Regional Management Corp. v. Legal Services Corp.

186 F.3d 457, 1999 WL 547925
CourtCourt of Appeals for the Fourth Circuit
DecidedAugust 3, 1999
Docket98-2165, 98-2166
StatusPublished
Cited by28 cases

This text of 186 F.3d 457 (Regional Management Corp. v. Legal Services Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Regional Management Corp. v. Legal Services Corp., 186 F.3d 457, 1999 WL 547925 (4th Cir. 1999).

Opinions

Vacated and remanded in part and affirmed in part by published opinion. Judge LUTTIG wrote the opinion, in which Judge WILLIAMS joined. Judge MURNAGHAN wrote a separate concurring opinion.

OPINION

LUTTIG, Circuit Judge:

Appellees Regional Management Corp. and its affiliates (collectively “Regional”) filed a complaint with the Legal Services Corporation alleging that certain recipients of Legal Services’ funds violated the Legal Services Corporation Act (“LSC Act”) when they lobbied against Regional before the South Carolina General Assembly and the Georgia Commissioner of Insurance. Legal Services concluded that neither instance of lobbying violated the LSC Act, and Regional sought judicial review in federal district court of the Corporation’s resolution of its complaint. The district court ruled in favor of Regional with regard to the lobbying in South Carolina, but in favor of Legal Services with regard to the lobbying in Georgia.

For the reasons that follow, we conclude that there is no basis for judicial review of Legal Services’ decision on Regional’s complaint. We therefore vacate the district court’s judgment and opinion and dismiss Regional’s claim. We also affirm the district court’s dismissal of Regional’s suit against Legal Services under the Freedom of Information Act, because that suit is not yet ripe.

I.

Appellant Legal Services, which Congress established by the LSC Act, 42 U.S.C. §§ 2996-29961, disburses federal money to local legal services programs, known as “recipients,” to support legal assistance to the poor in civil matters. The LSC Act, however, imposes numerous restrictions on recipients’ use of Legal Services’ funds, id. § 2996f(a) & (b), and charges Legal Services with enforcing those restrictions, id. § 2996e(b).

Among the funding restrictions that the LSC Act imposes is a ban on lobbying federal, state, or local officials, whether executive or legislative. Id. § 2996f(a)(5). There are some exceptions to this ban, however, such as for lobbying that is “necessary to the provision of legal advice and representation” of an “eligible client ... with respect to such client’s legal rights and responsibilities,” or for testimony or similar activity that has been requested by an agency or legislative body. Id. Regulations promulgated by Legal Services pursuant to the LSC Act implement the lobbying ban and the exceptions. See 45 C.F.R. pt. 1612.1

Appellee Regional is a lender, apparently concentrating on providing credit to those who have poor credit histories or are otherwise high credit risks. In 1994-95, the time of the underlying events in this case, Legal Services’ recipients included Palmetto Legal Services, Inc. (“PLS”), South Carolina Legal Services Association (“SCLSA”), and the Neighborhood Legal Assistance Program (“NLAP”). SCLSA received its funding via PLS. During this time, Susan Berkowitz, an attorney, registered lobbyist, and the director of SCLSA, successfully lobbied the South Carolina General Assembly to pass Act 135 of 1995, which imposed severe restrictions upon companies such as Regional, costing it, Regional contends, millions of dollars in [460]*460lost revenue. Soon thereafter, Berkowitz, joined by employees of PLS and NLAP, journeyed to Georgia at the request of the Georgia Commissioner of • Insurance, where they successfully opposed Regional’s application for a license to do business in that States

In February 1996, Regional filed a complaint with Legal Services pursuant to the complaint procedure of 45 C.F.R. § 1618.3, claiming that both the South Carolina and the Georgia lobbying violated the LSC Act and the then-applicable regulations. Soon thereafter, Regional, concerned that Legal Services might be receiving inaccurate information from the recipients, Berkowitz, and others, filed several requests under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, which applies to Legal Services pursuant to 42 U.S.C. § 2996d(g), for all documents that Legal Services had created or received as part of the investigation. Legal Services denied these requests, invoking its policy of not releasing documents relating to an ongoing investigation to a target of that investigation and concluding that the policy should extend to Regional’s request. In December 1996, Legal Services issued its decision, concluding that there was no violation of the LSC Act or regulations in either lobbying incident and, thus, that no disciplinary action was needed. It thereupon produced the documents that Regional had requested under FOIA.

Regional filed the present action in the federal district court in May 1997, seeking “judicial review” of Legal Services’ “final agency action.” Regional requested a declaratory judgment that the lobbying violated the LSC Act; restitution of funds to Legal Services; termination of funding to PLS, SCLSA, and NLAP;2 and termination of the offending employees of those recipients. In a second cause of action, Regional alleged violations of FOIA.

The district court, in a thorough opinion, 10 F.Supp.2d 565 (D.S.C.1998), first concluded that it had jurisdiction to hear Regional’s challenge to Legal Services’ decision. Although the court agreed with the numerous courts that have held that the LSC Act creates no private right of action, and also concluded that the judicial review provisions of the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq., do not provide a basis for reviewing Legal Services’ decision, see 42 U.S.C. § 2996d(e)(l), it followed the lead of several courts that have nonetheless found authority to review certain Legal Services actions under a pre-APA standard of review, which requires a court to consider only whether an agency action has a rational basis. The district court viewed this standard of review, however, as functionally identical to the APA’s “arbitrary and capricious” standard of review, see 5 U.S.C. § 706(2)(A).

On the merits, the district court first held that there was no rational basis for Legal Services’ conclusion that Berkowitz’s lobbying in South Carolina was in the service of a client. That conclusion by Legal Services, the court explained, was devoid of factual support, and the lobbying was thus a blatant violation of the LSC Act and regulations. The court held that Legal Services had a rational basis for concluding that the Georgia lobbying fell under the exception for testimony requested by a governmental official. Finally, the court dismissed Regional’s FOIA claim as moot because Regional had received the requested documents.

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Bluebook (online)
186 F.3d 457, 1999 WL 547925, Counsel Stack Legal Research, https://law.counselstack.com/opinion/regional-management-corp-v-legal-services-corp-ca4-1999.