JACOBY & MEYERS, LLP, ON BEHALF OF ITSELF AND ALL OTHER SIMILARLY SITUATED ENTITIES AUTHORIZED TO PRACTICE LAW IN THE STATE OF NEW YORK; JACOBY & MEYERS USA II, PLLC, Plaintiffs-Appellants, –v.– THE PRESIDING JUSTICES OF THE FIRST, SECOND, THIRD AND FOURTH DEPARTMENTS, APPELLATE DIVISION OF THE SUPREME COURT OF THE STATE OF NEW YORK; ERIC T. SCHNEIDERMAN; DIANE MAXWELL KEARSE, IN HER OFFICIAL CAPACITY AS CHIEF COUNSEL FOR THE GRIEVANCE COMMITTEE FOR THE SECOND, ELEVENTH AND THIRTEENTH JUDICIAL DISTRICTS; GARY L. CASELLA, IN HIS OFFICIAL CAPACITY AS CHIEF COUNSEL FOR THE GRIEVANCE COMMITTEE FOR THE NINTH JUDICIAL DISTRICT; GREGORY A. GREEN, IN HIS OFFICIAL CAPACITY AS CHIEF COUNSEL FOR THE GRIEVANCE COMMITTEE FOR THE TENTH JUDICIAL DISTRICT; GREGORY J. HUETHER, IN HIS OFFICIAL CAPACITY AS CHIEF COUNSEL FOR THE GRIEVANCE COMMITTEE FOR THE FIFTH, SEVENTH AND EIGHTH JUDICIAL DISTRICTS; PETER M. TORNCELLO, IN HIS OFFICIAL CAPACITY AS CHIEF ATTORNEY FOR THE COMMITTEE ON PROFESSIONAL STANDARDS FOR THE APPELLATE DIVISION OF THE SUPREME COURT, THIRD JUDICIAL DEPARTMENT; MONICA DUFFY, Defendants-Appellees.*
Docket No. 15-2608
United States Court of Appeals FOR THE SECOND CIRCUIT
March 24, 2017
August Term, 2016 (Argued: August 19, 2016 Decided: March 24, 2017)
LYNCH and CARNEY, Circuit Judges, and HELLERSTEIN, District Judge.**
Plaintiffs-Appellants Jacoby & Meyers, LLP, a limited liability law partnership, and Jacoby & Meyers USA II, PLLC, a related professional limited liability company (together, “plaintiffs” or “the J&M Firms“), challenge the constitutionality of a collection of New York regulations and laws that together prevent for-profit law firms from accepting capital investment from non-lawyers. The J&M Firms allege that, if they were allowed to accept outside investment, they would be able to—and would—improve their infrastructure and efficiency and as a result reduce their fees and serve more clients, including clients who might otherwise be unable to afford their services. By impeding them from reaching this goal, the J&M Firms contend, the state has unconstitutionally infringed their rights as lawyers to associate with clients and to access the courts—rights that are grounded, they argue, in the First Amendment. The District Court (Kaplan, J.) dismissed the complaint, concluding that the J&M Firms failed to state a claim for violation of any constitutional right and that, even if such rights as they claim were to be recognized, the challenged regulations withstand scrutiny because they are rationally related to a legitimate state interest. We agree that under prevailing law the J&M Firms do not enjoy a First Amendment right to association or petition as representatives of their clients’ interests; and that, even if they do allege some plausible entitlement, the challenged regulations do not impermissibly infringe upon any such rights. We therefore AFFIRM the District Court‘s judgment.
AFFIRMED.
DOUGLAS GREGORY BLANKINSHIP, Finkelstein, Blankinship, Frei-Pearson & Garber, LLP, White Plains, New York, for Appellants.
** Judge Alvin K. Hellerstein, of the United States District Court for the Southern District of New York, sitting by designation.
SUSAN L. CARNEY, Circuit Judge:
Through a set of prohibitions of long standing in New York and similar to those widely prevalent in the fifty states and the District of Columbia, the State of New York prohibits non-attorneys from investing in law firms. See generally
The United States District Court for the Southern District of New York (Kaplan, Judge) dismissed the complaint for failure to allege the infringement of any cognizable constitutional right. On de novo review, we identify no error in that conclusion. Neither as a for-profit law partnership nor as a professional limited liability company do the J&M Firms have the associational or petition rights that they claim. Even were we to assume, given the evolving nature of commercial speech protections, that they possess some such First Amendment interests, the regulations at issue here are adequately supported by state interests and have too little effect on the attorney-client relationship to be viewed as imposing an unlawful burden on the J&M Firms’ constitutional interests. We therefore AFFIRM the judgment of the District Court.
BACKGROUND
We draw this factual statement from the J&M Firms’ Third Amended Complaint (“TAC“), accepting as true the allegations stated there for purposes of our review of the District Court‘s decision. AHW Inv. P‘ship v. Citigroup, Inc., 806 F.3d 695, 697 n.1 (2d Cir. 2015).
Founded in 1972, Jacoby & Meyers, LLP, is a New York-based law partnership that “maintains a network of affiliated law offices across the country, including in
The J&M Firms challenge the constitutionality of
The LLP alleges that it “wishes to expand its operations, hire additional attorneys and staff, acquire new technology, and improve its physical offices and infrastructure to increase its ability to serve its existing clients and to attract and retain new clients and qualified attorneys.” J.A 107. To make these improvements, the LLP asserts, it requires capital contributions. It reports receiving “numerous offers” from “prospective non-lawyer investors . . . who are prepared to invest capital in exchange for owning an interest in the firm.” J.A. 109. These include some “high net-worth individuals” and
In 2011, the LLP sued the Presiding Justices of the New York Supreme Court‘s Appellate Divisions (who administer Rule 5.4) and others, asserting that the rule violates the First and Fourteenth Amendments and the Dormant Commerce Clause of the
This appeal followed.
DISCUSSION
We review de novo a district court‘s decision to dismiss a complaint for failure to state a claim pursuant to
On appeal, the J&M Firms abandon many of the constitutional challenges asserted in their prior complaints, and press only the argument that New York‘s prohibition of non-lawyer investment in law firms infringes their First Amendment
We agree with the District Court that the J&M Firms’ facial challenge fails: as a for-profit law partnership and professional limited liability company, the J&M Firms do not possess the First Amendment rights that they claim to have—and, even if they did
A. The First Amendment Rights to Petition and Association
The First Amendment prohibits the enactment of any law “abridging . . . the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
The right to associate freely is not mentioned in the text of the First Amendment, but has been derived over time as implicit in and supportive of the rights identified in that amendment. Thus, drawing upon the rights of both petition and expression, the Supreme Court has held that the First Amendment bears on some situations in which
Another line of Supreme Court authority recognizes that clients seeking legal representation—specifically in the context of union activity—have a right protected by the First Amendment to associate with each other to obtain legal representation and vindicate their rights effectively. See, e.g., Bhd. of R.R. Trainmen v. Va. ex rel. Va. State Bar, 377 U.S. 1, 5 (1964) (“Trainmen“). In this vein, the Court has held that “the First Amendment‘s guarantees of free speech, petition, and assembly give railroad workers the right to cooperate” to seek legal counsel, and that “collective activity undertaken to obtain meaningful access to the courts is a fundamental right within the protection of the First Amendment.” United Transp. Union v. State Bar of Mich., 401 U.S. 576, 585
The Button line of cases might casually be characterized as reflecting lawyers’ expressive rights in the causes they pursue—when those causes implicate expressive values—whereas in the union cases, it is the associational rights of the union members, as clients, that are the focus. The Supreme Court has never held, however, that attorneys have their own First Amendment right as attorneys to associate with current or potential clients, or their own right to petition the government for the redress of their clients’ grievances when the lawyers are acting as advocates for others, and not advocating for their own cause. Although in Trainmen, the Court commented that “lawyers accepting employment under [the unions‘] constitutionally protected plan [to recommend specific lawyers] have a like protection which the State cannot abridge,”
In fact, the Court has explicitly distinguished between the First Amendment protections enjoyed by attorneys who, as part of an advocacy group like the ACLU or the NAACP, have recognized associational rights, and attorneys who are engaged in litigation for their own commercial rewards, albeit in the context of advancing or protecting the interests of their clients. In particular, in 1978 the Court issued on a single day decisions in two cases involving state regulation of attorneys, highlighting this distinction. In In re Primus, the Court struck down the South Carolina Supreme Court‘s sanction of an ACLU attorney for solicitation of clients, holding that the disciplinary ruling infringed her First Amendment rights. 436 U.S. at 427-28. In a decision issued in tandem with Primus, Ohralik v. Ohio State Bar Association, 436 U.S. 447 (1978), however, the Court upheld Ohio‘s restriction on a private attorney‘s solicitation of potential personal injury clients. Distinguishing the pursuit of expressive activity from the pursuit of commercial interests, the Court wrote:
Normally the purpose or motive of the speaker is not central to First Amendment protection, but it does bear on the
distinction between conduct that is an associational act of expression, and other activity subject to plenary regulation by government. Button recognized that certain forms of cooperative, organizational activity, including litigation, are part of the freedom to engage in association for the advancement of beliefs and ideas, and that this freedom is an implicit guarantee of the First Amendment. As shown above, [the Primus] appellant‘s speech—as part of associational activity—was expression intended to advance beliefs and ideas. In Ohralik, the lawyer was not engaged in associational activity for the advancement of beliefs and ideas; his purpose was the advancement of his own commercial interests. The line, based in part on the motive of the speaker and the character of the expressive activity, will not always be easy to draw, but that is no reason for avoiding the undertaking.
In re Primus, 436 U.S. at 438 n.32 (internal quotation marks and citations omitted).
We embraced that distinction in Board of Education of the City of New York v. Nyquist, where we rejected the argument that any attorney has a First Amendment right to litigate on behalf of a client even when the representation might violate ethical rules. 590 F.2d 1241, 1245 (2d Cir. 1979). Because the attorney in Nyquist was not, as was the lawyer in In re Primus, “encouraging the airing in court of a point of view she believed in,” we concluded that the individual lawyer held no related First Amendment right to represent the clients in a case not raising other First Amendment concerns. Nyquist, 590 F.2d at 1245-46 (citing In re Primus, 436 U.S. at 422).
These cases illustrate why the J&M Firms have failed to allege facts sufficient to establish that any First Amendment right held by them is infringed by the New York regulations, especially in light of the demanding standard that governs a facial constitutional challenge. The J&M Firms argue that the rights at issue are the lawyers’ “right of access to the courts” and “right to associate with clients for purposes of accessing the courts.” Appellants’ Br. 20. But we think In re Primus, Ohralik, and Nyquist foreclose recognizing any such rights in a for-profit law partnership or PLLC that is not itself engaged in its own political advocacy or expression. See In re Primus, 436 U.S. at 438 n.32; Ohralik, 436 U.S. at 458; Nyquist, 590 F.2d at 1245. Clients have First Amendment expressive rights for which litigation may provide a vehicle. When the lawyers’ own expressive interests align with those rights, the lawyers themselves may have a cognizable First Amendment interest in pursuing the litigation. We are not aware of any judicial recognition of such an interest, however, when it comes to the lawyer‘s generic act of pursuing litigation on behalf of any client.
The J&M Firms’ lead argument to the contrary rests primarily on what we think is a misreading of the Supreme Court‘s union cases. In particular, they cite United Transportation Union and United Mine Workers, which we describe above, for the proposition that “lawyers hold First Amendment rights of access to courts.” Appellants’
Our reading of these two cases, focusing on the expressive rights of clients, not their counsel, is in keeping, moreover, with the constitutional text: the rights of petition and assembly attach to “the people“—who are themselves aggrieved and accordingly who seek to assemble or to petition in order to redress their own grievances.
The J&M Firms’ error is compounded by their apparent assumption that they enjoy a constitutionally protected right to associate with clients qua clients. But the so-called “freedom of association” protected by the First Amendment has been generally understood to encompass two quite different types of associational activity: “choices to enter into and maintain certain intimate human relationships,” and “associat[ion] for
The J&M Firms fault the District Court for relying on a distinction drawn in case law between the rights and interests of private, for-profit attorneys and not-for-profit political advocacy organizations. They contend that “the right of access to courts is not limited to instances in which attorneys provide services in cases with a political or constitutional dimension,” and that Supreme Court precedent holds “that a for-profit attorney employed by an individual client to litigate a non-political grievance (such as a
Neither Jacoby & Meyers, LLP, nor Jacoby & Meyers USA II, PLLC, is a not-for-profit political advocacy organization engaging in its own expression, nor a collection of individuals seeking redress of their own grievances or vindication of their own rights. Instead, the J&M Firms are engaged in the practice of law as a business. Thus, their firms can be regulated as businesses, and, as will be explained below, those regulations do not automatically trigger strict scrutiny simply because one of the law firm‘s functions is to help clients access the courts. Of course, we do not question the right to
C. The Failure to Allege any Burden on First Amendment Rights
Because the law is evolving rapidly with respect to the protections afforded commercial speech by the First Amendment, however, we proceed one step further with our analysis. We turn to addressing whether, to the extent that the J&M Firms could be found to have some degree of First Amendment right to associate with clients or to petition the government through the courts on their clients’ behalf—or could be allowed to challenge the regulations on behalf of their clients—their complaint states a claim. We conclude again, however, that their claims fail because the regulations are supported by substantial government interests and impose an insubstantial burden on the exercise of any such First Amendment rights.
The heart of the causal argument is:
[The] complaint alleges that several specifically identified non-lawyers stand ready to take equity stakes in [the J&M Firms‘] law practice; that such equity will enable [the J&M
allowed plaintiffs to assert third-party standing where the “enforcement of the challenged restrictions against the litigant would result indirectly in the violation of third parties’ rights.” Kowalski, 543 U.S. at 130. The Court has stated that an existing attorney-client relationship is “of course, quite distinct from [a] hypothetical attorney-client relationship” for purposes of third-party standing. Id. at 131. We do not decide on which, if any, clients’ behalf the J&M Firms might have asserted their constitutional challenge because the regulations at issue here do not violate the First Amendment.
Firms] to undertake several specific improvements in technology and infrastructure; and that those improvements, by increasing the efficiency of [the J&M Firms‘] provision of legal services, will raise even higher the quality of their legal services and lower the cost to clients, thus affecting [] the scope, cost, and quality of lawyers’ association with clients for purposes of accessing courts.
Appellants’ Br. 28.
Taking these projections as accurate, and assuming that the J&M Firms would in fact serve more clients at a lower cost, New York‘s regulations proscribing non-lawyer investment in law firms do not impede the lawyers’ constitutionally-shielded ability to associate or petition. We think the only plausible argument that the J&M Firms could have in this vein is that they would be able to and would in fact associate with and serve more needy clients if the regulations are lifted.8 Any law firm, of course, might like to attract more clients, and any client would like to pay less for his lawyer‘s services. But these observations do not mean that regulations that hypothetically and marginally raise the cost of legal services infringe any lawyer‘s First Amendment right of association or access to the courts: the connection is simply too attenuated. Indeed, “the broadly formulated First Amendment argument here would, if successful, undermine the power of states to regulate bar membership” and numerous fundamental aspects of the legal profession, “when this power has been repeatedly
Like our sister circuits that have rejected similar Petition Clause challenges to ordinary regulations of the legal profession, we see a marked difference between the regulations at issue here and the state prohibitions on attorney activities that were struck down in Button, Trainmen, and Primus. Unlike in those cases, no attorney here risks censure or sanction for soliciting, meeting with, or representing a client—the activities that can be central to initiating and maintaining the attorney-client relationship. Here, by contrast, the regulations prohibiting non-lawyer investment in law firms simply do “not deny [lawyers] meaningful access to the courts.” Nat‘l Ass‘n for the Advancement of Multijurisdiction Practice v. Berch, 773 F.3d 1037, 1048 (9th Cir. 2014) (rejecting a challenge to Arizona‘s admission-on-motion rule); see Castille, 799 F.3d at 221 (attorney admission reciprocity rule did not violate the Petition Clause, as it was a permissible “exercise of Pennsylvania‘s broad power to establish standards for licensing practitioners and regulating the practice of professions” (internal quotation marks omitted)). Like bar admission requirements, the regulations at issue here balance
The J&M Firms attempt to analogize this case to United Transportation Union, and argue that if the right of access to the courts “is impermissibly burdened by prohibitions on such mundane activities as transporting clients to attorneys’ offices,” as the Supreme Court found there, then “the same right is surely burdened by impediments to the various specific efficiency-enhancing, price-reducing investments in law-firm infrastructure that, according to [the J&M Firms‘] allegations, are obstructed by the challenged statutes and rules.” Appellants’ Br. 11. Their analogy fails to persuade us. The union in United Transportation Union had in fact been enjoined from, among other conduct, receiving any kind of compensation or reimbursement for the time or money spent in putting its members or their families in contact with recommended attorneys—and transporting its members from Michigan to Chicago, where the attorneys were located. United Transp. Union, 401 U.S. at 582. The Supreme Court struck down the injunction, including the portion related to travel: “Since the members of a union have a First Amendment right to help and advise each other in securing effective legal representation, there can be no doubt that transportation of injured members to an
D. The State‘s Interest in the Challenged Regulations
Because we hold that the J&M Firms’ complaint does not plausibly allege the infringement of any First Amendment right, we need not stay long with the question whether New York‘s interests as a state justify its regulations regarding non-lawyer investments.
The J&M Firms ask us to apply strict scrutiny to the regulations. In the context of claims asserting First Amendment associational rights we have instructed that, depending on the burden that the statute imposes on those rights, we will “apply either strict scrutiny, in which case the restriction survives only if it is narrowly drawn to advance a compelling state interest, or rational basis review, in which case the restriction need only be rationally related to a legitimate government interest.” Kraham v. Lippman, 478 F.3d 502, 506 (2d Cir. 2007) (citations omitted). Strict scrutiny applies
Accordingly, rational basis review applies. The regulations at issue plainly survive that standard because they are rationally related to a legitimate government interest. As the District Court noted, and as we think is cognizable even on a motion to dismiss, the challenged laws serve New York State‘s well-established interest in regulating attorney conduct and in maintaining ethical behavior and independence among the members of the legal profession. See, e.g., Jacoby III, 118 F. Supp. 3d at 574-75; Ohralik, 436 U.S. at 460-61. For example, by proscribing the involvement of unrelated third parties in the attorney-client relationship, the regulations preclude the creation of incentives for attorneys to violate ethical norms, such as those requiring attorneys to put their clients’ interests foremost. See, e.g., Lawline v. Am. Bar Ass‘n, 956 F.2d 1378, 1385-86 (7th Cir. 1992). They therefore easily pass muster under rational basis review.
CONCLUSION
The J&M Firms have no claim to the First Amendment rights of association and petition that the Supreme Court has recognized in political advocacy groups or in individuals seeking the vindication of their own rights through not-for-profit counsel. And the New York regulations at issue here have at most an attenuated effect on the
We AFFIRM the judgment of the District Court.