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Jacoby & Meyers, LLP v. Presiding Justices of the First, Second, Third & Fourth Dep'ts

Jacoby & Meyers, LLP v. Presiding Justices of the First, Second, Third & Fourth Dep'ts

United States Court of Appeals for the Second Circuit

August 19, 2016, Argued; March 24, 2017, Decided

Docket No. 15-2608

Opinion

 [*181]  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 N.Y. State Bar Ass'n, Report of the Task Force on Nonlawyer Ownership, reprinted at 76 Alb. L. Rev. 865 (2013) ("NYSBA Report [**3] "). The prohibition is generally seen as helping to ensure the independence and ethical conduct of lawyers. See id. at 876-77. Plaintiffs-Appellants Jacoby & Meyers, LLP, a limited liability partnership (the "LLP"), and Jacoby & Meyers USA II, PLLC, a related professional limited liability company (the "PLLC"; together, "plaintiffs" or the "J&M Firms") bring a putative class action challenging New York's rules, regulations, and statutes prohibiting such investments. The infusions of additional capital that the regulations now prevent, they declare, would enable the J&M Firms to improve the quality of the legal services that they offer and at the same time to reduce their fees, expanding their ability to serve needy clients. They assert that, were they able to do so, they would act on that ability in the interests of such potential clients. Because the laws currently restrict their ability to accomplish those goals, they maintain, the state regime unlawfully interferes with their rights as lawyers to associate with clients and to access the courts—rights they see as grounded in the First Amendment.

The United States District Court for the Southern District of New York (Kaplan,  [*182]  Judge) dismissed the complaint for [**4]  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

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852 F.3d 178 *; 2017 U.S. App. LEXIS 5247 **; 2017 WL 1101082

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.1

Prior History: 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 [**2]  to a legitimate state interest. We agree that under prevailing law the J&M Firms do not enjoy a First Amendment [**1]  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.

Jacoby & Meyers, LLP v. Presiding Justices of the First, Second, Third & Fourth Dep'ts, Appellate Div. of the Supreme Court of the State of N.Y., 118 F. Supp. 3d 554, 2015 U.S. Dist. LEXIS 92041 (S.D.N.Y., 2015)

Disposition: AFFIRMED.

CORE TERMS

regulations, Firms, rights, courts, lawyers, for-profit, right of petition, cases, associational rights, non-lawyer, law firm, Transportation, prohibitions, grievances, infringed, facial, legal services, quotation, advocacy, assembly, redress, marks, limited liability company, access rights, own right, partnership, protections, challenges, profession, implicate

Legal Ethics, Professional Conduct, Nonlawyers, Client Relations, Attorney Fees, Fee Splitting, Civil Procedure, Appeals, Standards of Review, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Constitutional Law, Bill of Rights, Fundamental Freedoms, Judicial & Legislative Restraints, Freedom to Petition, Freedom of Association, Justiciability, Standing, Third Party Standing, Case or Controversy