[Federal Register Volume 61, Number 157 (Tuesday, August 13, 1996)]
[Rules and Regulations]
[Pages 41963-41964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20415]


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LEGAL SERVICES CORPORATION
45 CFR Part 1617


Class Actions

AGENCY: Legal Services Corporation.

ACTION: Interim rule with request for comments.

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SUMMARY: This interim rule completely revises the Legal Services 
Corporation's (``Corporation'' or ``LSC'') regulation concerning class 
actions. The revisions are intended to implement a restriction 
contained in the Corporation's FY 1996 appropriations act which 
prohibits the involvement of LSC recipients in class actions. Although 
this rule is effective upon publication, the Corporation solicits 
public comment on the interim rule in anticipation of adoption of a 
final rule at a later time.

DATES: The interim rule is effective on August 13, 1996. Comments must 
be submitted on or before September 12, 1996.

ADDRESSES: Comments should be submitted to the Office of the General 
Counsel, Legal Services Corporation, 750 First St, NE, 11th Floor, 
Washington, DC 20002-4250.

FOR FURTHER INFORMATION CONTACT: Victor M. Fortuno, General Counsel, 
(202) 336-8910.

SUPPLEMENTARY INFORMATION: On May 19, 1996, the Operations and 
Regulations Committee (``Committee'') of the LSC Board of Directors' 
(``Board'') requested LSC staff to prepare an interim rule to implement 
Section 504(a)(7), a restriction in the Corporation's FY 1996 
appropriations act, Public Law 104-134, 110 Stat. 1321 (1996), which 
prohibits involvement of LSC recipients in class actions. The Committee 
held public hearings on staff proposals on July 8 and 19, and the Board 
adopted this interim rule on July 20 for publication in the Federal 
Register.
    The Committee recommended and the Board agreed to publish this rule 
as an interim rule. An interim rule is necessary in order to provide 
prompt and critically necessary guidance to LSC recipients on 
legislation which is already effective and which carries strong 
penalties for noncompliance. Because of the great need for guidance on 
how to comply with substantially revised legislative requirements, 
prior notice and public comment are impracticable, unnecessary, and 
contrary to the public interest. See 5 U.S.C. 553(b)(3)(B) and 
553(d)(3). Accordingly, this interim rule is effective upon 
publication.
    However, the Corporation also solicits public comment on the 
interim rule for review and consideration by the Committee. After 
receipt of written public comment, the Committee intends to hold public 
hearings to discuss the written comments and to hear oral comments. It 
is anticipated that a final rule will be issued which will supersede 
this interim rule.
    Part 1617 is completely revised by this interim rule. Generally, 
this interim rule prohibits any recipient involvement in class actions. 
The prior regulation, which had not been revised since 1976, had 
allowed recipients to provide assistance in class actions as long as 
certain procedural requirements were met. No such involvement is 
allowed under this new rule.
    A section-by-section discussion of this interim rule is provided 
below.

Section 1617.1  Purpose

    The purpose of this rule is to prohibit involvement by LSC 
recipients in class actions.

Section 1617.2  Definitions

    The definition of ``class action'' is revised to include only the 
nature of a class action. The prior definition also reached the issue 
of types of involvement in a class action, including involvement in 
various stages of a class action. Those issues are now included in the 
definition of ``initiating or participating in a class action.''
    The definition of ``class action'' defers to widely accepted 
Federal and local court rules and statutory definitions. Thus, a class 
action for the purposes of this part is a ``class action'' pursuant to 
Rule 23 of the Federal Rules of Civil Procedure or the comparable State 
statute or rule of civil procedure

[[Page 41964]]

governing the action in the court where it is filed.
    ``Initiating or participating in any class action'' is defined to 
clarify that all types of involvement are prohibited at various stages 
of a class action prior to an order granting relief. Recipients may not 
initiate a class action or participate in one initiated by others, 
either at the trial or appellate level. Nor may recipients continue 
involvement in a case already begun that is later certified or 
otherwise determined by the court, sua sponte or on a motion by a 
party, to be a class action. In addition, recipients may not act as 
amicus curiae or co-counsel in a class action or intervene in a class 
action on behalf of individual clients who seek to withdraw from, 
intervene in, opt out of, modify, or challenge the adequacy of the 
representation of a class. Finally, recipients may not represent 
defendants in a class action.
    Certain situations are not within the definition and are thus not 
prohibited by this rule. For example, recipients may advise clients 
about the pendency of a class action or its effect on the client and 
what the client would need to do to benefit from the case. Other 
actions related to a class action are also not included, but only 
because they involve actions taken after liability, if any, has been 
determined and an order of relief has been entered. Accordingly, 
recipients may be involved in non-adversarial monitoring of an order 
granting relief or representation of an individual client seeking the 
benefit of the order, provided that any such involvement is only on 
behalf of an individual client and does not involve representation of 
an entire class. In addition, if the class action resumes its 
adversarial nature for any reason, recipients would need to attempt 
withdrawal in order to avoid participating in a class action.
    Finally, a class action would not include other forms of action, 
even if they result in relief that benefits numbers of clients or 
resolves issues that affect others in addition to the client, provided 
that the case is not also a class action as defined by this rule. For 
example, this rule does not apply to mandamus or to injunctive or 
declaratory relief actions, unless such actions are filed or certified 
as class actions.
    The Committee especially seeks comments from recipients factually 
describing other situations which recipients consider to be outside the 
prohibition on initiating or participating in a class action that 
should be described in the language of the rule itself.

Section 1617.3  Prohibition

    This section prohibits LSC recipients from initiating or 
participating in any class action.

Section 1617.4  Recipient Policies and Procedures

    This section requires recipients to adopt written policies and 
procedures to guide the recipient's staff in ensuring compliance with 
this rule.

List of Subjects in 45 CFR Part 1617

    Grant Programs--law, Legal services.
    For reasons set out in the preamble, LSC revises 45 CFR part 1617 
to read as follows:

PART 1617--CLASS ACTIONS

Sec.
1617.1  Purpose.
1617.2  Definitions.
1617.3  Prohibition.
1617.4  Recipient policies and procedures.

    Authority: 29 U.S.C. 2996e(d)(5); 110 Stat. 1321 (1996).


Sec. 1617.1  Purpose.

    This part is intended to ensure that LSC recipients do not initiate 
or participate in class actions.


Sec. 1617.2  Definitions.

    (a) Class action means a lawsuit filed as, or otherwise declared by 
the court having jurisdiction over the case to be, a class action 
pursuant to Rule 23 of the Federal Rules of Civil Procedure or the 
comparable State statute or rule of civil procedure applicable in the 
court in which the action is filed.
    (b) Initiating or participating in any class action means any 
involvement at any stage of a class action prior to an order granting 
relief, including acting as amicus curiae, co-counsel or providing 
legal assistance to an individual client who seeks to withdraw from, 
intervene in, opt out of, modify, or challenge the adequacy of the 
representation of a class. It does not include non-adversarial 
monitoring of an order granting relief or individual representation of 
a client seeking to obtain the benefit of relief ordered by the court.


Sec. 1617.3  Prohibition.

    Recipients are prohibited from initiating or participating in any 
class action.


Sec. 1617.4  Recipient policies and procedures.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part.

    Dated: August 6, 1996.
Victor M. Fortuno,
General Counsel.
[FR Doc. 96-20415 Filed 8-12-96; 8:45 am]
BILLING CODE 7050-01-P