Supreme Court of the United States
Washington Legal Foundation, et al.,
Legal Foundation Of Washington, et al.,
On Petition for a Writ of Certiorari to
the United States Court of appeals
for the Ninth circuit
brief of Amici Curiae, Citizens for the
Preservation of Constitutional Rights, Small Property Owners ASSOCIATION, Scott
Sherman, David parker, and Karen Parker, Rep. Francis L. Marini supporting the
Petition for a writ of certiorari
The Amici Curiae are the plaintiffs
in the case of Citizens for the Preservation of Constitutional Rights, et
al. v. Chief Justice Marshall, et al., No. 02-cv-10125 MLW (D.Mass. filed Jan. 23,
2002), which challenges the constitutionality of the Massachusetts IOLTA
program. They are joined by a Massachusetts elected official, who is
participating in that case as an amicus at the district court. The
Massachusetts plaintiffs are all victims of IOLTAs unconstitutional taking of
private property and the forced contribution to the political speech of groups
with whom they do not agree. Much of the $10,000,000.00 in
private money taken by the Massachusetts Supreme Judicial Court through IOLTA
annually, goes to hiring lawyers to sue small property owners and to lobby
against pro-property owner legislation. Because small property owners regularly
utilize the services of attorneys, they are also one of the most frequent
contributors (all be it against their will) to IOLTA. Grant recipients, such as
Greater Boston Legal Services, which maintains a staff of 68 attorneys, are
largely devoted to suing landlords on behalf of tenants. See www.gbls.org. Therefore, amici are forced
to pay for the lawyers who sue them.
Amicus Citizens for the Preservation
of Constitutional Rights (CPCR) is a non-profit law firm located in Boston,
represents clients whos equal protection, speech, religious or property rights
have been violated by government actors. See www.JulyFourth.net. CPCR seeks
compensatory damages for some of these clients. As a law firm practicing within
the Commonwealth of Massachusetts, CPCR maintains an IOLTA account as required by
Massachusetts Supreme Judicial Court Rule 3:07, Cannon 9, Massachusetts
Rules of Professional Conduct, (Mass.R.Prof.C.) Rule 1.15. See 431 Mass. 1302
(2000) (publishing SJC Rule 3:07). CPCRs cases are regularly opposed by other
non-profit firms, who have the advantage of receiving generous IOLTA grants.
Property Owners Association (SPOA) is an unincorporated association with over
3,000 members. SPOA is based in Cambridge, Massachusetts. The property owners
who make up this association regularly do business with attorneys in
Massachusetts and their funds are regularly placed in IOLTA accounts. SPOA,
itself, has engaged the services of attorneys within the Commonwealth and will
do so again in the future.
Scott Sherman is a citizen of the Commonwealth of Massachusetts. In
the course of his business dealings, he has in the past engaged the services of
attorneys and expects to continue to do so. Currently Mr. Sherman has money
held in an IOLTA account. Mr. Sherman has been sued by individuals represented
by attorneys funded through IOLTA.
David Parker and Karen Parker are citizens of the Commonwealth of
Massachusetts. In the course of their business, they have engaged the services
of attorneys and expects to continue to do so. The Parkers have previously had
funds placed into IOLTA trust accounts.
have all had their property taken by the Massachusetts Supreme Judicial Court
without just compensation. They have all been forced to contribute their funds
to support the expressive activities of others with whom they do not agree.
The plaintiffs in
the Massachusetts IOLTA case are joined in this brief by Amicus State
Representative Francis L. Marini. Rep. Marini was elected to the Massachusetts
House of Representatives in 1994 and was elected Minority Leader on January 6,
1999, and again on January 3, 2001.
Rep. Marini is an amicus in the Massachusetts IOLTA case. Rep. Marini believes that IOLTA is damaging
to the structure of Massachusetts government and intrudes on the powers of the
legislature. Rep. Marini is a personal
witness to the lobby activity paid for by client funds taken through IOLTA.
Summary of the
The decision of the Fifth and Ninth Circuits
need to be reconciled. With IOLTA programs in all 50 states, additional suits
like the one brought by the amici in Massachusetts are inevitable.
Additionally, the decision of the en banc
panel of the Ninth Circuit provides this Court with the opportunity to further
clarify when the ad hoc and per se takings analyses are
IOLTA is damaging to the fundamental
principles that property belongs to the individual, not the state, as well as
the principle that the state cannot force individuals to fund political speech
or expression that is contrarily to their beliefs. As this Court has long
noted, in a free government almost all other rights would become worthless if
the government possessed an uncontrollable power over the private fortune of
every citizen. Chicago, Burlington & Quincy R.R. Co. v. Chicago,
166 U.S. 226, 236 (1897).
Statement of the Case
Massachusetts, like the other 49 states, has
adopted an IOLTA program. The Massachusetts IOLTA program is mandated by the
Justices of the Massachusetts Supreme Judicial Court for all attorneys
practicing within the Commonwealth. Mass.R.Prof.C. 1.15. Similar to Washington State,
the Massachusetts IOLTA rules require attorneys to maintain a separate pooled
account for certain client funds held by that attorney, i.e., those
which are nominal in amount, or are to be held for a short period of time,
must be placed in a pooled account (IOLTA account). Compare, Washington
Disciplinary Rule (Wash. DR) 9-102and Mass.R.Prof.C. 1.15. The interest income
generated by these client funds is turned over to the Court.
As in Washington, the Supreme Judicial Court
mandates that, [l]awyers shall certify their compliance with [the IOLTA] rule
as a prerequisite to practicing within the Commonwealth. Mass.R.Prof.C.
These funds are the property of the client
and are held in trust by their attorney. Phillips v. Washington Legal
Foundation, 524 U.S. 156, 172 (1998)(the interest income generated by funds held in IOLTA accounts is
the private property of the owner of the principal the client); Kent v.
Dunham, 106 Mass. 586, 591 (1871)(interest follows as an accretion to the
Despite the finding by this Court that the
interest income generated by these accounts belongs to the individual clients,
the Supreme Judicial Court of Massachusetts continues to take clients interest
income, for its own use, in the amount of over $10,000,000.00 a
The money taken in Massachusetts is distributed
through a committee created by the Justices of the Supreme Judicial Court, the
Massachusetts IOLTA Committee.
The funds are distributed to various Recipient Organizations. The Massachusetts
IOLTA rules do not prevent these Recipient Organizations from using the funds
for lobbying or for the drafting of legislation.
Recipient Organizations regularly utilize
IOLTA grants to engage in litigation against the individuals whose funds generated
the interest income in the IOLTA accounts. The result is that individuals, like
the amici, are forced to fund litigation against themselves.
As the plaintiffs in a challenge to the
Massachusetts IOLTA program, the amici are confronted with conflicting
decisions by the Fifth and Ninth Circuits. The amici argue that the
logic of the Fifth Circuit should be adopted, while the defendants seek the
adoption of the Ninth Circuits reasoning.
With IOLTA programs in all fifty states
taking an estimated $150,000,000.00 per year in clients interest
income, there is little doubt that other courts beyond the Fifth, Ninth, and
now First Circuits, will have to address these identical issues.
First Conflict: What analysis should courts apply?
One of the first questions that will need to
be addressed in the resolution of amicis challenge to the Massachusetts
IOLTA program is which form of takings analysis should be applied. The Ninth Circuit
chose to apply the ad hoc regulatory takings analysis. The Fifth Circuit
analyzed the Texas IOLTA program under the per se takings analysis. See
Washington Legal Foundation v. Texas Equal Access to Justice Foundation [TEAJF],
270 F.3d 180, 186 (5th Cir. 2001), citing, Webb's Fabulous Pharmacies,
Inc. v. Beckwith, 449 U.S. 155 (1980), and Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419 (1982).
See also, Lucas v. South Carolina Coastal Council, 505 U.S. 1003,
1015 (1992)(holding that the ad hoc analysis is appropriate when
determining if a regulation of the use of private property goes too far and
amounts to a taking, while the per se analysis is to be applied to
regulations that compel the property owner to suffer a physical invasion of
his property or where regulation denies all economically beneficial or
productive use of land).
The First Circuit
has recently stated its understanding of,
the two prongs of takings jurisprudence: per se
(or categorical) takings and regulatory takings. Government action
categorically violates the Takings Clause if it results in the permanent
physical occupation of property or if it denies the owner all economically
beneficial use of his property. In these instances, known as per se
takings, just compensation is required, no matter how minor the invasion or how
great the public purpose served by the regulation. In contrast, in
noncategorical regulatory takings cases, courts must engage in an ad hoc,
factual inquiry to determine whether the government regulation goes too far.
Philip Morris, Inc. v. Reilly, 267 F.3d 45, *21-22
(1st Cir. 2001) (internal citations omitted), rehg en banc granted, No.
00-2425 (November 16, 2001), argued, January 7, 2002.
In its pre-Phillips decision on
IOLTA, the First Circuit applied the per se analysis to a review of
whether the use of client funds held in IOLTA as a mechanism for generating
interest income for the state constituted a temporary taking of the principal. Washington
Legal Found. v. Massachusetts Bar Found., 993 F.2d 962, 975 (1st Cir. 1993). In that case, the First
Circuit held that the taking of interest income was not at issue, based on the
now indefensible argument that the clients do not have a property right to the
interest earned on their funds held in IOLTA accounts. Id. at 975-76. Based on that erroneous proposition,
the only claim reviewed under the per se analysis was whether the
clients property right to exclude others from the use of their funds had been
violated. Id. at 976. In doing so
the First Circuit attempt to distinguish this Courts holding in Webb's
Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980).
In Webbs, the Court found that the claimants to
the interpleaded fund had a recognized property right to the interest earned
while the funds were held by the county registries. In this case, the
plaintiffs do not have a property right to the interest earned on their funds
held in IOLTA accounts . . . The Webbs claimants had property rights to
accrued interest which is tangible personal property, while plaintiffs in this
case have claimed only intangible property interests the right to control
and exclude others.
Massachusetts Bar Foundation, 993 F.2dat
The First Circuit thus implied that if
clients had a property right to the interest income generated by IOLTA, then,
under the per se analysis applied by this Court in Webbs, a
taking requiring compensation would have occurred. See Webbs, 449 U.S.at 163. This would put the First Circuit in conflict with the
decision of the en banc panel of the Ninth Circuit.
recently stated that the per se and ad hoc tests are not
This longstanding distinction between acquisitions of
property for public use, on the one hand, and regulations prohibiting private
uses, on the other, makes it inappropriate to treat cases involving physical
takings as controlling precedents for the evaluation of a claim that there has
been a regulatory taking, and vice versa.
Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning
Agency, 535 U.S. __, No. 00-1167, 2002 U.S. LEXIS 3028, *34 (April 23,
2002).Tahoe-Sierra Pres. Council makes a
clear on the inapplicability of the per se analysis in cases involving the
regulations of the use of property. This Court should use this opportunity to
add an equally clear statement that an ad hoc analysis is not
appropriate where government has
actually appropriated personal property.
Second Conflict: What relief will be available to the amici?
Another question the Court in Massachusetts
will need to answer is: What relief will the amici be entitled to, given
that the Massachusetts IOLTA program, like those in Texas and Washington, does
not contain, reasonable, certain and adequate provision for obtaining
compensation. Regional Rail Reorganization Act Cases, 419 U.S. 102,
quoting, Cherokee Nation v. S. Kansas R. Co., 135 U.S. 641, 659 (1890). In their case, the amici are asking for
an injunction against the enforcement of the Massachusetts IOLTA program,
because it does not include a process by which clients may seek compensation
for their private property that has been taken.
When confronted with this question, the
Fifth Circuit held that where a governmental policy takes property without
providing a mechanism for just compensation, injunctive relief is an
appropriate remedy. TEAJF, 270 F.3dat 194. The Ninth Circuit rejects the use of such a remedy.
How IOLTA funds are used in Massachusetts
IOLTA requirements came into existence
beginning in the 1980s as a mechanism to fund legal services groups. The
industry of Legal Services groups funded by IOLTA often target the interests of
the very people who unwittingly provide their funding.
In 1990, IOLTA grant recipient, Massachusetts Law
Reform Institute (MLRI), filed a brief with the Supreme Judicial Court
advocating in favor of a tax increase. In 1992, MLRI advocated against the
repeal of Massachusetts estate tax. MLRI lobbied against a bill that sought to
limit the availability AFDC benefits to teenagers with excessive absences from
school. After welfare reforms were enacted, MLRI sent a letter to other
non-profit organizations urging them not to participate in workfare.
In 1989, Grant recipient, Greater Boston Legal Services
(GBLS), along with MLRI, brought a case seeking to continue government benefits
for illegal aliens.
Grant recipient Western Massachusetts Legal Services
brought an action seeking welfare benefits for a man who won $75,000
in the lottery, then lost the money on a drug and gambling binge. Western
Massachusetts Legal Services Corporation published a brochure that advises
welfare recipients who inherit or win large amounts of money on how to remain
on public assistance. The brochure advised:
Since in most cases you want
to resume your [welfare] eligibility as soon as possible, you will want to
spend the money as quickly as possible . . . You can buy a special gift [or]
take a vacation.
Merrimack Valley Legal Services lobbied against a bill
that would removed drug addicts and mental patients from housing for the
IOLTA remains an unresolved question across
the country. The conflicting decision by the only two Courts of Appeal to have
reviewed IOLTA in light of this Courts Philips decision have not added
any clarity to the issue. Unless this Court brings clarity to this issue,
further conflicting decision from across the nation are inevitable.
The petition not only provides the Court
with ability to resolve the question of IOLTAs constitutionality, granting the
petition will also provide the Court with the opportunity to end the confusion,
which obviously exists between at least the Fifth and Ninth Circuits, as to when
the per se and ad hoc takings analyses are appropriate.
The Amici Curiae pray that certiorari
Counsel of Record
Citizens for the Preservation
Francis E. Pullaro
of the Minority Leader,
House, Room 124