraging abortion. See Rust, 500 U.S. at 179-80. A grant-
ee’s affiliate could engage in restricted activities, but only if
15498         LEGAL AID v. LEGAL SERVICES CORP.
the grantee and affiliate ensured legal, physical, and financial
separation. See id. at 180-81.

   The Rust court rejected the Title X grantees’ (and doctors
who worked for those grantees) claim that the restrictions
amounted to an unconstitutional condition. To prevail on such
a claim, the Court explained, a recipient of a federal subsidy
must show that it has been “effectively prohibit[ed] . . . from
engaging in [ ] protected conduct outside the scope of the fed-
erally funded program.” Id. at 197. Because grantees were
free to engage in restricted activities through a legally sepa-
rate affiliate, the Court determined that they had failed to
establish an unconstitutional condition. The Court also con-
cluded that the challenged restrictions did not amount to
impermissible viewpoint discrimination, because Congress
had “not discriminated on the basis of viewpoint; it [ ] merely
chose[ ] to fund one activity to the exclusion of the other.” Id.
at 193.

   After the issuance of the PIR, the LASH I district court dis-
solved its injunction and entered summary judgment in favor
of LSC. Legal Aid Soc’y of Haw. v. Legal Serv. Corp., 981 F.
Supp. 1288, 1294, 1301 (D. Haw. 1997).

   We affirmed the judgment of the district court, concluding
that the Restrictions and PIR satisfy the standards set forth in
Rust. See LASH III, 145 F.3d at 1024. Because the PIR did not
force LSC grantees to “give up prohibited activities,” but
rather allowed them to engage in those activities so long as
they were carried out through “separate and independent”
entities, we concluded that, under Rust, the Restrictions were
constitutional on their face. See id. at 1025. We rejected the
LASH III plaintiffs’ contention that the practical burdens asso-
ciated with channeling restricted activities through separate
affiliates amounted to an impermissible burden on the exer-
cise of their free speech rights, but left open the possibility
that they could challenge LSC’s application of the PIR in a
subsequent action. Id. at 1027.
                  LEGAL AID v. LEGAL SERVICES CORP.                     15499
III.   Velazquez Litigation3

   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 restric-
tions.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 pre-
liminary 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 suc-
ceed 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 ques-
tions at issue in this case, we summarize it at length here.
   4
     In addition to several restrictions not at issue in this appeal, the Velaz-
quez 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. Velaz-
quez 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 chal-
lenge, but granted their application for a preliminary injunc-
tion on the as-applied challenge to the PIR, concluding that
LSC’s enforcement of the PIR “unduly burden[ed]” the plain-
tiffs’ 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 plain-
tiffs’ facial challenge to the substantive restrictions failed to
state a claim, id. (summarily adopting the reasoning and con-
clusions of the district court with respect to plaintiffs’ facial
challenge), but concluded that the district court erred in apply-
ing an undue burden standard to the as-applied challenge to
the PIR, see id. at 231. The proper standard, the court con-
cluded, 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
IV.   LASO and OLC

   LASO is a nonprofit legal aid organization and LSC
grantee. It derives roughly 45 percent of its $6.5 million
annual operating budget from LSC grants, and the remainder
of its funding comes from other federal, state, and private
sources. OLC is an independent legal aid organization that
does not receive funding from LSC; thus, it is not subject to
the Restrictions. The organizations share a common board of
directors.

   Since 1995, when LASO spun-off OLC, the two organiza-
tions have coordinated their respective delivery of legal ser-
vices, with OLC providing many of the services that LASO
cannot offer pursuant to the Restrictions. In addition to their
common board, the two organizations coordinate their efforts
by: (1) maintaining separate but adjoining office space; (2)
co-counseling certain cases; (3) holding regular joint planning
meetings; (4) maintaining a single litigation support unit to
aid both OLC and LASO attorneys; (5) dividing the use of
physical resources like libraries, computer services, and
phone systems; and (6) coordinating training, priority setting,
and information sharing regarding administration, finance,
personnel, and other policies.

   In May 2005, LASO submitted a new configuration pro-
posal (the “Proposal”) to LSC. Under the Proposal, LASO
and OLC would merge into a single, nonprofit corporation
with two financially separate divisions. The new organization
would operate under the leadership of a single executive
director, and the two divisions would share personnel in a
variety of job categories.

   LSC’s Office of Legal Affairs issued a written opinion
rejecting the Proposal. The opinion explained that “[i]n order
to maintain program integrity from OLC, LASO must be a
legally separate entity and must have greater physical and
financial separation than set forth in the proposal.” According
15502            LEGAL AID v. LEGAL SERVICES CORP.
to the declaration of Mark Freedman, LSC’s Assistant Gen-
eral Counsel, LASO did not contact LSC to discuss the Pro-
posal prior to submitting it, nor did it explore alternatives with
LSC after receiving notice that the Proposal had been
rejected. Freedman also stated that “the PIR would permit a
limited number of individual LASO attorneys to work part-
time for OLC, provided the organizations otherwise complied
with the PIR in terms of legal, physical and financial separa-
tion overall.”

V.    Proceedings in this Case

   In September 2005, Plaintiffs filed this action raising, in
relevant part, facial and as-applied First Amendment claims,
and seeking declaratory and injunctive relief.5 The United
States intervened to defend the constitutionality of the
Restrictions and PIR.

   LSC and the United States both filed motions to dismiss all
of Plaintiffs’ claims. The Magistrate Judge, in his Findings
and Recommendations, recommended granting the motions as
to all claims, except for Plaintiffs’ as-applied First Amend-
ment challenge to the PIR. The district adopted the recom-
mendations in their entirety. Ultimately, in its Amended
Order, the district court granted the motions to dismiss as to
all of Plaintiffs’ claims, except for the as-applied challenge to
the PIR.6

  The parties then engaged in a lengthy and contentious dis-
covery process, with several disputed motions to compel. The
  5
     The State of Oregon brought a separate action against LSC challenging
the Restrictions and PIR on Tenth Amendment grounds. The district court
dismissed the State’s action and that dismissal was affirmed on appeal. See
Oregon v. Legal Serv. Corp., 552 F.3d 965 (9th Cir. 2009) (holding that
Oregon lacked Article III standing to challenge the Restrictions).
   6
     After the district judge filed the Amended Order, the parties consented
to the Magistrate Judge’s full jurisdiction over the case under 28 U.S.C.
§ 636(c).
               LEGAL AID v. LEGAL SERVICES CORP.            15503
district court denied Plaintiffs’ requests for production of doc-
uments relating to LSC’s interpretation and enforcement of
the substantive Restrictions, but permitted a great deal of dis-
covery regarding LSC’s enforcement of the PIR.

  In December 2007, LSC and the United States filed
motions for summary judgment on Plaintiffs’ remaining as-
applied challenge, and the individual LASO attorneys filed a
cross-motion for partial summary judgment. The court
granted Defendant and Intervenor’s motions and denied the
LASO attorneys’ motion. See Legal Aid Serv. of Or. v. Legal
Serv. Corp., 561 F. Supp. 2d 1187 (D. Or. 2008).

   Plaintiffs then filed a motion for new trial or, in the alterna-
tive, to amend/correct the opinion and judgment. In their
motion, Plaintiffs stated that they read the order as granting
summary judgment in favor of LSC on both their as-applied
challenge to the PIR, and their as-applied challenge to the
Restrictions themselves — which they believed were legally
distinct claims. The problem with the judgment, in Plaintiffs’
view, was that district court’s prior Amended Order had dis-
missed all of Plaintiffs’ claims except for the as-applied chal-
lenge to the PIR. Had they known that the as-applied
challenge to the Restrictions was still at issue, Plaintiffs con-
tended, they would have presented additional arguments and
evidence.

   After holding two hearings on the matter, the Magistrate
Judge denied Plaintiffs’ motion. He explained that Plaintiffs’
inability to present additional arguments and evidence related
to their as-applied challenge to the Restrictions “couldn’t have
impacted the ultimate decision,” because the only issue before
the court after the dismissal of Plaintiffs’ facial challenge to
the Restrictions was whether the PIR permitted Plaintiffs to
access alternative channels for expressing protected speech.

  Plaintiffs timely appealed, seeking review of the district
court’s dismissal of their facial challenge to the Restrictions,
15504         LEGAL AID v. LEGAL SERVICES CORP.
entry of summary judgment on their as-applied challenge,
denial of their motion for a new trial, and denial of several
motions to compel relating to LSC’s enforcement of the
Restrictions.

                   STANDARDS OF REVIEW

  Review of the district court’s dismissal for failure to state
a claim is de novo, “accept[ing] all factual allegations in the
complaint as true and constru[ing] the pleadings in the light
most favorable to the nonmoving party.” Knievel v. ESPN,
393 F.3d 1068, 1072 (9th Cir. 2005).

   Review of the district court’s entry of summary judgement
is also de novo. Henderson v. City of Simi Valley, 305 F.3d
1052, 1055 (9th Cir. 2002). Summary judgment is to be
granted only if the pleadings and supporting documents,
viewed in the light most favorable to the non-moving party,
show that there is no genuine issue as to a material fact, and
the moving party is entitled to judgment as a matter of law.
See FED. R. CIV. P. 56(c).

   Review of the district court’s ruling on a motion for a new
trial is for abuse of discretion. Doe ex rel. Rudy-Glanzer v.
Glanzer, 232 F.3d 1258, 1263 (9th Cir. 2000). Review of its
rulings limiting the scope of discovery are for “a clear abuse
of discretion.” Blackburn v. United States, 100 F.3d 1426,
1436 (9th Cir. 1996).

                         DISCUSSION

I.   Plaintiffs’ Facial Challenge to the Restrictions

   Plaintiffs contend that LASH III is irreconcilable with the
Supreme Court’s subsequent decision in Velazquez III; thus,
that we must reconsider the facial constitutionality of the
Restrictions under the rubric set forth in Velazquez III. See
Miller v. Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en
              LEGAL AID v. LEGAL SERVICES CORP.            15505
banc) (explaining that a three-judge panel of this court is not
bound by circuit precedent where the subsequent decision of
a higher court “undercut[s] the theory or reasoning underlying
the prior circuit precedent in such a way that the cases are
clearly irreconcilable”). Upon careful review of Justice Ken-
nedy’s opinion for the majority in Velazquez III, we agree
with the district court that LASH III continues to control.

   In striking down the suits-for-benefits exception, the Velaz-
quez III court distinguished Rust, explaining that “viewpoint-
based funding decisions can be sustained in instances . . . in
which the government ‘use[s] private speakers to transmit
specific information pertaining to its own program.’ ” 531
U.S. at 541 (quoting Rosenberger v. Rector & Visitors of
Univ. of Va., 515 U.S. 819, 833 (1995)). Where it endeavors
to fund certain modes of private expression, however, “Con-
gress’ antecedent funding decision cannot be aimed at the
suppression of ideas thought inimical to the Government’s
own interest.” Id. at 548-49. Because LSC’s grant program
subsidized private expression through the medium of free
legal services, the Court concluded that Rust was not control-
ling. Justice Kennedy also observed that the suits-for-benefits
exception “distorts the legal system by altering the traditional
role of the attorneys,” id. at 544, thereby “prohibit[ing] speech
and expression upon which courts must depend for the proper
exercise of the judicial power,” id. at 545.

   According to Plaintiffs, Velazquez III announced a new
First Amendment doctrine applicable in unconstitutional con-
ditions cases — in essence a “distortion test” — eroding the
foundation on which LASH III rested. They contend that in
Velazquez III, as in this case, Congress chose to subsidize pri-
vate expression through a particular medium, and then dis-
torted the functioning of that medium by restricting the
procedural tools and legal strategies that grantee attorneys
were permitted to utilize in the course of their advocacy.
Plaintiffs argue, for example, that LASO attorneys’ inability
to seek statutory attorneys’ fees deprives them (and their cli-
15506            LEGAL AID v. LEGAL SERVICES CORP.
ents) of a potent tool for inducing settlement, thereby altering
the normal functioning of the legal system. Under Velazquez
III, Plaintiffs contend, this sort of distortion violates the First
Amendment.

   Defendant and Intervenor, for their part, contend that Plain-
tiffs read Velazquez III far too broadly. See, e.g., Intervenor’s
Reply Br. at 23 (contending that “Velazquez III merely stands
for the unremarkable proposition that the government may not
impose viewpoint-based restrictions where it seeks to fund
private speech”). Because the Restrictions do not discriminate
against a particular viewpoint, they argue, Velazquez III is
inapposite, and Justice Kennedy’s discussion of the suits-for-
benefits exception’s distortionary effects does not disturb the
holding in LASH III.

   [1] We agree with the district court that Plaintiffs’ distor-
tion theory relies on a mistaken reading of Velazquez III. The
Velazquez III Court analyzed the grantee plaintiffs’ unconsti-
tutional conditions claim through the lens of the Court’s lim-
ited public forum cases.7 See 531 U.S. at 544 (“As this suit
involves a subsidy, [the Court’s] limited forum cases . . . may
not be controlling in a strict sense, yet they do provide some
instruction.”); see also Mezibov v. Allen, 411 F.3d 712, 720
(6th Cir. 2005) (stating that “Velazquez [III] involved . . . a
government funding program that the Court deemed a limited
   7
     A “limited public forum” is “a nonpublic forum that the government
intentionally has opened to certain groups or for the discussion of certain
topics.” Faith Ctr. Church Evangelistic Ministries v. Glover, 480 F.3d
891, 908 (9th Cir.), cert. denied, 128 S. Ct. 143 (2007). As the Supreme
Court has noted, limited public fora can exist “more in a metaphysical
than in a spatial or geographic sense.” Rosenberger, 515 U.S. at 830.
Examples of such fora include a school mail system, see Perry Educ.
Ass’n v. Perry Local Educators’ Ass’n, 460 U.S. 37, 46-47 (1983), a chari-
table contribution program, see Cornelius v. NAACP Legal Defense &
Educ. Fund, Inc., 473 U.S. 788, 801 (1985), and a university program for
subsidizing and distributing student publications, see Rosenberger, 515
U.S. at 830.
              LEGAL AID v. LEGAL SERVICES CORP.            15507
public forum for First Amendment purposes”); Marijuana
Policy Project v. United States, 304 F.3d 82, 87 (D.C. Cir.
2002) (stating that Velazquez III “rests on limited public
forum doctrine”). In a limited public forum, the Court has
held, the government may not “regulat[e] speech when the
specific motivating ideology or the opinion or perspective of
the speaker is the rationale for the restriction.” Rosenberger,
515 U.S. at 829. Content discrimination, however, is permis-
sible in a limited public forum so long as it is “ ‘reasonable
in light of the [forum’s] purpose.’ ” See id. at 829-30 (quoting
Cornelius, 473 U.S. at 806).

   [2] Because LSC’s grant program operates much like a lim-
ited public forum, the Velazquez III court explained, it is sub-
ject to the First Amendment principles that govern such
forums. See 531 U.S. at 544. Accordingly, the Court held that
restrictions on the activities of LSC grantees may not target
a particular viewpoint or motivating ideology, and they “can-
not be aimed at the suppression of ideas thought inimical to
the Government’s own interest.” Id. at 549.

   [3] Justice Kennedy’s discussion of how the suits-for-
benefits exception “distorts the legal system” is thus ancillary
to the Court’s holding. The reference to distortion is best
understood as underscoring the analytical connection linking
LSC’s grant program to the government properties and pro-
grams that the Court has recognized as limited public fora for
the purposes of the First Amendment — not as elaborating a
novel First Amendment doctrine. See id. at 544 (explaining
that “[r]estricting LSC attorneys in advising their clients and
in presenting arguments and analyses to the courts distorts the
legal system by altering the traditional role of the attorneys in
much the same way broadcast systems or student publication
networks were changed” in the Court’s limited public forum
cases (emphasis added)).

   [4] With this understanding of Velazquez III in mind, we
return to the Restrictions. In prohibiting grantees from solicit-
15508            LEGAL AID v. LEGAL SERVICES CORP.
ing clients, lobbying, seeking attorneys’ fees, and participat-
ing in class actions, Congress did not discriminate against any
particular viewpoint or motivating ideology, much less did it
aim to suppress “ideas . . . inimical to the Government’s own
interest.” Id. at 549. The Restrictions simply limit specific
procedural tools and strategies that grantee attorneys may uti-
lize in the course of carrying out their legal advocacy. As
such, they are permissible under Velazquez III.8

   [5] In sum, we conclude that Velazquez III did not establish
a new First Amendment test that hinges on whether restric-
tions on a given government subsidy distort an existing
medium of expression. Rather, the Court applied familiar
principles, drawn from the limited public forum doctrine, to
strike down a viewpoint-based restriction on private expres-
sion. Because the Restrictions do not discriminate against a
particular viewpoint, they are constitutional under Velazquez
III. LASH III thus remains controlling precedent, and the dis-
trict court did not err in dismissing Plaintiffs’ facial challenge
to the Restrictions.9
  8
     Plaintiffs do not contend that the Restrictions are “unreasonable” as the
term is used in the Court’s limited public forum cases. Nor do they con-
tend that either the class action, solicitation, or lobbying restrictions dis-
criminate on the basis of viewpoint. They do argue, however, that the
attorneys’ fees restriction is viewpoint-based. Because the restriction does
not forbid legal services lawyers from arguing that an adverse party is not
entitled to fees, they contend, it targets a particular point of view. The
argument is unpersuasive. The attorneys’ fees restriction bars grantee
attorneys from claiming, collecting, or retaining statutory attorneys’ fees.
See 45 C.F.R. § 1642.3. It does not restrict the expression of any particular
idea or point of view.
   9
     We note that the Second Circuit — the only other circuit to consider
the constitutionality of the Restrictions post-Velazquez III — reached the
same conclusion. See Velazquez V, 462 F.3d at 236 (adopting the district
court’s conclusion in Velazquez IV that the in-person solicitation, class
action, and attorneys’ fees restrictions are reasonable and viewpoint neu-
tral, and therefore permissible under Velazquez III).
                LEGAL AID v. LEGAL SERVICES CORP.                15509
II.    As-Applied Challenge

   Plaintiffs contend that the PIR, as LSC has interpreted and
applied it, effectively prevents them from expressing pro-
tected speech through alternative channels. Because they have
not “demonstrated as a factual matter that the [PIR] has not
left them adequate alternative channels for protected expres-
sion,” Velazquez V, 462 F.3d at 231, the district court properly
entered summary judgment in favor of LSC. We first address
LASO and its clients’ as-applied claims, and then turn to the
individual LASO attorneys’ claims.10

  A.    LASO and its Clients

   [6] In LASH III we held that, as a facial matter, the PIR
provides LSC grantees (and their employees and clients) with
adequate alternative channels for engaging in restricted
speech. We acknowledged, however, that a grantee could
challenge subsequent applications of the PIR in a separate
action. See LASH III, 145 F.3d at 1024 (noting that “even if
[the LASH plaintiffs] presented a factual situation that sug-
gested the restrictions were unconstitutional in only limited
circumstances . . . [the court] would not strike down the
restrictions as unconstitutional” in the context of a facial chal-
lenge).

   [7] An as-applied First Amendment challenge contends that
a given statute or regulation is unconstitutional as it has been
applied to a litigant’s particular speech activity. See Members
of City Council of City of L.A. v. Taxpayers for Vincent, 466
U.S. 789, 802-03 (1984). The underlying constitutional stan-
dard, however, is no different then in a facial challenge. See
  10
    Plaintiffs do not explain how LSC’s application of the PIR violated
the free speech rights of LASO’s private donors, nor do they address how
OLC, an unrestricted LASO affiliate not subject to the PIR, could suffer
an as-applied First Amendment violation. Accordingly, we do not address
those claims.
15510         LEGAL AID v. LEGAL SERVICES CORP.
Velazquez V, 462 F.3d at 228 (“Facial and as-applied chal-
lenges differ in the extent to which the invalidity of a statute
need be demonstrated . . . [i]nvariant, however, is the substan-
tive rule of law to be used.”). Accordingly, we apply the con-
stitutional standard set forth in LASH III, namely, whether
LSC’s enforcement of the PIR has effectively cut off alterna-
tive channels through which Plaintiffs can express restricted
speech. See LASH III, 145 F.3d at 1025.

   [8] Between 1996 and 2005, LASO and OLC coordinated
their efforts to deliver legal services to indigent clients, but
maintained legal, physical, and financial separation from each
other. During that period, LSC did not assert or imply that
LASO’s affiliation with OLC violated the PIR. LSC’s rejec-
tion of the Proposal in 2005 — the only concrete application
of the PIR in the record before us — is thus the focal point
of our analysis.

   LSC determines whether a grantee is sufficiently indepen-
dent from a non-restricted affiliate on a case-by-case basis,
taking into consideration the totality of the circumstances. 45
C.F.R. § 1610.8(a)(3). “Mere bookkeeping separation of LSC
funds from other funds is not sufficient.” Id. Other factors,
such as having separate personnel, separate accounting and
timekeeping records, separate facilities, and distinguishing
forms of identification are relevant but not dispositive. Id. All
grantees must annually certify to LSC that their program com-
plies with the PIR, 45 C.F.R. § 1610.8(b), and a grantee
uncertain about whether its relationship with a restricted affil-
iate satisfies the PIR may “submit [to LSC] all the relevant
‘program integrity’ information and request a review by
[LSC] of any existing or contemplated relationship with an
organization that engages in restricted activities,” 62 Fed.
Reg. 27,695, 27,698.

  [9] Plaintiffs do not dispute that by eschewing formal legal
separation, the Proposal violated the PIR on its face. Although
LSC generally applies a case-by-case, totality-of-the-
               LEGAL AID v. LEGAL SERVICES CORP.           15511
circumstances approach to PIR enforcement, it informs grant-
ees that they “may transfer non-LSC funds to another organi-
zation which engages in restricted activity if, and only if, the
other organization is a legally separate entity.” LSC Instruc-
tions for Certification of Program Integrity at 1. We upheld
the validity of the PIR’s legal separation requirement in LASH
III, and thus, LSC’s rejection of the Proposal on that basis
cannot itself establish an as-applied First Amendment viola-
tion. 145 F.3d at 1027 (“[W]e do not find it significant that
the LSC regulations require that [an] unrestricted [affiliate]
organization be a ‘legally separate entity.’ ” (quoting 45
C.F.R. § 1610.8(a)(1))).

   Plaintiffs contend that they cannot risk testing the PIR’s
limits, because doing so could lead to immediate termination
of federal funding they depend on for basic operations. Plain-
tiffs’ professed fear is not sufficient to establish an as-applied
violation of their First Amendment rights. First, we note that
Congress has provided that LSC grant funding “shall not be
suspended unless the grantee, contractor, or person or entity
receiving financial assistance . . . has been given reasonable
notice and opportunity to show cause why such action should
not be taken,” 42 U.S.C. § 2996j(1), and that grantees are
entitled to a pre-deprivation hearing before “an independent
hearing examiner,” id. § 2996j(2). Thus, Plaintiffs’ concerns
about immediate termination of funding without prior notice
appear to be unwarranted.

   Further, Plaintiffs have not explained why the prospect of
funding termination prevents them from submitting an
amended configuration proposal (one that, at the very least,
conforms to the PIR’s legal and physical separation require-
ments) to LSC. LSC officials testified that they engage in an
iterative process with grantees to ensure PIR compliance, and
Plaintiffs have offered no evidence suggesting that this char-
acterization of LSC’s general approach is inaccurate. While
submitting an amended proposal (or proposals) may impose
some level of practical burden on LASO and its staff, LASH
15512         LEGAL AID v. LEGAL SERVICES CORP.
III makes clear that a grantee must show more than a burden
on the exercise of protected speech to establish an as-applied
First Amendment violation — the grantee must show that
workable alternative channels do not exist.

   Plaintiffs point to enforcement actions that LSC has taken
against other grantees to bolster their as-applied challenge.
They contend that a “prudent” grantee will pay close attention
to PIR compliance audits and investigative reports that LSC
periodically conducts and makes available to the public, and
entered several audits and reports of this kind into the record.
The district court disregarded the evidence of LSC’s applica-
tion of the PIR to grantees other than LASO, concluding that
it was not relevant in the context of an as-applied First
Amendment challenge.

   We have held that “[a]n as-applied [First Amendment]
challenge does not implicate the enforcement of the [chal-
lenged] law against third parties.” Foti v. City of Menlo Park,
146 F.3d 629, 635 (9th Cir. 1998). That general principle
clearly applies here. That a grantee may glean insight into
LSC’s enforcement policies by examining publically available
audits and LSC Inspector General reports is not controversial.
Plaintiffs, however, go a step further. They contend that LSC
audits of other, unrelated grantees are tantamount to actual
enforcement actions against LASO, its staff attorneys, and its
clients. Accepting this premise would require the court to
assume that LSC would treat LASO in the same manner that
it has treated other grantees — despite the myriad practical
differences among grantees and LSC’s “totality-of-the-
circumstances” approach to determining PIR compliance —
and then speculate about whether that treatment would violate
the First Amendment. Such an approach is inconsistent with
the limited scope of an as-applied constitutional challenge.

   [10] In sum, the record reflects that LSC employs a flexi-
ble, fact-intensive process for determining whether a grantee
maintains objective integrity and independence. LASO has
                LEGAL AID v. LEGAL SERVICES CORP.                 15513
not been subjected to an LSC audit, nor, according to the
record, has it been threatened with an audit, despite its close
affiliation with OLC. LSC’s rejection of the Proposal, stand-
ing alone, is not sufficient to establish an as-applied First
Amendment violation, and Plaintiffs have not identified any
other concrete application of the PIR that has had the effect
of prohibiting LASO, or the clients the organization serves,
from expressing restricted speech through alternative chan-
nels.

  B.    LASO Attorneys

   The individual LASO attorneys’ separately contend that
they are entitled to summary judgment on their as-applied
challenge to the PIR.

   Their argument runs as follows: LSC, in an official guid-
ance document and in audits of other grantees, has stated that
if more than ten percent of a larger grantee’s attorneys work
part-time for a particular unrestricted affiliate, the grantee is
likely not in compliance with the PIR. Therefore, at least
some LASO attorneys that wish to do so (they offer affidavits
from individual LASO attorneys suggesting that more than
ten percent of LASO’s attorneys do in fact wish to work for
OLC part-time), are effectively barred from exercising pro-
tected speech rights. The district court denied the attorneys’
motion for partial summary judgment, concluding that they
had failed to show any specific instance where LSC had
denied an individual LASO attorney’s request to work part-
time (or on his or her own time) for an unrestricted organiza-
tion.11

   [11] We agree that the individual LASO attorneys have
failed to show that LSC’s enforcement of the PIR effectively
cuts off alternative channels for engaging in protected speech.
  11
     An attorney working full-time for an LSC grantee may only engage
in the outside practice of law under limited circumstances. See 45 C.F.R.
§ 1604.4.
15514         LEGAL AID v. LEGAL SERVICES CORP.
  A 1997 LSC Guidance Memorandum states the following:

    There is no per se bar against a recipient employing
    part-time staff who are also employed part-time by
    an organization which engages in restricted activity.
    Generally speaking, however, the more staff
    “shared,” or the greater the responsibilities of the
    staff who are employed by both organizations, the
    more danger that program integrity will be compro-
    mised. Sharing an executive director, for example,
    inappropriately tends to blur the organizational lines
    between the entities. Likewise, sharing a substantial
    number or proportion of recipient staff calls the
    recipient’s separateness into question.

In a footnote, the memo explains that “[f]or larger organiza-
tions, 10% of the recipients’s attorney/paralegal staff should
serve as a guide. However, for recipients with smaller staffs,
the program director should use his or her best judgment to
determine whether part-time staff constitute a substantial pro-
portion of the recipient’s legal workforce.”

   The above statements outline LSC’s general methodology
for determining whether a grantee and an unrestricted affiliate
are sufficiently separate. The rough “10 percent rule” that the
LASO attorneys rely on does not suggest that only 10 percent
of LASO’s staff may engage in restricted activity part-time,
or on their own time, but rather that, under normal circum-
stances, no more than 10 percent of LASO’s legal staff may
work part-time at the same unrestricted organization. That
the PIR prevents at least some LASO attorneys from working
part-time for OLC does not establish that it effectively cuts
off alternative channels for engaging in protected speech. As
we recognized in LASH III, LASO attorneys are free to pursue
a variety of alternative avenues for expressing restricted
speech, including working full-time for an unrestricted orga-
nization, or alternatively, continuing to work for an LSC
               LEGAL AID v. LEGAL SERVICES CORP.           15515
grantee organization and engaging in restricted activities on
their own time. See LASH III, 145 F.3d at 1029.

  [12] The district court thus did not err in denying the indi-
vidual LASO attorneys’ motion for partial summary judg-
ment.

III.   Motion for New Trial and Related Discovery Issues

   [13] Plaintiffs contend that the district court abused its dis-
cretion in denying their motion for a new trial and their
motions to compel the production of documents relating to
LSC’s enforcement of the Restrictions. We disagree.

   The basic premise underlying both Plaintiffs’ motion for a
new trial and their motions to compel discovery — that the
Restrictions and the PIR can be challenged in separate as-
applied claims — is flawed. As we have explained, under
LASH III, the Restrictions are constitutional so long as LSC’s
enforcement of the PIR provides grantees with alternative
channels through which they can direct restricted speech.
Velazquez III did not disturb the holding in LASH III; thus, the
district court properly focused the litigation below on the
manner in which LSC has interpreted and applied the PIR.

                          CONCLUSION

  For the reasons set forth above, the judgment of the district
court is

  AFFIRMED.

PREGERSON, Circuit Judge, partial dissent:

   In 1974, Congress established the not-for-profit Legal Ser-
vices Corporation (“LSC”) for the purpose of distributing
15516          LEGAL AID v. LEGAL SERVICES CORP.
grants to enable qualifying legal service organizations to pro-
vide free legal assistance to the poor in non-criminal proceed-
ings. 42 U.S.C. §§ 2996-2996l. In the years since, Congress
has attached a number of restrictions to the ways in which
recipients of LSC grants can provide legal services. See, e.g.,
§ 2996f(b). In 1996, Congress attached another set of restric-
tions to the LSC grants. See Omnibus Consolidated Rescis-
sions and Appropriations Act of 1996, Pub. L. No. 104-134,
§ 504, 110 Stat. 1321, 1321-53-56 (1996) (the “1996 Act”),
reenacted in the Omnibus Consolidated Rescissions and
Appropriations Act of 1997, Pub. L. 104-208, § 502, 110 Stat.
3009 (1997).

   In this case, Plaintiffs mounted a facial challenge to four of
the 1996 LSC Restrictions. Specifically, Plaintiffs challenged
the LSC Restrictions on: (1) “attempt[s] to influence” legisla-
tion and/or administrative rule-making processes; (2) initia-
tion of, and participation in, class action lawsuits; (3)
claiming, collecting or retaining attorneys’ fees available
under any federal or state law; and (4) soliciting clients. Plain-
tiffs argued that these four Restrictions violate their First
Amendment rights to free speech and association because the
Restrictions distort Plaintiffs’ ability to provide legal services
to their clients.

   The district court rejected Plaintiffs’ distortion argument. In
so doing, the district court erred. First, determining whether
the four Restrictions distort legal services attorneys’ ability to
effectively represent their clients is key to determining
whether the Restrictions are unreasonable in light of the pur-
pose of the LSC grants, and, thus, violate the First Amend-
ment. Second, the four Restrictions do distort the legal system
by imposing serious and fundamental limits on legal services
providers’ ability to effectively represent their clients such
that the Restrictions are unreasonable in light of the purpose
of the LSC grants.
                LEGAL AID v. LEGAL SERVICES CORP.            15517
I.    Distortion Renders the Restrictions Unreasonable

     A.   Velazquez III

   In Velazaquez III, the Supreme Court held that the LSC
“suits-for-benefits” restriction, which prohibited legal services
attorneys from challenging existing welfare laws, was uncon-
stitutional. Legal Servs. Corp. v. Velazquez (Velazquez III),
531 U.S. 533, 536 (2001). As the majority in this case
observes, in Velazquez III, the Supreme Court “did not estab-
lish a new First Amendment test,” but rather analyzed the
suits-for-benefits restriction “through the lens of the Court’s
limited public forum cases.” See Majority Opinion at
15505-07. Under the limited public forum analysis, a restric-
tion on speech must be “reasonable in light of the purpose
served by the forum” and cannot “discriminate against speech
on the basis of its viewpoint.” Rosenberger v. Rector & Visi-
tors of the Univ. of Va., 515 U.S. 819, 829 (1995) (internal
quotation marks omitted). Thus, whether a LSC restriction
violates the First Amendment depends on whether the restric-
tion is (1) reasonable in light of the purpose of the LSC grants
(to provide free legal services to the poor), and (2) viewpoint
neutral.

   Applying the limited public forum analysis, the Velazquez
III Court held that the suits-for-benefits restriction was uncon-
stitutional. Id. at 548. The reasons identified by the Court for
reaching this conclusion included the Court’s determinations
that (1) the suits-for-benefits restriction “distorts the legal sys-
tem by altering the traditional role of the attorneys . . . . ,” and
that (2) Congress may not subsidize legal services in a way
that seriously and fundamentally restricting the advocacy of
attorneys. Id. at 544.

   The majority contends that Velazquez III was decided on
viewpoint discrimination grounds. See Majority Opinion at
15507-08. This reading of Velazquez III is mistaken. Instead,
Velazquez III struck down the suits-for-benefits restriction on
15518             LEGAL AID v. LEGAL SERVICES CORP.
reasonableness grounds. That Velazquez III was decided on
reasonableness grounds is illustrated by two aspects of the
opinion. First, the Velazquez III majority repeatedly discussed
the suits-for-benefits restriction in the context of the purpose
of the LSC grants.1 This is significant because analysis of the
LSC grants’ purpose goes to whether a restriction is reason-
able, not to whether it discriminates on the basis of viewpoint.
Second, the Velazquez III majority never stated that it was
deciding the case on viewpoint discrimination grounds and
did not dispute the dissent’s contention that the majority did
not challenge whether the suits-for-benefits restriction was
viewpoint neutral. See Velazquez III, 531 U.S. at 549 (Scalia,
J. dissenting) (noting that the majority did not claim the suits-
for-benefits restriction “discriminates on the basis of view-
point.”). This is significant because if the Velazquez III major-
ity intended to overturn the suits-for-benefits restriction on
viewpoint grounds, one would expect the majority to respond
to the dissent’s assertion to the contrary.

   Thus, the Velazquez III majority’s discussion of how the
suits-for-benefits restriction “distorts the legal system” can
properly be understood to refer to the “reasonableness” of the
restriction in light of the purpose of the LSC grants rather
than whether the restriction was viewpoint neutral. Because
the suits-for-benefits restriction “distort[ed] the legal system
by altering the traditional role of . . . attorneys,” it was unrea-
sonable in light of the purpose of the LSC grants. And,
because the suits-for-benefits restriction was unreasonable in
  1
    See, e.g., 531 U.S. at 536 (noting the purpose of LSC grants is to fund
legal representation for the indigent in noncriminal matters); Id. at 537
(explaining that the restriction permitted the attorney-grantees to represent
“indigent clients seeking welfare benefits” but, prohibited the attorney-
grantees from challenging “existing welfare law”); Id. at 543 (noting that
review of the restriction is informed by whether the restriction is necessary
to the program’s purpose); Id. at 544 (noting that the government seeks to
facilitate suits-for-benefits but distorts the judiciary’s ability to resolve the
claims).
               LEGAL AID v. LEGAL SERVICES CORP.            15519
light of the purpose of the LSC grants, it violated the First
Amendment under the limited public forum analysis.

  B.    Plaintiffs’ Distortion Arguments Were Not Properly
        Considered

   Before the district court, Plaintiffs argued that the four
Restrictions violate the First Amendment because they distort
legal services attorneys’ ability to effectively represent their
clients. Plaintiffs, however, did not frame their distortion
arguments as reasonableness arguments within the limited
public forum analysis. Nonetheless, whether the four Restric-
tions distort legal services attorneys’ ability to effectively rep-
resent their clients is key to determining whether the
Restrictions are unreasonable within the limited public forum
analysis. For this reason, the district court should have consid-
ered Plaintiffs’ distortion arguments as part of the reasonable-
ness inquiry.

   The district court, however, did not address the question
whether the four Restrictions distort the process of legal rep-
resentation such that the Restrictions are unreasonable in light
of the purpose of the LSC grants. Because of this failure, the
district court incorrectly analyzed whether the four Restric-
tions violate the First Amendment.

II.    The Restrictions Distort Legal Service Attorneys’
       Ability to Effectively Represent their Clients

   The district court’s failure to properly consider whether the
four Restrictions distort legal services attorneys’ ability to
effectively represent their clients was a critical error because
the Restrictions do distort legal services attorneys’ ability to
effectively represent their clients such that the Restrictions are
unreasonable in light of the purpose of the LSC grants.

  To effectively represent their clients, attorneys may need to
use any number of legal tools. Some of the tools an attorney
15520         LEGAL AID v. LEGAL SERVICES CORP.
may use include: making a phone call, writing a letter, trying
to negotiate a settlement, seeking alternative dispute resolu-
tion, filing a lawsuit seeking an injunction, filing a lawsuit
seeking damages, filing a lawsuit challenging the validity of
the underlying law, or seeking to change the underlying law
through lobbying. For example, where a client’s claim has a
particularly small monetary value, an attorney might seek to
combine that client’s claim with similar claims of others
through joinder or through a class action. Similarly, where a
client has a claim under a law that provides attorneys’ fees,
the attorney might give-up all or part of those fees to bring
about an amicable settlement.

   Landlord-tenant disputes illustrate how attorneys might
need to use a variety of legal tools to effectively represent a
poor client. Landlord-tenant disputes often involve very small
sums of money, but carry huge quality of life implications. A
poor tenant, for example, who fails to get her landlord to
eliminate a lead paint hazard in an apartment might face the
untenable choice of risking harm to the health of her children
by staying or upending her family’s lives and incurring sub-
stantial costs by moving out. Where such a tenant seeks legal
help, she could have a winning legal claim that is nonetheless
not a viable solution to her lead paint problem because the
potential damage award is too small to motivate the landlord
to fix the problem. By combining that tenant’s claim with
other tenants’ similar claims or with an attorneys’ fees claim,
however, an attorney could increase the potential cost of los-
ing to an amount large enough to motivate the recalcitrant
landlord to remove the lead paint hazard. But under the Solic-
itation Restriction and Attorneys’ Fees Restrictions at issue in
this case, legal services attorneys are prohibited from seeking
other clients with the same problem or seeking attorneys’
fees. Consequently, in this hypothetical, were a legal services
attorney to take on the original tenant’s case, that attorney
would not be in a position to effectively represent his client.

  Similarly, a client may have a wage and hour claim of such
a small monetary value that even if she were to prevail, a
               LEGAL AID v. LEGAL SERVICES CORP.            15521
large and obstinate employer would not be persuaded to
change the underlying practice—thus subjecting the client to
a high probability of future harm. In such a case, a class
action might be the only way to root out the underlying prac-
tice. Alternatively, a client might be suffering an injury that
falls just outside existing wage and hour law. In such a case,
lobbying to change the underlying wage and hour law might
be the client’s only hope of redress. Under the Restrictions,
however, a legal services attorney cannot pursue a class action
or assist a client in lobbying to change an existing law. Conse-
quently, in both these wage and hour hypotheticals, a legal
services attorney would not be able to employ the legal tools
necessary to most effectively represent his client.

   This same analysis applies to many of the real life problems
facing the poor. By depriving legal services attorneys of their
ability to pursue class actions, solicit other clients with similar
problems, seek attorneys’ fees, or lobby to change a law, the
four Restrictions at issue often prevent legal services attor-
neys from employing the legal tools that would most effec-
tively redress a client’s problems. The Restrictions thus
distort the legal system because they seriously and fundamen-
tally limit legal services attorneys’ ability to effectively repre-
sent their clients by curtailing the legal tools that legal
services attorneys can employ to advocate on their clients’
behalf.

III.   Conclusion

   It is tough for the poor to find good lawyers. The purpose
of LSC grants is to help ameliorate that social problem by
providing funds for legal assistance to people who cannot oth-
erwise pay for a lawyer. Even so, there is still a scarcity of
lawyers serving the poor. Upholding these four Restrictions
severely constrains those dedicated lawyers who choose to
serve the poor by seriously and fundamentally limiting their
ability to effectively represent their clients. The four Restric-
tions thus distort a legal system designed to “do equal right
15522          LEGAL AID v. LEGAL SERVICES CORP.
to the poor and to the rich” (28 U.S.C. § 453, Oaths of justices
and judges) so that all Americans will be the beneficiaries of
a system of government based on equal justice under the law.
Under the limited public forum analysis, because these four
Restrictions distort legal services attorneys ability to effec-
tively represent their clients, they are thus unreasonable in
light of the purpose of the LSC grants and therefore violate
the First Amendment. For this reason, I would reverse the dis-
trict court as to Plaintiffs’ facial challenge to the four Restric-
tions.