USSC to hear IOTA case

first_img USSC to hear IOTA case July 1, 2002 Regular News USSC to hear IOTA casecenter_img The U.S. Supreme Court appears poised to determine the constitutionality of the nation’s interest on lawyer trust account programs once and for all.Acting June 10, the Court accepted cert in the Washington State IOLTA case ( Washington Legal Foundation v. Legal Foundation of Washington, No. 01-1325). The San Francisco-based U.S. Ninth Circuit Court of Appeals ruled last November that the state of Washington’s IOLTA program does not violate the Fifth Amendment of the U.S. Constitution, reasoning that while the plaintiffs “have the right to control the accrued interest generated in theory, as a practical matter, that right will never come to fruition on its own because without IOLTA there is no interest.”That decision is at odds with a similar case decided in October 2001 by a three-judge panel of the New Orleans-based U.S. Fifth Circuit Court of Appeals that found the Texas IOLTA program’s use of pooled interest from lawyers’ trust accounts amounts to an unconstitutional taking without just compensation, in violation of the Fifth Amendment. (WLF v. Texas Equal Access to Justice Foundation ).In that case the majority said, “In reality, the linchpin for this case has already been inserted by the Supreme Court: Interest income generated by funds held in IOLTA accounts is the ‘private property’ of the owner of the principal. And, because the state has permanently appropriated [the appellant’s] interest income against his will, instead of merely regulating its use, there is a per se taking.” Petition for en banc review of the Texas case was denied by the Fifth Circuit May 31, and lawyers for the Texas agency plan to file a petition for writ of certiorari with the U.S. Supreme Court, which may consolidate both cases, according to the ABA.In 1998, the U.S. Supreme Court, in Philips v. WLF, found that clients have a protected property interest in funds created by pooled IOLTA accounts. The Supreme Court, however, took no view as to whether the funds had been “taken” by the state or if any “just compensation” was due the respondent. It left those issues for the lower courts to decide.The WLF is a Washington, D.C., based organization that has battled IOLTA programs across the country in the courts for many years.last_img

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