|
The New York Times
December 10, 2002
Linda Greenhouse
WASHINGTON - An argument at the Supreme Court on Monday was
conducted in the dry and arcane language of "takings
law," the jurisprudence governing the appropriation of
private property for public use. But beneath the jargon was
an ideologically charged and highly consequential debate about
the financing of legal services for the poor.
Under the justices' microscope was a program that all 50
states use to pool the tiny amounts of interest generated
on the money that lawyers hold for clients for short periods
of time in escrow accounts and other very short term deposits.
The interest, which would be eaten up by transaction costs
and taxes if held in individual accounts, is instead aggregated
and channeled to organizations that provide legal services.
Last year, these programs, known as Interest on Lawyers Trust
Accounts, or IOLTA, generated more than $160 million, or about
15 percent of the money spent on legal services for the poor
from all public and private sources.
The Washington Legal Foundation, a conservative policy group
here, has for years made the programs its target and has sponsored
litigation against them. Four years ago, in a case challenging
the trust account program in Texas, the Supreme Court agreed
with the group that the interest generated by the client funds
was the property of the clients. But the court in that case
stopped short of declaring that the public
use of the money amounted to a "taking" under the
Fifth Amendment, which provides that private property shall
not be "taken for public use without just compensation."
That ultimate question was the issue before the court on
Monday in the Washington Legal Foundation's challenge to the
trust account program in the state of Washington. Put in place
by the Washington Supreme Court in 1984, the program generates
between $2.5 million and $4 million a year.
One of the foundation's clients would have earned a gross
amount of five dollars on a two day escrow deposit of $90,500,
while the other would have earned two dollars on a smaller
deposit.
Charles Fried, a Harvard Law School professor arguing for
the Washington Legal Foundation, said the two had suffered
a taking of the full seven dollars, even if, as several justices
suggested, they would have earned no net interest at all had
their money been deposited in individual accounts.
"Private property is valued even though there is no
realizable economic value," Fried, who served as solicitor
general during the administration of President Ronald Reagan,
told the court. While not conceding that the interest had
no calculable value, he said, "It is a taking even if
the 'just compensation' is zero." The remedy for the
constitutional violation, he said, was to "shut down
the program."
David J. Burman, a Seattle lawyer defending the Washington
program on behalf of the nonprofit foundation that administers
it, told the justices that the plaintiffs' "real complaint
is a subjective, ideological one." That was not a proper
complaint to bring under the Fifth Amendment, he said, adding,
"If there is no value lost, there is no taking."
The program was also defended by Walter Dellinger, who represented
the justices of the Washington Supreme Court. Dellinger, who
was acting solicitor general during the Clinton administration,
said the state court, "in so far as the English language
would permit," had been very precise in making clear
that any client deposits that had the potential to earn net
interest for the clients were to be placed in an account for
the client's personal benefit and not put in the IOLTA account.
If not for the transaction costs of maintaining small individual
accounts, many clients
might earn net interest, Dellinger said, but "a world
without transaction costs doesn't exist in the Milky Way."
The justices, who split 5 to 4 in the 1998 decision that
found the interest to be property, have clearly not reconciled
their differences, and were considerably more open than usual
in carrying on a debate among themselves. Justice Antonin
Scalia, whose support of the Washington Legal Foundation was
manifest, challenged Dellinger by asking: "Whose money
earned the interest?" Justice David H. Souter, whose
opposite sympathies were equally apparent, instantly shot
back: "There was no interest!"
Justice Stephen G. Breyer, who like Souter was a dissenter
from the earlier decision, had this question for Dellinger:
"Suppose a robber had come to the depositor and said,
'Your money or your life.' What would the depositor have done?
He'd be dead. This money didn't exist. There is a sense in
which the program took the money, but who from?"
Dellinger said, "It's not money that could have been
paid to an individual client. We don't agree that it's a taking."
The vote is likely to be close once again in this case, Washington
Legal Foundation vs. Legal Foundation of Washington, No.
01-1325. The outcome may depend on the vote of Justice Sandra
Day O'Connor, who voted with the majority four years ago in
finding the interest to be the clients' property. She seemed
skeptical on Monday about the further step of declaring that
an unconstitutional taking had occurred. "How is it a
taking if the compensation is zero?" she asked Fried.
To Burman, the program's lawyer, she suggested that any constitutional
problem might be solved by explaining the situation to clients
and giving them a choice not to participate.
The takings issue is part of a multi pronged attack on the
trust account programs by the Washington Legal Foundation,
which has also raised a challenge under the First Amendment
to the programs in Texas and Washington. Under this argument,
the program amounts to compelled speech, because clients have
no choice about the causes their money supports. The First
Amendment arguments have not been resolved in the lower courts.
In this case, the 9th U.S. Circuit Court of Appeals in San
Francisco, addressed only the takings issue and rejected it.
In a fund raising letter mailed to its supporters in September,
the Washington Legal Foundation said its goal was to "deal
a death blow to the single most important source of income
for radical legal groups all across the country." The
letter continued: "It's an abomination that IOLTA can
take money that is rightly the property of Americans like
you and me and use that money to support programs we oppose,
that stand in direct opposition to everything we believe in."
The fund raising letter was submitted to the court in a brief
filed by AARP and other groups that support the trust account
programs. Briefs were filed in support of the programs by
the American Bar Association; the Conference of Chief Justices,
representing 50 state high courts; and by 36 states, including
New York, New Jersey and Connecticut. The bar association
said that the trust account programs pay for one quarter of
the pro bono programs runs by the organized bar.
|
