[Federal Register Volume 61, Number 232 (Monday, December 2, 1996)]
[Rules and Regulations]
[Pages 63754-63755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30620]
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LEGAL SERVICES CORPORATION
45 CFR Part 1617
Class Actions
AGENCY: Legal Services Corporation.
ACTION: Final rule.
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SUMMARY: This final rule revises the Legal Services Corporation's
(``Corporation'' or ``LSC'') interim regulation concerning class
actions. The revisions are intended to implement a restriction
contained in the Corporation's Fiscal Year (``FY'') 1996 appropriations
act which is currently incorporated by reference in the Corporation's
FY 1997 appropriations act. The restriction prohibits the involvement
of LSC recipients in class actions.
DATES: This final rule is effective on January 1, 1997.
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
Sec. 504(a)(7), a restriction in the Corporation's FY 1996
appropriations act, Pub. L. 104-134, 110 Stat. 1321 (1996), which
prohibited involvement of LSC recipients in class actions. The
Committee held public hearings on staff proposals on July 8 and 19, and
the Board adopted an interim rule on July 20 for publication in the
Federal Register. Although the interim rule was effective upon
publication, see 61 FR 41963 (Aug. 13, 1996), the Corporation also
solicited comments on the rule for review and consideration by the
Committee and Board.
The Corporation received 7 comments on the interim rule. The
Committee held public hearings on the rule on September 29, 1996, and
made several recommendations for revisions to the Board. The Board
adopted this final rule on September 30, 1996.
The Corporation's FY 1997 appropriations act became effective on
October 1, 1996, see Pub. L. 104-208, 110 Stat. 3009. It incorporated
by reference the Sec. 504 condition on LSC grants included in the FY
1996 appropriations act implemented by this rule. Accordingly, the
preamble and text of this rule continue to refer to the appropriate
section number of the FY 1996 appropriations act.
The interim rule was intended to implement a clear prohibition in
the Corporation's FY 1996 appropriations act on any participation in
class actions by LSC recipients. Other than providing a transition
period for programs to withdraw from pending cases, the appropriations
act provided no exceptions and allowed for no Corporation waivers to
the prohibition. The legislative history of this provision indicates an
intent that legal services programs should focus their resources on
representation of individual poor clients and not be involved in any
class actions. Accordingly, the interim rule contained a strict
prohibition on participation in class actions with no exceptions or
waivers. This final rule continues the interim rule's strict
prohibition but better clarifies those activities that constitute
participation in class actions.
A section-by-section discussion of this final 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'' in the interim rule deferred to
widely accepted Federal and local court rules and statutory
definitions. Thus, a class action for the purposes of this part was
defined as a class action pursuant to Rule 23 of the Federal Rules of
Civil Procedure or the comparable State statute or rule of civil
procedure governing the action in the court where it is filed. No
comments challenged the definition, and no changes have been made to
the definition in this final rule.
The definition of ``initiating or participating in any class
action'' in the interim rule was intended to clarify that any
involvement in a class action is prohibited prior to an order granting
relief. Public comments on part 1617 generally asked for more clarity
as to the scope of the definition. In general, the Board decided that
it should state in the rule that all participation, whether before or
after entry of an order, is prohibited; and the final rule reflects
that change. In addition, the Board decided to address some of the
specific issues addressed by the comments.
One comment urged the deletion of ``non-adversarial'' before
``monitoring,'' stating that any action, even an adversarial action,
should be allowed once an order granting relief has been issued. The
Board did not take this approach. Participation in adversarial actions,
even after entry of an order, constitutes active participation in a
class action, and such involvement is not permitted under the law. The
use of the term ``non-adversarial'' was intentional. The Corporation
meant to prohibit any adversarial action after relief is granted, and
the term is retained in this final rule. Furthermore, the term
``monitoring'' is replaced with ``activities'' because its use seemed
to imply a more active role for recipients than was intended.
Comments further indicated that the rule should be more explicit
about the types of activities the Corporation considers to be
adversarial and non-adversarial. Accordingly, this final rule adds
language to clarify what would be considered to be non-adversarial.
Non-adversarial activities would include efforts to remain informed
about the terms of an order granting relief as well as efforts to
explain, clarify, educate or give advice about an order granting
relief.
One comment questioned the use of the term ``legal assistance'' in
the definition of ``initiating or participating in any class action.''
Because the term as defined in 45 CFR part 1600 has a different focus
than is intended in this definition, the Board changed ``legal
assistance'' to ``representation.''
Other comments suggested deleting the language in the definition
that prohibits program attorneys from assisting their clients to
``withdraw from'' or ``opt out of'' a class action. The comments stated
that the inclusion of the language in the definition goes beyond the
intent of the statutory restriction and has the opposite effect of
``participating'' in a class action. Arguing that representation to
withdraw from or opt out of a class action may be essential to allow
individual representation, the comments urged the Corporation to change
the rule to allow such representation.
The Board agreed that efforts to withdraw from a class action are
consistent with the Congressional intent that LSC recipients provide
representation to individual clients and should not be viewed as
efforts to participate or to be included in a class action. The Board
revised paragraph (b) of the definition of ``initiating or
participating in any class action'' to clarify that the definition does
not include the representation of an individual client seeking to
withdraw from or opt out of a class by deleting reference to
withdrawing or opting out from the definition. This change only
authorizes actions by a recipient
[[Page 63755]]
necessary to ensure that its client is not included in the class or
that any class order would not apply to the recipient's client. Any
other activity in the case, however, is not permitted.
In summary, the final rule clarifies the definition of ``initiating
or participating in any class action'' as extending to all types of
involvement at all stages of a class action. Recipients may not
initiate a class action or participate in one initiated by others,
either at the trial or appellate level, nor may they continue
involvement in a case that is later certified or otherwise determined
by the court to be a class action. However, in response to comments on
a situation where the recipient's client does not file for or move for
certification of a class action, the Board requested that the following
example be included in this commentary regarding the definition of
``initiating or participating in a class action'': In a case where the
recipient files or otherwise initiates action to have the case
certified as a class action, participation in the case is prohibited
from the point that the recipient takes such actions. On the other
hand, if the recipient is representing a client in a pending action
that was not filed as a class action, and another party moves to have
the case certified as a class action, the recipient will not be deemed
to be participating in a class action until the court certifies it as
such. Finally, 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 intervene in, 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. Recipients
may represent an eligible client in withdrawing from or opting out of a
class action. Furthermore, the definition of a class action would not
include a mandamus action or injunctive or declaratory relief actions,
unless such actions are filed or certified as class actions.
Recipients may also represent 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 and may represent an individual client seeking to
withdraw from or opt out of a class.
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. 3009 (1996); 110
Stat. 1321 (1996).
Sec. 1617.1 Purpose.
This rule 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)(1) Initiating or participating in any class action means any
involvement at any stage of a class action prior to or after an order
granting relief. ``Involvement'' includes acting as amicus curiae, co-
counsel or otherwise providing representation relating to a class
action.
(2) Initiating or participating in any class action does not
include representation of an individual client seeking to withdraw from
or opt out of a class or obtain the benefit of relief ordered by the
court, or non-adversarial activities, including efforts to remain
informed about, or to explain, clarify, educate or advise others about
the terms of an order granting relief.
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: November 26, 1996.
Victor M. Fortuno,
General Counsel.
[FR Doc. 96-30620 Filed 11-29-96; 8:45 am]
BILLING CODE 7050-01-P