Grassley v. Legal Services Corp., Civ. No. 81-277-B.

• Decision Date: 03 February 1982
• Docket Number: Civ. No. 81-277-B.
• Citation: 535 F. Supp. 818
• Parties: United States Senators Charles GRASSLEY, James McClure, Sam Hayakawa, Steve Symms, Jeremiah Denton, Congressman Albert Lee Smith, Iowa State Senator Stephen W. Bisenius, Plaintiffs, v. LEGAL SERVICES CORPORATION, Hillary Rodham, Chairman of the Board of Legal Services Corporation, Stephen Engelberg, Revius Ortique, Cecilia Esquer, Howard Sacks, Michael Kantor, Ramona Shump, Robert Kutak, Richard Trudell, F. William McCalpin, Josephine Worthy, in their official capacity as directors of the Legal Services Corporation; Dan J. Bradley, in his official capacity as President of the Legal Services Corporation; Alan W. Houseman, in his official capacity as Research Director for the Legal Services Corporation; Legal Services Corporation of Iowa, Defendants.
• Court: U.S. District Court — Southern District of Iowa

535 F. Supp. 818

United States Senators Charles GRASSLEY, James McClure, Sam Hayakawa, Steve Symms, Jeremiah Denton, Congressman Albert Lee Smith, Iowa State Senator Stephen W. Bisenius, Plaintiffs, v. LEGAL SERVICES CORPORATION, Hillary Rodham, Chairman of the Board of Legal Services Corporation, Stephen Engelberg, Revius Ortique, Cecilia Esquer, Howard Sacks, Michael Kantor, Ramona Shump, Robert Kutak, Richard Trudell, F. William McCalpin, Josephine Worthy, in their official capacity as directors of the Legal Services Corporation; Dan J. Bradley, in his official capacity as President of the Legal Services Corporation; Alan W. Houseman, in his official capacity as Research Director for the Legal Services Corporation; Legal Services Corporation of Iowa, Defendants.

Civ. No. 81-277-B.

United States District Court, S. D. Iowa, C. D.

February 3, 1982.

COPYRIGHT MATERIAL OMITTED

Roger J. Marzulla, Maxwell A. Miller, Mountain States Legal Foundation, Denver, Colo., Donald G. Juhl, Nevada, Iowa, for plaintiffs.

Addison M. Parker, Richard A. Malm, Dickinson, Throckmorton, Parker, Mannheimer & Raife, Des Moines, Iowa, for defendant Legal Services Corp. of Iowa.

Steven Cole, Washington, D. C., Randy Duncan, Duncan, Jones, Riley & Finley, Des Moines, Iowa, for defendant Legal Services Corp. and individual defendants.

MEMORANDUM OPINION, RULING ON MOTIONS TO DISMISS, AND ORDER OF DISMISSAL

VIETOR, District Judge.

Plaintiffs, five United States Senators, a United States Representative, and an Iowa State Senator, seek declaratory and injunctive relief against lobbying and political activities allegedly conducted by defendants, the Legal Services Corporation (hereinafter the Corporation), its president and research director, and Legal Services Corporation of Iowa (hereinafter Iowa Legal Services), which plaintiffs assert violate provisions of the Legal Services Corporations Act of 1974, 42 U.S.C. § 2996, et seq., 18 U.S.C. § 1913, and the Moorhead Amendment, Pub. L. 95-431, 92 Stat. 1021, 1045 (1978). Jurisdiction is predicated upon these statutes and 28 U.S.C. § 1331(a). Plaintiffs sue in their legislative capacities. They assert that the alleged lobbying and political pressure asserted by or with the assistance of the defendants has subjected plaintiffs and their staffs to "illegal pressure, by attempting to distort their perception of public opinion on political issues, and by otherwise hindering their fulfilment of their public office." Amended Complaint, ¶ 33-34, at 11-12.

The court has before it defendants' motions to dismiss asserting that the complaint fails to state a claim upon which relief can be granted and that this court lacks subject matter jurisdiction because the statutes upon which plaintiffs rely do not authorize a private right of action. Alternatively, defendants assert that plaintiffs lack standing to bring this suit. Defendant Iowa Legal Services further alleges that plaintiffs have failed to exhaust administrative remedies with the Corporation and that the Corporation has primary jurisdiction over plaintiffs' claims against it. Plaintiffs have filed a resistance.

None of the statutes upon which plaintiffs rely expressly grant or deny the private cause of action asserted in this case. Accordingly, plaintiffs have stated a cause of action upon which relief can be granted only if a private right of action can be implied from the statutes or, as plaintiffs also contend, their action properly invokes this court's "inherent equity jurisdiction."

IMPLIED CAUSE OF ACTION

In Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087, 45 L.Ed.2d 26 (1975), the Court set forth four factors to be considered in determining whether a private cause of action is implicit in a statute not expressly providing one:

First, is the plaintiff "one of the class for whose especial benefit the statute was enacted," citation omitted—that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Citation omitted. Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? Citations omitted. And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law? Citations omitted.

Subsequent decisions of the Court have focused the inquiry upon legislative intent. See Middlesex County Sewerage Authority v. National Sea Clammers Ass'n, 453 U.S. 1, 101 S.Ct. 2615, 2622, 69 L.Ed.2d 435 (1981); Northwest Airlines, Inc. v. Transport Workers Union of America, AFL-CIO, 451 U.S. 77, 101 S.Ct. 1571, 1580, 67 L.Ed.2d 750 (1981). The ultimate issue, then, is whether Congress intended to authorize the implied cause of action asserted in this case. Id. The factors set forth in Cort v. Ash, supra, however, remain the criteria by which legislative intent is to be ascertained. See California v. Sierra Club, 451 U.S. 287, 101 S.Ct. 1775, 1779, 68 L.Ed.2d 101 (1981).

Legal Services Corporation Act of 1974

The Corporation was established by Congress in 1974 to continue the legal services program then administered through the United States Office of Economic Opportunity (OEO). It was created as a private nonmembership nonprofit corporation in the District of Columbia to provide "financial support for legal assistance in noncriminal proceedings or matters to persons financially unable to afford legal assistance." 42 U.S.C. § 2996b(a). The Corporation itself does not provide legal assistance; it provides financial assistance, through annual congressional appropriations received by the Corporation, to qualified programs furnishing legal assistance to individuals who qualify under financial eligibility criteria prescribed by the Corporation. 42 U.S.C. §§ 2996e(a)(1), 2996f(a)(2). Iowa Legal Services is a nonprofit corporation formed and existing under the laws of Iowa, and it is a recipient of funds from the Corporation.

The provisions of the Legal Services Corporation Act upon which plaintiffs' action is predicated generally prohibit the Corporation, a recipient, or any employee of either program from lobbying or engaging in political activity as it is defined in the Act. See 42 U.S.C. §§ 2996e(b)(5), 2996e(c)(2), 2996f(a)(5), 2996f(a)(6), 2996f(b)(4), 2996f(b) (6) & 2996f(b)(7).¹

1. Especial Benefit

The initial inquiry under Cort v. Ash, supra, is not whether the plaintiffs have been injured by conduct seemingly proscribed by the Act. Instead, the inquiry is whether the plaintiffs are members of the class for whose especial benefit the statute was enacted. Cort v. Ash, supra, 422 U.S. at 78, 95 S.Ct. at 2087. "The fact that a federal statute has been violated and some person harmed does not automatically give rise to a private cause of action in favor of that person." Cannon v. University of Chicago, 441 U.S. 677, 688, 99 S.Ct. 1946, 1953, 60 L.Ed.2d 560 (1979). See Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979). As the Court held in California v. Sierra Club, supra, 101 S.Ct. at 1779, "the question is not simply who would benefit from the Act, but whether Congress intended to confer federal rights upon those beneficiaries."

The Supreme Court has not found an intent to provide a private cause of action where the statute states no more than a general proscription of certain activities. See id.; Universities Research Ass'n, Inc. v. Coutu, 450 U.S. 754, 101 S.Ct. 1451, 1462, 67 L.Ed.2d 662 (1981); Kissinger v. Reporters Comm. for Freedom of the Press, 445 U.S. 136, 148, 100 S.Ct. 960, 967, 63 L.Ed.2d 267 (1980); Touche Ross & Co. v. Redington, supra, 442 U.S. at 569, 99 S.Ct. at 2485; Cort v. Ash, supra, 422 U.S. at 80-82, 95 S.Ct. at 2089.

The statutory language of sections 2996e and 2996f does not focus on any particular class of beneficiaries. Rather, the provisions upon which plaintiffs rely simply ban certain conduct by recipients of federal funds or prohibit disbursement of public funds to programs engaged in such conduct. As the Court held in Cannon v. University of Chicago, supra, 441 U.S. at 690-93, 99 S.Ct. at 1954-55, there is far less reason to infer a private remedy in such a statute. See Universities Research Ass'n, Inc. v. Coutu, supra, 101 S.Ct. at 1462. The provisions of the Legal Services Corporation Act upon which plaintiffs rely contain no more than a general ban from which a private cause of action in favor of a particular group cannot be implied.

Only one court that has addressed the issue in the context of the Legal Services Corporation Act has concluded that any of its provisions were enacted for the especial benefit of any particular class of individuals other than the recipients of the legal assistance itself. See Locricchio v. Legal Aid Society, No. 78-0083, slip op. at 11-13 (D. Hawaii August 22, 1978) (unpublished opinion). In that case, the court construed provisions setting forth procedural requirements in the discipline of employees to be enacted for the especial benefit of the employees.²Id. See 42 U.S.C. §§ 2996e(b)(2), 2996j. The specific conferral of a right directly upon a class of persons which the court found present in sections 2996e(b)(2) and 2996j is not present in sections 2996e(b)(5), 2996e(c)(2), 2996f(a)(5), 2996f(a)(6), 2996f(b)(4), 2996f(b)(6), and 2996f(b)(7). Those statutes, significantly, articulate but a general ban or proscription from which a conferral of rights in legislators cannot be ascertained.

Further, nothing in the legislative history of the Act indicates that Congress intended to benefit legislators in limiting political activity and lobbying.

It has generally been recognized that the Legal Services Corporations Act was intended to benefit indigents who have legal grievances but who are...