Legal Aid Soc. of Hawaii v. Legal Services Corp.

Decision Date01 August 1997
Docket NumberCivil No. 97-00032 ACK.
CourtU.S. District Court — District of Hawaii

Paul Alston, Bradford L. Tannen, Alston, Hunt, Floyd & Ing, Honolulu, HI, Stephen V. Bomse, Charles N. Freiberg, Adam M. Cole, Rakesh K. Anand, Robert A. Rosenfeld, Heller, Ehrman, White & McAuliffe, San Francisco, CA, Stanley E. Levin, Davis, Levin, Livingston, Grande, Honolulu, HI, Hope L. Hudson, Heller, Ehrman, White & McAuliffe, Palo Alto, CA, Steven R. Shapiro, Robin L. Dahlberg, American Civil Liberties Union, New York City, Margaret C. Crosby, American Civil Liberties Union Foundation of Northern CA, San Francisco, CA, for plaintiffs.

Daniel A. Bent, Carlsmith, Ball, Wichman, Murray, Case, Mukai & Ichiki, Honolulu, HI, Thomas S. Williamson, Jr., Georgia Kazakis, Ernest A. Young, Erika F. King, Covington & Burling, Washington, DC, for defendant.

Michael Chun, U.S. Attys. Office, Honolulu, HI, Jeffrey S. Markowitz, Dept. of Justice, Washington, DC, for intervenor.


KAY, Chief Judge.


Plaintiffs essentially prevailed at the preliminary injunction stage because this Court ruled that the LSC regulations violated the unconstitutional conditions doctrine. Legal Aid Society of Hawaii v. Legal Services Corporation, 961 F.Supp. 1402, 1420 (D.Haw. 1997). Importantly, LSC regulations prohibiting lobbying for welfare reform were enjoined so that lobbying was allowed during the past critical legislative session during which the Federal government was turning over to the states much of the welfare function.

In seeking a preliminary injunction, Plaintiffs asserted that the ruling of the Supreme Court in Rust v. Sullivan, 500 U.S. 173, 111 S.Ct. 1759, 114 L.Ed.2d 233, regarding adequate alternate channels for speech was dispositive. This Court concurred, and the LSC has subsequently amended its regulations in basic compliance with Rust. Seemingly, Plaintiffs had achieved their primary objectives in this suit. However, Plaintiffs now contend that Rust is not controlling and in any event the LSC has not conformed to the regulations in Rust. Plaintiffs also raise additional arguments.

With regard to the motions before the Court, the Court grants LSC and DOJ's motion for summary judgment and denies Plaintiffs' motion for summary judgment. For the same reasons, the Court dissolves its earlier injunction, which additionally is moot because it is based on superseded regulations that no longer affect the parties.

The Court reads the new regulations as allowing a LSC funded organization to control another organization that engages in restricted activities so long as all the insularity and separate incorporation requirements of the regulations are satisfied. With this ability to control the separately incorporated and insular second organization, the Court finds that alternative channels exist for LSC-funded organizations to exercise their constitutionally protected rights such as lobbying the legislature. Thus, the LSC-funded legal aid societies will be able to control affiliates who care for the needs of the poor in areas from which the regulations restrict the societies.

The insularity requirements have already been upheld in Rust and the Court finds Plaintiffs' many efforts to distinguish the case unpersuasive. Unlike Rust, however, the regulations here also require that an affiliate be separately incorporated. Nevertheless, the Court does not find that the separate incorporation requirement limits the availability of alternate channels any more than the insularity requirement alone did in Rust. Accordingly, the addition of the separate incorporation requirement does not make these regulations unconstitutional. Moreover, the Court finds the LSC regulations are just as narrowly tailored as the regulations in Rust and that their burdens do not exceed those in Rust; except as to the separate incorporation requirement, which the Court finds to be de minimis and which was allowed in Regan v. Taxation with Representation of Washington, 461 U.S. 540, 103 S.Ct. 1997, 76 L.Ed.2d 129, The Supreme Court ruled in TWR that the separate incorporation requirement was "not unduly burdensome."

The Court also finds that these regulations do not violate Plaintiffs' Due Process or Equal Protection rights.


On February 14, 1997, this Court granted in part Plaintiffs'1 motion for a preliminary injunction (hereinafter "order"). See Legal Aid Society of Hawaii v. Legal Services Corporation, 961 F.Supp. 1402 (1997). A general background of this case can be found in that order. Id. at 1406-07.

On March 3, 1997, Plaintiffs filed a motion for reconsideration of the Court's order. The Legal Services Corporation ("LSC") filed an opposition to the motion for reconsideration on March 14, 1997. In their opposition, the LSC attached as an exhibit an amended regulation concerning the use of Non-LSC funds, 62 Fed.Reg. 12101. See LSC's opposition, Appendix A. The interim regulation added language modeled after the restrictions upheld by the Supreme Court in Rust v. Sullivan, 500 U.S. 173, 111 S.Ct. 1759, 114 L.Ed.2d 233 (1991). On April 9, 1997, in response to this amendment, the Court sua sponte issued an order to show cause whether the provision (62 Fed.Reg. 12101) moots Plaintiffs' reconsideration motion. On May 21, 1997, the LSC issued the final regulation which deviated significantly from the interim rule. See 62 Fed.Reg. 27696.

On April 14, 1997, Magistrate Kurren held a pretrial conference. At the conference, the government (hereinafter the "DOJ") was allowed to intervene via stipulation by the parties. In addition, the Plaintiffs agreed to withdraw their reconsideration motion. Magistrate Kurren also set the instant hearing date and briefing schedule.

In accordance with the schedule, the DOJ and LSC both filed motions for summary judgment on May 23, 1997. The Plaintiffs filed an opposition and a counter-motion for summary judgment on June 20, 1997. On July 3, 1997, the LSC and the DOJ filed their oppositions. On July 17, 1997, the Plaintiffs filed their reply. On July 28, 1997, the Court held a hearing.


Summary judgment shall be granted where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). One of the principal purposes of the summary judgment procedure is to identify and dispose of factually unsupported claims and defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

The United States Supreme Court has declared that summary judgment must be granted against a party who fails to demonstrate facts to establish an element essential to his case where that party will bear the burden of proof of that essential element at trial. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552. "If the party moving for summary judgment meets its initial burden of identifying for the court the portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact [citations omitted], the nonmoving party may not rely on the mere allegations in the pleadings in order to preclude summary judgment." T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987).

Rather, Rule 56(e) requires that the nonmoving party set forth, by affidavit or as otherwise provided in Rule 56, specific facts showing that there is a genuine issue for trial. T.W. Elec. Serv., 809 F.2d at 630. At least some "significant probative evidence tending to support the complaint" must be produced. Id. Legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment. British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir.1978).

The standard for a grant of summary judgment reflects the standard governing the grant of a directed verdict. See Eisenberg v. Ins. Co. of North America, 815 F.2d 1285, 1289 (9th Cir.1987) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986)). Thus, the question is whether "reasonable minds could differ as to the import of the evidence." Anderson, 477 U.S. at 250-51, 106 S.Ct. at 2511.

The Ninth Circuit has established that "[n]o longer can it be argued that any disagreement about a material issue of fact precludes the use of summary judgment." California Architectural Bldg. Products, Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir.1987). Moreover, the United States Supreme Court has stated that "[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

Indeed, "if the factual context makes the nonmoving party's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial." Franciscan Ceramics, 818 F.2d at 1468 (emphasis in original) (citing Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356). The Ninth Circuit, however, has held that courts should not determine whether direct evidence (as opposed to circumstantial evidence) is implausible because to do so would be to weigh the evidence. McLaughlin v. Liu, 849 F.2d 1205, 1207 (9th Cir.1988). Moreover, all evidence and inferences to be drawn therefrom must be construed in the light most favorable to the nonmoving party. T.W. Elec. Serv., 809 F.2d at 630-31.

I. The issue before the Court

On February 14, 1997, after reviewing the relevant case law,2 this Court issued a 42 page order...

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