FACT SHEET | The Restriction Barring LSC-Funded Lawyers from Bringing Class Actions

“None of the funds appropriated . . . to the Legal Services Corporation may be used to provide financial assistance to any person or entity . . . that initiates or participates in a class action suit.” Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L. No. 104–134, 504(a)(7), 110 Stat. 1321, 50 (1996).

What is a class action?

• A class action is a lawsuit brought by one or more representatives of a group on behalf of all the members of the group. The members of the group, known as the “class,” must be ascertainable, and must share a common interest in the issues of law and fact raised by the class representatives. See Barron’s Law Dictionary 74 (3d ed. 1991).

What is the history of the class action restriction on lawyers for low-income clients?

• The Omnibus Consolidated Rescissions and Appropriations Act of 1996, which was part of the sweeping reform of public benefits structures enacted by the 104th Congress, prohibited Legal Services Corporation (“LSC”) grant recipients from initiating or participating in class action suits. This restriction has been re-imposed in each subsequent year’s LSC budget allocation. See 45 C.F.R.  1617 (1996).
• The LSC restriction has become the subject of state-level copycat restrictions. For example, funds from the Texas Interest on Lawyers Accounts (“IOLTA”) program and funds from a court filing fee dedicated for the provision of civil legal services to low-income Texans may not be used to finance class action suits. Funds from the Maryland IOLTA program similarly may not be used to finance class action suits. Money allocated by the state of Washington to civil legal services programs also may not be used to finance class action suits.
• Prior to the 1996 restriction on LSC, the rules governing LSC programs required lawyers to obtain permission from program directors prior to filing a class action lawsuit. This rule was designed to ensure attorney accountability and program integrity. See 45 C.F.R.  1617.3 (1976).

Why is it important for legal services lawyers to be able to bring class actions?

• Class actions enable legal services lawyers to bring one case that can help many members of a community. When clients are unable to proceed in a class action, they must instead pursue their claims individually, burdening the resources of the legal services program and those of the courts.
• Class actions can compel government bureaucracies to follow the law. Individuals, acting alone, often lack this power because the government can dodge the brunt of the lawsuit by fixing the problem for one person while continuing to hurt hundreds or even thousands of other people. Class actions are the legal example of the common sense principle that there is strength in numbers.
• Class actions can help government fulfill its obligations. Maryland Attorney General J. Joseph Curran, whose office sometimes finds itself defending the state against class-action suits, says, “Sometimes [legal services] attorneys best enforce the law by filing class-actions against the state . . . Government is not infallible. As uncomfortable and irritating as it may be, sometimes it is class-actions by [LSC-funded] lawyers that require the state to do what it is legally bound to do.”
• Class actions can be an important tool for encouraging government or private actors who are engaging in unlawful activity to stop that behavior on their own accord, thereby expediting solutions and avoiding lengthy litigation. For example, when the federal government terminated Supplemental Security Income (“SSI”) for 150,000 disabled children and discouraged those children’s families from appealing the denial of benefits, Community Legal Services of Philadelphia, Pa. prepared papers for a national class action on behalf of the children. Within three months of receiving notice of the potential class action, the Social Security Commissioner agreed to give a second chance to all former SSI beneficiaries originally discouraged from appealing.
• Class action cases permit some individuals to gain relief who otherwise might never learn of their legal rights and never be able to bring an independent suit.

Why do LSC’s critics want to prohibit LSC-grantees from bringing class actions cases?

• Conservative political pundits and some members of Congress argue that class actions “promote a left-wing political agenda.” In reality, most legal services class actions require governments and private actors to follow laws that are already in place. The cases above are typical examples of class actions enforcing existing laws.
• Class actions are commonly criticized for reasons that have nothing to do with the work of legal services lawyers. For example, some critics claim that personal injury class actions—which are often settled—offer lawyers huge fees, while individual class members get only a few dollars each. But legal services lawyers never take money from their clients. And most legal services class actions seek injunctive relief that benefits all class members by putting a stop to illegal activity. Regardless of anyone’s opinion about the size of fee awards in other cases (and there are opinions pro and con), legal services class actions focus directly on helping those with genuine legal needs.

Who is helped by class action suits brought by LSC-funded programs?

• Class action suits, brought on behalf of LSC-grantees’ clients, have helped hundreds of thousands of Americans, including the elderly, children, the infirm and others. In addition to providing remedies for the individual plaintiffs’ injustices, a class action suit can ensure that similar injustices are prevented in the future. Some examples of important class actions include:
  
  
  • When the city of Philadelphia, Pennsylvania deemed children age four and older ineligible and terminated them without any written notice of opportunity for hearing from the Women, Infants and Children (“WIC”) program, which provides food to children faced with the risk of malnutrition because of inadequate income, a class action suit on behalf of those children obtained a favorable decision from a judge who deemed the terminations unconstitutional, required Pennsylvania to devise fair hearing regulations, and ensured that other children would not go without food in the future due to reckless bureaucratic error.
  • When the elderly were improperly denied Medicare reimbursement for treatment because the Department of Health and Human Services (“HHS”) was not monitoring Health Maintenance Organizations (“HMOs”), a class action won thousands expedited fair hearings from the HMOs and required HHS to cancel contracts with HMOs that failed to provide fair hearings and appeals for Medicare beneficiaries.
  • Individuals denied Supplementary Security Income disability benefits challenged an HHS policy of deeming their impairments “not severe” without inquiring into their age, education, work history, and the combined impact of their multiple health impairments. The court required HHS to assist individuals in obtaining evidence of disability and to review their claims based on complete records.
  • When African-American workers at Caulkins Indiantown Citrus Company showed that the company had cheated them out of years of wages and benefits because of their skin color, more than 730 workers obtained damage payments. Lead plaintiff John Henry Robinson explained that the victory meant even more to him than the money: “When a person is stripped of their dignity and pride, it feels like someone has reached inside of you and tore your heart out.”
  • African-American public housing residents in Philadelphia, Pennsylvania showed that the city of Philadelphia, the Housing Authority, the Redevelopment Authority, and the federal Department of Housing and Urban Development had violated their constitutional rights as well as their rights under civil rights laws by stalling progress on construction of a new public housing development in a primarily white neighborhood. As a result, the public housing development was built and today remains one of Philadelphia’s most successful integrated housing developments.
    
    
    This Fact Sheet was prepared by Elisabeth Jacobs, Research Associate, Poverty Program, Brennan Center for Justice at NYU Law School.  Date—May 10, 2000