August 23, 2000
In the Matter of:
California Rural Legal AssistanceComplainant:
631 Howard Street, Suite 300
San Francisco, CA 94104
National Legal and Policy Center
1309 Vincent Place, Suite 1000
McLean, VA 22101
This complaint alleges that California Rural Legal Assistance, Inc. (CRLA), a program supported by federal tax funds through the Legal Services Corporation (LSC), apparently undertook activities which violated the LSC Act and regulations regarding fee-generating cases.
The complaint further alleges that CRLA’s actions appear to have violated federal appropriations law and LSC regulations prohibiting class actions, the initiation of litigation in which each plaintiff has not been specifically identified by name, and the seeking of attorney’s fees.
In a complaint dated July 8, 2000 and filed in the U.S. District Court for
the Eastern District of California, CRLA undertook a lawsuit seeking:
See Exhibit A: Manuel A., et al. v. J.B. Farm Labor Contractor, et al., USDC Case No. CIV. S-00-1162-GEB-PAN, Second Amended ComplaintOn its face, the lawsuit filed by CRLA appears to violate the LSC Act, LSC regulations and federal appropriations law restrictions applying to all recipients of LSC funds. As the complaint found in Exhibit A indicates, CRLA is engaged in a fee-generating case for which there was counsel not funded by LSC available to provide legal assistance.
Moreover, CRLA is litigating on behalf of a class of individuals in clear violation of the appropriations law restriction which forbids involvement in any class actions by LSC recipients and makes no allowances for exceptions of any kind.
As is also apparent from CRLA’s own Second Amended Complaint, CRLA has failed to identify by name all of its clients in the case, as is strictly required by federal law (see Public Law 106-113 which incorporates by reference the restrictions first set forth in Public Law 104-134) and LSC regulations (45 CFR § 1636).
Finally, under federal law and LSC regulations, all LSC recipients are forbidden from seeking or accepting attorney’s fees, yet CRLA is seeking attorney’s fees in this case for its co-counsel, California Rural Legal Assistance Foundation. There is substantial evidence from California Rural Legal Assistance Foundation itself as well as news accounts that this organization initiates and participates in a wide variety of activities which are restricted by law for LSC grantees. The financial separation which federal appropriations law and LSC regulations require between recipients of LSC funds and those organizations engaged in restricted activities does not appear to be present when an LSC-funded program engages in a major class action in which it seeks attorney’s fees for its co-counsel which is unquestionably using its resources for restricted activities.
The activities of CRLA in this case constitute an apparent violation of both the LSC Act and regulations regarding fee-generating cases.
The LSC Act addresses the restriction against involvement of LSC-funded programs in fee-generating cases as follows:
No funds made available by the Corporation under this subchapter, either by grant or contract, may be used-The restriction against LSC-funded programs handling fee-generating cases is further described in LSC’s regulations at 45 CFR § 1609.(1) to provide legal assistance (except in accordance with guidelines promulgated by the Corporation) with respect to any fee-generating case (which guidelines shall not preclude the provision of legal assistance in cases in which a client seeks only statutory benefits and appropriate private representation is not available);42 U.S.C. § 2996f(b)(1)
The purpose of the regulation is to “ensure that recipients do not use scarce legal resources when private attorneys are available to provide effective representation.” 45 CFR § 1609.1
The definition of fee-generating case is remarkably straightforward:
“Fee-generating case” means any case or matter which, if undertaken on behalf of an eligible client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client, from public funds or from the opposing party.It is beyond dispute that the case being brought by CRLA is a fee-generating case. On page 31 of the Second Amended Complaint of CRLA in this case, CRLA specifically seeks “an award of attorney’s fees” for the counsel of “the law firm of the California Rural Legal Assistance Foundation.”45 C.F.R. § 1609.2
It is also beyond dispute that attorneys other than LSC-funded attorneys are available to take this case because the co-counsel in this case has clearly agreed to take the case.
Any argument that this is a fee-generating case which could be taken by a LSC grantee because it was rejected by two local attorneys, as allowed for in 45 CFR § 1609.3, is baseless since it was accepted by counsel not funded by LSC and that counsel is still involved in the case and seeking attorney’s fees.
The litigation initiated by CRLA in this case repeatedly asserts claims not just for the named plaintiffs, but for a class of unidentified “members of the general public.” On page 20 of the Second Amended Complaint, under the “Fourth Cause of Action,” this class is described as “other similarly-employed members of the general public.” Again the members of this additional class of clients are never identified specifically by name.
The size of the class is never given because it is apparently not known by the legal services lawyers involved in this class action. The closest estimate by CRLA lawyers comes on the first page of the Second Amended Complaint in the first numbered paragraph of the preliminary statement:
“This civil action is brought by three migrant farm workers, for themselves and for the interests of the general public including not less than 150 other similarly situated former, current and future migrant workers.”Lest there be any doubt that the lawsuit seeks to recover funds for the unidentified class members, numbered paragraph 94 of the Second Amended Complaint states:
“...each Plaintiff, and on information and belief other similarly-employed members of the general public, were, and are, injured and entitled to recover amounts to be proved at trial of no less than $100.00 for each failure.”Throughout the Second Amended Complaint, CRLA lawyers explicitly seek to assert various claims on behalf of the unidentified class members.
The problem is that programs funded by LSC are strictly prohibited from either initiating or participating in any class action lawsuit.
The restriction against class actions found in Public Law 104-134 is neither ambiguous nor does it provide for any exceptions:
Sec. 504None of the funds appropriated in this Act to the Legal Services Corporation may be used to provide legal assistance to any person or entity (which may be referred to in this section as “recipient”)-
. . .
(7) that initiates or participates in a class action suit;
The fact that Congress prohibited any LSC-funded program from initiating or participating in a class action and chose not to allow any exceptions, especially when other restrictions in the same law did allow for certain specified exceptions, underscores Congressional intent to ban the practice of class action lawsuits by LSC-funded programs.
LSC regulations further codified the restriction against class actions at 45 CFR § 1617. As with the federal law, no exceptions to the prohibition against initiating or participating in class action lawsuits were set forth. The broad nature of the prohibition was underscored by the language found in 45 CFR § 1617.3:
Recipients are prohibited from initiating or participating in any class action.The word “any” in the regulation just cited provides further emphasis as to the fact that exceptions of any type were not permitted.
A case decided earlier this year before the U.S. Court of Appeals for the Ninth Circuit included a discussion of what was meant by the word “any” as it appeared in a statute covering drug-related criminal activity:
We have no reason to think the Congress meant anything other than “any” when it used the term “any.” “Read naturally, the word ‘any” has an expansive meaning, that is ‘one of some, indiscriminately of whatever kind.’” United States v. Gonzalez, 520 U.S. 1, 4, 137 L. Ed. 132, 117 S. Ct. 1032 (1997) (quoting Webster’s Third New International Dictionary (1976)). We suppose that Congress could have included an additional sentence stating “Yes, we really do mean ‘any.’” Even without such a statement, binding precedent instructs that, just as “no” means “no,” “any” really does mean “any.”Rucker v. Davis, 203 F.3d 627
Nor is there any dilution of the broadness of the restriction in the definition of class action at 45 CFR § 1617.2, which covers not just class actions brought pursuant to Rule 23 of the Federal Rules of Civil Procedure, but also “comparable State statute or rule of civil procedure applicable in the court in which the action is filed.”
Should there be any doubt as to whether a representative action in which legal services lawyers attempt to represent a class of unnamed individuals is a violation of the broad restriction against class actions found in both the law and regulations, one can turn to Ballentine’s Law Dictionary to review what that authoritative legal dictionary has to say on the subject. The definition is remarkably unambiguous:
representative action. same as class actionThat definition does not allow any discernible wiggle room for any attempt to argue that a representative action is not a class action.
Similarly, Black’s Law Dictionary provides no grounds for claiming a
representative action is not a class action:
CLASS or REPRESENTATIVE ACTION. One in which one or more members of a class sue either for themselves or for themselves and other members of a class. Huester v. Gilmour, D.C.Pa., 13 F. Supp. 630, 631; City of Dallas v, Armour & Co., Tex. Civ. App., 216 S.W. 222, 224.Put simply, a representative action is a class action and Congress has explicitly prohibited legal services programs funded by LSC from initiating or participating in any class actions. CRLA has initiated a class action in this case and is presently participating in that class action.
Indeed, the current involvement of a growing number of legal services programs in class actions and LSC’s failure to ensure that these programs comply with the law has not escaped the attention of Congress. The recently released House of Representatives report covering Fiscal Year 2001 appropriations for the Departments of Commerce, Justice and State had this to say about class actions by LSC grantees:
The Committee also reminds the Corporation that its grantees are prohibited by section 504(a)(7) of P.L. 105-119 from participating in class action suits and directs the Corporation to ensure its grantees comply.House Report 106-680, page 126
This apparent failure to document information regarding potential clients’ assets and/or citizenship/alien eligibility is not surprising. In fact LSC’s own Program Letter 99-3, issued to all LSC Program Directors on July 14, 1999 and entitled “Documentation of Asset Determinations and Citizenship/Alien Eligibility,” cited the fact that LSC management had learned “through on-site reviews, audits by the General Accounting Office, and discussions with recipients regarding the Case Service Reporting Self-Inspection Procedure” that documentation required by federal law and LSC regulations was not “consistently documented.”
Section 504(a)(11) of the LSC appropriations act for FY 1996, Pub. L. 104-134, 110 Stat. 1321 (1996) prohibits LSC from providing funding to any person or entity that provides legal assistance to ineligible aliens. Since CRLA has no idea of the names of the class of more than 150 individuals they claim to be representing in this case, how did they determine that none of the class were ineligible? And how was the asset documentation accomplished? The verification of citizenship required by 45 CFR § 1626.6? The verification of eligible alien status as required by 45 CFR §1626.7?
On the question of undocumented workers, it is clear that the federal law just cited flatly prohibits any legal assistance by a program funded by LSC to any undocumented alien. Yet CRLA is providing legal assistance to a large class of farm workers whose names are unknown to CRLA. What are the odds that none of that class are undocumented aliens? Consider the comments of California Rural Legal Assistance Foundation lawyer Claudia Smith:
"We estimate that 40 to 50 percent of the farm workers of California may be undocumented.”
“AFL-CIO makes right call in its turnabout on undocumented workers,” by Jorge Bustamante, “Star Tribune,” February 29, 2000, page 16AAs for the need to check alien status, one need look no further than the first numbered paragraph of CRLA’s preliminary statement of their Second Amended Complaint:
This action challenges practices whereby workers are recruited in Mexico by defendants and/or defendants employees, foremen and other agents and in some cases by co-workers, and are never provided with information about the specific terms and conditions of employment.If CRLA is alleging that individuals who make up their class were recruited in Mexico, that would indicate that alien eligibility is certainly a factor to be considered. Moreover, under LSC’s regulation on restrictions on legal assistance to aliens, there is a requirement that citizenship be verified:
Section 1626.6 Verification of citizenship
(a) A recipient shall require all applicants for legal assistance who claim to be citizens to attest in writing in a standard form provided by the Corporation that they are citizens, unless the only service provided for a citizen is brief advice and consultation by telephone which does not include continuous representation.LSC and General Accounting Office investigators found this requirement to be frequently violated by legal services lawyers. LSC felt it was serious enough to require a Program Letter to all LSC programs in July 1999. Moreover, LSC assured the GAO and Congress in September 1999 that it was taking steps to correct the problem.45 CFR § 1626.6
None of the unidentified members of the class being represented by CRLA in this action can be said to fit in the narrow confines of the exception made for individuals seeking brief advice and consultation by telephone. It follows that CRLA had a legal, ethical and professional obligation to verify citizenship of each member of the class. As there is no indication that CRLA lawyers know the names of those in the class or whether they have ever met or spoken with them, it’s doubtful that there was any attestation in writing as required by 45 CFR § 1626.6.
Under the LSC Act, LSC has all the legal authority it needs to inspect any such written attestation forms. LSC Program Letter 99-3 of July 1999 reminded all LSC Program Directors:
All such citizen attestations are to be preserved and maintained in the client’s file.If CRLA can not or will not disclose written attestation forms for each and every client they are claiming to represent, it’s difficult to see how they can be considered in compliance with the requirements of this regulation.
The complaint filed by CRLA in this case seeks to assert claims on behalf of a large class of individuals who are unidentified.
Additionally, CRLA fails to state the exact size of the class and wholly fails to provide any information as to whether the individuals it is claiming to represent are even eligible for assistance.
As noted, if any class of individuals which CRLA is claiming to represent are undocumented aliens or have income or assets in excess of the amount allowed by law, then any such representation is illegal. More precisely, it would be illegal in yet another way because class actions and failing to state the names of plaintiffs in a complaint filed by attorneys funded through LSC represent activities which violate federal appropriations law and LSC regulations.
That filing a complaint or initiating litigation on behalf of unidentified clients violates federal law could scarcely be more clear.
Public Law 104-134 sets forth the restrictions as follows:
Sec. 504Applying the law just cited to the facts of this case, it must be asked: did CRLA specifically identify by name, each plaintiff it seeks to represent in any complaint filed for the purpose of such litigation? Of course not. Instead, CRLA’s lawyers repeatedly assert that they are representing a class of unidentified “members of the general public” as well as similarly unidentified “similarly employed members of the general public.”None of the funds appropriated in this Act to the Legal Services Corporation may be used to provide financial assistance to any person or entity (which may be referred to in this section as “recipient”)-
. . .
(8) that files a complaint or otherwise initiates or participates in litigation against a defendant, or engages in precomplaint settlement negotiation with a prospective defendant, unless-(A) each plaintiff has been specifically identified, by name, in any complaint filed for the purposes of such litigation or prior to the precomplaint negotiation; and
(B) a statement of facts written in English and, if necessary, in a language that the plaintiffs understand, that enumerate the particular facts known to the plaintiffs that on which the complaint is based, have been signed by the plaintiffs, are kept on file by the recipient, and are made available to any Federal department or agency that is auditing or monitoring the activities of the Corporation or of any recipient, and to any auditor or monitor receiving Federal funds to conduct such auditing, including any auditor or monitor of the Corporation:...
Also applying the law just cited, did CRLA obtain from all its claimed clients a statement of facts signed by the clients, as required? The law specifically requires such a signed statement and also requires that it “be kept on file by the recipient” and made available to “any Federal department or agency” as well as “any auditor or monitor of the Corporation.”
As such, LSC can simply require CRLA to provide it with copies of all statements of fact signed by plaintiffs in this case. However, it appears abundantly clear that CRLA does not know the identities of its purported class members or it would have disclosed them in the complaint.
If LSC chooses to ignore violations of law and regulations by LSC-funded programs, Congress has the option to call for a GAO investigation of such violations as well as LSC’s failure to ensure compliance. Alternatively, the matter could be investigated by the House Committee on Government Reform, the House Judiciary Subcommittee on Commercial and Administrative Law or their Senate counterparts.
Finally, CRLA’s litigation represents an apparent violation of both federal appropriations law and LSC regulations regarding attorney’s fees and program integrity.
Congress addressed years of abuses in the legal services program when it initiated a series of reforms as riders to the Fiscal Year 1996 appropriations legislation for LSC. The relevant section of Public Law 104-134 is as follows:
Sec. 504In the case in question, CRLA is seeking attorney’s fees, not for itself but for its co-counsel, California Rural Legal Assistance Foundation. Specifically, under the Prayers for Relief section of the Second Amended Complaint, CRLA seeks the award of “reasonable attorneys’ fees for the law firm of the California Rural Legal Assistance Foundation.”None of the funds appropriated in this Act to the Legal Services Corporation may be used to provide financial assistance to any person or entity (which may be referred to in this section as “recipient”)-
. . .
(13) that claims (or whose employee claims), or collects and retains, attorney’s fees pursuant to any Federal or State law permitting or requiring the awarding of such fees.
While LSC-funded programs are prohibited from taking fee-generating cases when other counsel is available, as it is in this case, nothing in the law or regulations carves out an exception allowing for legal services programs which violate the ban on fee-generating cases to seek attorneys fees for the co-counsel in the case.
Moreover, CRLA seeking attorneys’ fees to benefit California Rural Legal Assistance Foundation raises yet another serious question since the Foundation engages in a long list of activities prohibited to LSC grantees. The federal appropriations law and companion LSC regulation (45 CFR § 1610) requiring program integrity requires that programs receiving LSC funds be both financially and physically separate from groups engaging in restricted activities. The legal services program in Alameda, California lost its LSC grant because, among other things, it failed to abide by the legal and regulatory requirements mandating such separation.
In the present matter, voluminous evidence exists that the California Rural Legal Assistance Foundation engages in a variety of activities which LSC programs may not undertake or subsidize. It has registered lobbyists in Sacramento, its web page describes other activities banned to LSC grantees and a survey of news and legal databases revealed far more such activities. The fact that CRLA has assigned six of its lawyers to this case for one of the plaintiffs while the California Rural Legal Assistance Foundation has just one attorney listed on the Second Amended Complaint yet that one attorney is described as the attorney for all the plaintiffs certainly raises questions as to program integrity issues.
Apparently, CRLA believes it’s acceptable for a program funded by LSC to seek
attorneys’ fees - as long as those fees go to a group engaged in restricted
activities.
The actions of CRLA in this case represent flagrant apparent violations of the LSC Act and regulations as well as federal appropriations law.
LSC-funded programs are prohibited from taking fee-generating cases when other counsel is available, yet that is exactly what CRLA has done.
LSC-funded programs are prohibited from initiating or participating in class actions, yet that is exactly what CRLA has done.
LSC-funded programs are required to obtain written attestations of citizenship or alien eligibility from all clients other than those getting brief advice, yet the fact that there’s no indication that CRLA even knows the names of the huge class it is purporting to represent makes one doubt such written attestations exist.
LSC-funded programs are prohibited from filing complaints unless all plaintiffs are identified by name and a written statement of facts giving rise to the lawsuit has been obtained, yet there is no indication that CRLA has complied with either of these legal requirements.
LSC-funded programs are forbidden from seeking attorneys’ fees, yet they have and the fees being sought are for a group which CRLA knows is engaged in a host of activities prohibited to LSC grantees.
LSC is legally bound by the LSC Act to ensure that its grantees obey the LSC Act, LSC regulations and federal appropriations law.
LSC has repeatedly claimed to Congress, as recently as earlier this year, that it “vigorously” enforces all restrictions.
This is the third complaint filed with LSC this year informing LSC that a program it funds is violating the class action restriction. To date, no action has been taken by LSC to stop these class action lawsuits.
Now the House of Representatives through the language in House Report 106-680 has reminded LSC that its grantees are forbidden by section 504(a)(7) of P.L. 105-119 from participating in class action suits and has directed the Corporation “to ensure its grantees comply.”
Year after year the policy debate over LSC has had advocates of the program
claiming that the restrictions imposed by Congress were obeyed by legal services
lawyers and being enforced by LSC. The facts of this case and the other two
pending complaints suggest otherwise.
Legal Services Accountability Project Page