United States Court of Appeals For the First Circuit
No. 25-1324
E. DAVID WESCOTT, an individual residing in Dedham, County of Hancock, State of Maine; RUSSELL JOHNSON BEAUPAIN, a Maine Limited Liability Company,
Plaintiffs, Appellants,
v.
HON. VALERIE STANFILL, in their official capacity as Chief Justice, Maine Supreme Judicial Court; AMY QUINLAN, ESQ., in their official capacity as State Court Administrator for the State of Maine, Judicial Branch; MAINE JUSTICE FOUNDATION,
Defendants, Appellees,
MAINE BOARD OF OVERSEERS OF THE BAR,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE
[Hon. Lance E. Walker, U.S. District Judge]
Before
Barron, Chief Judge, Howard and Rikelman, Circuit Judges.
Kyle Singhal, with whom Stephen C. Smith, Hopwood & Singhal PLLC, and Steve Smith Trial Lawyers were on brief, for appellants. Jason Anton, Assistant Attorney General, with whom Aaron M. Frey, Attorney General, Thomas A. Knowlton, Deputy Attorney General, and Heather A. Francis, Assistant Attorney General, were on brief, for appellees Valerie Stanfill and Amy Quinlan. Julia B. MacDonald, with whom Gavin G. McCarthy and Pierce Atwood LLP were on brief, for appellee Maine Justice Foundation. McDermott Will & Schulte, Ethan H. Townsend, Wilber H. Boies, Gabrielle L. Siroonian, and Maura R. Cremin on brief for National Association of IOLTA Programs, Massachusetts IOLTA Committee, Rhode Island Bar Foundation, and Fundación Fondo de Acceso a la Justicia, as amici curiae supporting appellees.
April 2, 2026 BARRON, Chief Judge. In this appeal, we confront an
as-applied challenge to Maine's Interest on Lawyers' Trust
Accounts ("IOLTA") program. The plaintiffs -- a law firm and one
of its clients -- contend that the program unconstitutionally
compels their speech by requiring the firm to place the client's
funds in a special pooled account, see Me. Bar R. 6(a), (c)(1),
and then directing a nonprofit organization to distribute the
resulting interest to other organizations to "maintain and
enhance . . . access to justice in Maine," id. 6(e)(3). The
defendants are the Chief Justice of the Maine Supreme Judicial
Court, the State Court Administrator for Maine's Judicial Branch,
and Maine Justice Foundation, the nonprofit corporation charged
under the program with disbursing the interest.1 The United States
District Court for the District of Maine dismissed the claims
against the Chief Justice and State Court Administrator on the
merits and dismissed the claim against Maine Justice Foundation
for lack of jurisdiction. The plaintiffs challenge those rulings
on appeal. We affirm.
1 The operative complaint also named the Maine Board of Overseers of the Bar (the "Board") as a defendant, but the plaintiffs later agreed that the Board was shielded from suit by sovereign immunity. The portion of the District Court's order dismissing the claim against the Board on sovereign immunity grounds is not at issue in this appeal.
- 3 - I.
A.
The Maine Supreme Judicial Court created Maine's IOLTA
program in the mid-1980s. IOLTA: Interest on Lawyers' Trust
Accounts, State of Me. Bd. of Overseers of the Bar (Mar. 26, 2026),
https://www.mebaroverseers.org/attorney_services/registration/io
lta.html [https://perma.cc/SX3N-FZ6A]. In Maine, as elsewhere,
"attorneys are frequently required to hold clients' funds for
various lengths of time" and are generally subject to restrictions
regarding how such funds may be stored. Brown v. Legal Found. of
Wash., 538 U.S. 216, 220 (2003). And, even before Maine created
its IOLTA program, attorneys complying with these requirements
often pooled the funds that they held in trust for their clients
in non-interest-bearing checking accounts. See id. at 221. But
after Congress enacted a 1980 statute that permitted interest to
be paid on a "limited category of demand deposits" known as "NOW
accounts," states began adopting programs -- known as IOLTA
programs -- that authorized attorneys to deposit client funds in
NOW accounts and required that the interest generated by the funds
in those accounts "be used for charitable purposes," including
"legal services for the poor." Id. at 221-23.
Over time, every state in the United States (including
Maine), as well as the District of Columbia, the Commonwealth of
Puerto Rico, and the Virgin Islands, has adopted an IOLTA program.
- 4 - Comm'n on IOLTA, Status of IOLTA Programs, A.B.A. (Mar. 26, 2026),
https://www.americanbar.org/groups/interest_lawyers_trust_accoun
ts/resources/status_of_iolta_programs [https://perma.cc/7ULP-
ZHU6]. The Maine IOLTA program is governed by Maine Bar Rule 6
("Rule 6"). That rule requires "[e]very lawyer admitted to
practice in Maine" to "deposit all funds held in trust in this
jurisdiction in accordance with Rule 1.15 of the Maine Rules of
Professional Conduct in accounts clearly identified as IOLTA
accounts." Me. Bar R. 6(a). It goes on to define "IOLTA account"
as follows:
An IOLTA account is a pooled trust account earning interest or dividends . . . in which a lawyer or law firm holds funds on behalf of clients, which funds are small in amount or held for a short period of time such that they cannot earn interest or dividends for the client in excess of the costs incurred to secure such income . . . .
Id. 6(c)(1).
Rule 6 also requires banking institutions that service
IOLTA accounts to "remit the interest and dividends on [IOLTA]
account[s], net of any allowable reasonable fees," "to the Maine
Justice Foundation." Id. 6(c)(4)(A). It then directs Maine
Justice Foundation to "receive[] and distribute[]" IOLTA funds for
the purpose of "provid[ing] services that maintain and enhance
resources available for access to justice in Maine, including those
services that achieve improvements in the administration of
- 5 - justice and provide legal services, education, and assistance to
low-income, elderly, or needy clients."2 Id. 6(e)(3).
The Maine Rule of Professional Conduct referenced in
Rule 6 is Rule 1.15 ("MRPC 1.15"). It provides that "[a] lawyer
shall deposit into a client trust account any advance payment of
fees or retainer and any expenses that have been paid in advance."
Me. R. Pro. Conduct 1.15(b)(1). It goes on to state, with respect
to "[a]ll funds of any client held by the lawyer or law firm that
are small in amount or held for a short period of time so that
they cannot earn interest or dividends for the client in excess of
the costs incurred to secure such income," that such funds "shall
be deposited in an [IOLTA] account" pursuant to Rule 6.
Id. 1.15(b)(4). MPRC 1.15 provides, however, that "when a lawyer
or law firm reasonably expects that client funds will earn interest
or dividends for the client in excess of the costs incurred to
secure such income," "such funds shall be deposited in a client
trust account," with net earnings to be paid to the client.
Id. 1.15(b)(3).
2 The rule allots a portion of IOLTA funds to Maine Justice Foundation's administrative costs. Me. Bar R. 6(e)(2).
- 6 - B.
The lawsuit that gives rise to this appeal was filed in
the District of Maine in August 2024.3 The plaintiffs are Russell
Johnson Beaupain ("RJB"), a law firm with its principal place of
business in Maine, and E. David Wescott ("Wescott"), one of RJB's
clients. The operative complaint named as defendants Valerie
Stanfill, in her official capacity as Chief Justice of the Maine
Supreme Judicial Court; Amy Quinlan, in her official capacity as
State Court Administrator for the State of Maine's Judicial Branch;
and Maine Justice Foundation ("MJF"). We refer to the first two
defendants collectively as the "State Defendants."
The operative complaint alleges that the defendants, in
violation of 42 U.S.C. § 1983, "deprived . . . RJB of its First
and Fourteenth Amendment rights to be free from compelled speech
by requiring [RJB] to maintain an IOLTA account and store client
funds therein," with "the interest on such funds being used to
support causes that contravene the sincerely held beliefs of the
members of . . . RJB." It further alleges that the defendants, in
violation of 42 U.S.C. § 1983, "deprived . . . Wescott of his
First and Fourteenth Amendment rights to be free from compelled
speech by compelling the contribution of interest from his retainer
3 "[W]e take the facts from the [plaintiffs'] amended complaint." San Juan Cable LLC v. P.R. Tel. Co., 612 F.3d 25, 28 (1st Cir. 2010).
- 7 - funds -- interest that would otherwise accrue to his benefit -- to
support causes that contravene the sincerely held beliefs
of . . . Wescott." As relief, it seeks: (1) a declaration that
Rule 6, "as currently enforced," violates the First and Fourteenth
Amendments "insofar as it permits mandatory IOLTA funds to
subsidize systemic advocacy or legislative lobbying"; (2) a
declaration that it is unconstitutional for the defendants "to
permit IOLTA funds to be used for" five enumerated purposes;4
(3) alternatively, an injunction barring the defendants "from
requiring lawyers to participate in . . . IOLTA" and "requir[ing]
[the] [d]efendants to provide notice to lawyers and clients"
regarding the potential uses of IOLTA funds; and (4) costs and
attorneys' fees.
The operative complaint alleges, in relevant part, the
following.
In June 2023, Wescott transmitted a $2,500 retainer to
RJB as an advance payment for legal services. "[I]nterest [later]
accrued on the retainer that, but for the mandatory IOLTA program,
would have accrued to . . . Wescott's benefit." But, "[i]n
4 Those purposes were listed as follows: "(1) supporting or opposing candidates for elected office, (2) supporting or opposing ball[o]t initiatives or referenda, (3) lobbying in support of or in opposition to pending proposed legislation, (4) seeking public support through the media including social media to support or oppose legislation, valid initiatives or referenda for candidates for elected office, or (5) voter registration, voter education, voter signature gathering, or get out to vote actions."
- 8 - compliance with the mandatory IOLTA program, the
interest . . . was not transferred to . . . Wescott but was
instead transferred to [MJF] to support causes adverse
to . . . Wescott's interest."
MJF distributed most of the IOLTA interest it received
to six legal services groups: Cumberland Legal Aid Clinic,
Immigrant Legal Advocacy Project, Legal Services for Maine Elders,
Maine Equal Justice, Pine Tree Legal Assistance, and Maine
Volunteer Lawyers Project.
Shortly after the plaintiffs filed their amended
complaint, the State Defendants filed a motion to dismiss the
complaint for failure to state a claim. They argued, first, that
the plaintiffs' participation in the Maine IOLTA program was not
compelled because, in representing Wescott, RJB could have used a
payment structure other than a retainer fee, and because, under
Rule 6 and MRPC 1.15, the "interest generated by an IOLTA
account . . . is not money that . . . Wescott would otherwise have
pocketed." Second, the State Defendants argued that even if the
plaintiffs' participation in Maine's IOLTA program was compelled,
the "connection" between the plaintiffs and the speech to which
they objected was too attenuated to support a subsidy-based
compelled-speech claim. Finally, the State Defendants argued
that, even if Maine's IOLTA program compelled the plaintiffs'
speech, the program still complies with the First Amendment because
- 9 - "support[ing] access to justice" is "a compelling state interest
that cannot be achieved through significantly less restrictive
means." (Citing Gaspee Project v. Mederos, 13 F.4th 79, 82-83,
95-96 (1st Cir. 2021).)
MJF filed a separate motion to dismiss the complaint, in
which MJF adopted the State Defendants' arguments in full, that
same day. MJF additionally argued that the plaintiffs lacked
standing to sue it because it did not cause their injuries and
because the relief that they sought could not be provided in an
action against MJF because MJF neither promulgated nor enforced
Rule 6.
The District Court granted both motions. It noted that,
in Washington Legal Foundation v. Massachusetts Bar Foundation,
our Circuit had "considered a near-identical" challenge to
Massachusetts's IOLTA program. See 993 F.2d 962, 968 (1st Cir.
1993). The District Court explained that we held in that case
that, for a plaintiff to state a First Amendment claim for
subsidized speech, "there must be a connection between dissenters
and the organization so that dissenters reasonably understand that
they are supporting the message propagated by [the] recipient
organizations." Id. at 979. The District Court noted that we
ruled there that the connection was lacking at least in part
because "[t]he interest earned on IOLTA accounts belongs to no
- 10 - one" but instead was a "benefit . . . created by the
practicalities of" the IOLTA program. Id. at 980.
The District Court then considered whether, under that
precedent, the plaintiffs here had alleged that they had the
requisite connection to the speech of the IOLTA-fund-recipient
organizations to which they objected. It ruled that they had not.
The District Court further held that the plaintiffs
"lack[ed] standing in their claim against" MJF because that claim
"wants redressability." It explained that MJF "do[es] not enforce
Rule 6" and that the "[p]laintiffs can obtain complete
redressability from a favorable ruling solely against [the] State
Defendants."
The plaintiffs timely appealed.
II.
In reviewing the dismissal of a complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failure to state a
claim on which relief may be granted, we "accept[] all well-pleaded
facts as true, and we draw all reasonable inferences in favor of
the [plaintiffs]." Id. at 971. "Because only well-pleaded facts
are taken as true," however, we need not "accept a complainant's
unsupported conclusions or interpretations of law," id., nor must
we "credit bald assertions" or "subjective characterizations,"
United States v. AVX Corp., 962 F.2d 108, 115 (1st Cir. 1992)
(first quoting Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49,
- 11 - 52 (1st Cir. 1990); then citing Dartmouth Rev. v. Dartmouth Coll.,
889 F.2d 13, 16 (1st Cir. 1989)). Our review is de novo, "and we
may affirm on any ground apparent in the record." Rodríguez-Ortiz
v. Margo Caribe, Inc., 490 F.3d 92, 95 (1st Cir. 2007).
III.
In dismissing the plaintiffs' complaint against the
State Defendants for failure to state a claim based on our decision
in Massachusetts Bar Foundation, the District Court acknowledged
that the plaintiffs' complaint alleged that the IOLTA program
"creat[es] the public perception that their participation in the
IOLTA program implies their endorsement of the views that [the]
[d]efendants use IOLTA funds to support." The District Court
concluded, however, that this statement asserted a legal
conclusion and so did not constitute a factual allegation. As
such, the court stated that it needed to accept that conclusion as
true only if the complaint's factual allegations supported it.
The District Court explained that the plaintiffs'
contention that the public would perceive them to have "endorse[d]"
the speech in question was "predicated" on their complaint's
allegation "that the IOLTA 'interest would otherwise accrue to
[Wescott's] benefit.'" (Second alteration in original.) But, the
District Court concluded, it could not accept that factual
allegation as plausible because it is "simply false," given that,
under Maine's IOLTA program, "[u]nless RJB is mismanaging
- 12 - Wescott's funds, absent the IOLTA program Wescott would not see a
penny of interest as it would not cover the financial institution's
cost of handling his funds."
In challenging the District Court's ruling dismissing
their claims against the State Defendants, the plaintiffs do not
dispute the District Court's premise that their as-applied First
Amendment claims can go forward only if their complaint plausibly
alleged both that the IOLTA program required them to deposit the
Wescott funds into an IOLTA account and that those funds otherwise
would have accrued interest. Nor do they dispute that Rule 6
provides that an attorney must deposit client funds into an IOLTA
account only when such funds are "small in amount or held for a
short period of time such that they cannot earn interest or
dividends for the client in excess of the costs incurred to secure
such income." Me. Bar R. 6(c)(1) (emphasis added); accord Me. R.
Pro. Conduct 1.15(b)(4). Nor, finally, do they dispute that
MRPC 1.15, which Rule 6 references, requires that client funds be
deposited in a non-IOLTA account if a lawyer "reasonably expects"
that such funds "will earn interest or dividends for the client."
Me. R. Pro. Conduct 1.15(b)(3). The plaintiffs nonetheless
contend that the District Court erred for either of two reasons,
neither of which we find convincing.
- 13 - A.
The plaintiffs first take aim at the District Court's
ruling on the ground that, by assuming that Wescott's retainer fee
would have accrued interest only if RJB was "mismanaging" Wescott's
funds, the District Court impermissibly drew a negative inference
against them. After all, the plaintiffs highlight, on a motion to
dismiss, "all reasonable inferences" must be drawn in favor of the
plaintiffs' factual allegations. See Dartmouth Rev., 889 F.2d. at
16. As a result, in their view, "[t]he proper inference to draw
in RJB's favor" would be that, "if RJB is in doubt about whether
a retainer is sufficiently large . . . to permit its deposit into
a separate, non-IOLTA interest-bearing account, then RJB feels
compelled to err on the side of using an IOLTA account so as to
avoid the threat of enforcement and punishment for noncompliance."
If the plaintiffs mean to argue, however, that their
complaint's allegations support a reasonable inference that, when
they deposited the Wescott funds into an IOLTA account, they
reasonably expected that those funds would not generate net
interest, we cannot agree. The complaint is devoid of any facts
that so much as hint that RJB was ever unsure about whether
Wescott's retainer would generate net interest, let alone that RJB
expected that those funds would not do so when they were deposited
in an IOLTA account. Indeed, even in their briefs on appeal, the
plaintiffs do not assert that RJB in fact was uncertain or had any
- 14 - such expectation. They instead simply argue in the abstract that
a lawyer may "not know whether" funds will accrue net interest and
that, with respect to RJB, it "would prefer to be able to store
client funds in non-IOLTA accounts regardless of the amount of
interest that each retainer might generate during the time it is
held."
The plaintiffs do argue, elsewhere in their briefing to
us, that MRPC 1.15 "is insufficient to provide an opt-out" from
Maine's IOLTA program. That is so, they contend, because that
rule "imposes an external 'reasonableness' constraint,"
which -- coupled with the fact that it is the State Defendants who
"enforce the rules" and the "threat of imminent punishment" that
RJB would face if the defendants "determin[ed] that RJB had flouted
Rule 6" -- "compel[s the plaintiffs] into IOLTA participation."
If by this the plaintiffs mean to argue that the
complaint's allegation about the penalties required the District
Court to draw the inference that they claim it had to draw, we
cannot see why. The allegation in the complaint concerning
penalties appears only in the section of the complaint that details
how, insofar as Rule 6 did oblige the plaintiffs to store Wescott's
funds in an IOLTA account, they were injured by Maine's IOLTA
program because of the penalties that they would face for failing
to comply with that obligation. The complaint does not at any
point purport to draw a connection between that allegation and the
- 15 - complaint's later allegations regarding RJB's storage of Wescott's
funds and the interest that accrued on those funds. Thus, the
complaint's allegation regarding the "imminent threat of severe
penalties . . . for failing to store client retainer funds in an
IOLTA account" fails to support a reasonable inference that the
plaintiffs reasonably believed that Wescott's funds would not
accrue net interest and, thus, that Rule 6 required that those
funds be deposited in an IOLTA account.
We suppose the plaintiffs could be making a distinct
argument regarding the import of the complaint's allegation about
the threat of penalties. Perhaps they mean to contend that that
allegation gives rise to the reasonable inference that the
plaintiffs believed that they would be penalized for violating
Rule 6 even if they had not violated it. And thus, we further
suppose, they may mean to be arguing that that allegation gives
rise to the reasonable inference that they had to deposit the
Wescott funds in an IOLTA account, even though they reasonably
expected that those funds would accrue net interest, due to their
reasonable fear of enforcement. But, if the plaintiffs do mean to
be making this contention, we are not persuaded by it.
The complaint does not set forth any facts that plausibly
support an allegation that Rule 6 has been enforced in a manner
that would make any such belief reasonable. And the plaintiffs
develop no argument on appeal about why this penalty-based theory
- 16 - of compulsion is viable, beyond what appears to be their conclusory
assertion that we must accept it. Nor do we see how an unreasonable
fear of enforcement, if held, could suffice to shore up their
complaint under Massachusetts Bar Foundation.
That the plaintiffs allege in their complaint that they
"sincerely believe[d]" that they were required under Rule 6 to
deposit these funds in an IOLTA account also does not help their
cause. The sincerity of their belief that Rule 6 compelled the
conduct in question is, as a legal matter, irrelevant to the
question of whether they reasonably believed that they had to
deposit the Wescott funds in an IOLTA account notwithstanding their
reasonable expectation that those funds would earn net interest.
Even an unreasonable belief can be sincerely held.
To be sure, we must accept as true that RJB deposited
Wescott's funds into an IOLTA account and that those funds would
earn net interest. But the plaintiffs do not deny that, as the
District Court ruled based on our decision in Massachusetts Bar
Foundation, they need to do more. More specifically, they do not
deny that they needed to plausibly allege not only that they
deposited the Wescott funds in an IOLTA account and that those
funds would earn net interest,5 but also that Maine's IOLTA program
5 The plaintiffs hinted at oral argument that depositing any funds into an IOLTA account would give rise to a compelled-speech claim even if those funds did not or would not earn net interest
- 17 - required them to deposit those funds into such an account. But,
as we have explained, we see no basis for rejecting the District
Court's determination that they failed to plausibly allege as much.
See Kaempe v. Myers, 367 F.3d 958, 963 (D.C. Cir. 2004) (explaining
that the court will not accept "inferences drawn by plaintiffs
[that] are unsupported by the facts set out in the complaint"
(quoting Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002))).
B.
The plaintiffs also take issue with the District Court's
dismissal of their claims against the State Defendants for a
distinct reason. Here, they assert that the dismissal was in error
because the District Court mistakenly treated one of their key
allegations as if it were an unsupported legal conclusion. But
this contention rests on a misreading of the District Court's
opinion.
The plaintiffs assert that the District Court erred by
treating the following allegation as a "legal conclusion couched
as a factual allegation": "that the interest on Wescott's retainer
on their own. But any such argument was too little too late; the plaintiffs did not clearly trace their First Amendment injury to their ownership of IOLTA principal. See Phillips v. Wash. Legal Found., 524 U.S. 156, 172 (1998). Their opening brief on appeal, meanwhile, assigns some importance to a loss of hypothetical interest. We therefore have no occasion to address whether a compelled-speech claim could survive in the absence of a showing that the IOLTA deposits would have earned net interest on their own.
- 18 - 'would otherwise accrue to Wescott's benefit' in the absence of
the IOLTA program." But, as our review of the District Court's
ruling at the outset of our analysis reveals, the District Court
did no such thing. Rather, the District Court treated as "a legal
conclusion couched as a factual allegation" the plaintiffs'
assertion in their complaint that the IOLTA program "creat[es] the
public perception that their participation in the IOLTA program
implies their endorsement of the views that [the] [d]efendants use
IOLTA funds to support."
The plaintiffs do not contend, however, that that
statement regarding the "public perception" of their endorsement
alleges a fact rather than asserting a legal conclusion, and we do
not see how they could. See Mass. Bar Found., 993 F.2d at 977-78
(treating the issue of whether Massachusetts's IOLTA program was
compulsory as a question of law). Thus, we see no merit to this
ground for challenging the District Court's ruling dismissing
their claims against the State Defendants.
In sum, for these reasons, we conclude that the District
Court did not err in dismissing the plaintiffs' First
Amendment-based claims against the State Defendants for failing to
state a claim upon which relief may be granted. We thus need not
reach any of the plaintiffs' other arguments as to why we must
overturn that ruling.
- 19 - IV.
There remains the plaintiffs' jurisdictional challenge
to the dismissal of their claim against MJF. There is no question,
however, that we have jurisdiction to address their challenge to
the dismissal of their claims against the State Defendants. As a
result, there is no question that we have jurisdiction to address
whether the complaint that sets forth those claims plausibly
alleged that Maine's IOLTA program compelled the plaintiffs to
deposit Wescott's funds in an IOLTA account and that that deposit
was sufficiently connected to the speech to which they object.
See, e.g., Kachalsky v. Cnty. of Westchester, 701 F.3d 81, 84 n.2
(2d Cir. 2012) (noting that the court's "jurisdiction is secure"
so long as "at least one plaintiff has standing," and declining to
address the issue of one of the plaintiff's standing after
affirming dismissal). Thus, because the fatal defect in the
complaint that we identified above in affirming the dismissal of
the claims against the State Defendants inheres in the complaint
as a whole without regard to the particular defendant, we conclude
that the plaintiffs' appeal of the District Court's dismissal of
their claim against MJF is moot. See Efron v. Embassy Suits
(P.R.), Inc., 223 F.3d 12, 21 (1st Cir. 2000) (finding questions
concerning the plaintiff's standing "obviously . . . moot" after
concluding that he had failed to allege sufficient facts to state
a claim).
- 20 - V.
For the foregoing reasons, we affirm.
- 21 -