Texas IOLTA Litigation Timeline
February 7, 1994
The Washington Legal Foundation and others filed suit against the Texas Equal Access to
Justice Foundation, its chair and the individual Justices of the Texas Supreme Court. The
suit for injunctive relief was filed in the U.S. District Court in Austin, under the
caption Washington Legal Foundation, et al. v. Texas Equal Access to Justice
Foundation, et al. The complaint alleged that IOLTA grants were made in violation of
the Plaintiffs' rights under the First and Fifth Amendments.
January 19, 1995
The District Court dismissed the suit holding that Plaintiffs failed to allege any legally
recognized claim under the Fifth Amendment. In addition, the court ruled that because
Plaintiffs had not shown a property interest in the interest generated by IOLTA accounts,
they could not claim that they were being forced to financially support the organizations
that receive funding from IOLTA. The Plaintiffs appealed the District Court's decision to
the U.S. Court of Appeals for the Fifth Circuit.
September 12, 1996
A three judge panel of the Fifth Circuit Court of Appeals ruled that Texas' traditional
rule that interest follows principal applies to client funds placed by attorneys in
accounts under Texas' IOLTA program, and any interest that accrues belongs to clients as
owners of principal unless they agree otherwise. In addition, the court ruled that the
appellees are immune from monetary damages under the Eleventh Amendment Immunity Clause.
September 26, 1996
The Texas IOLTA program and the Texas Supreme Court filed a motion for rehearing and a
petition for rehearing en banc.
Many entities filed motions and were granted leave to file amicus curiae briefs in
support of en banc rehearing. They included the American Bar Association, more than
thirty state bar associations and the National Association of IOLTA Programs (NAIP).
February 14, 1997
The Fifth Circuit Court of Appeals denied the motion for rehearing and suggestion for
rehearing en banc. Six judges dissented from the refusal of the court to grant rehearing en
banc. Four of those judges joined in a written dissent arguing that the original
decision erred in finding that IOLTA constitutes the taking of property.
February 20, 1997
The Texas IOLTA program and the Texas Supreme Court filed a motion to stay the issuance of
a mandate pending the filing of a petition for certiorari.
March 5, 1997
The Fifth Circuit Court of Appeals denied the issuance of a stay of the mandate.
April 1, 1997
Judge James Nowlin, United States District Judge for the Western District of Texas, Austin
Division, to whom the case was remanded, issued an order staying any action in the matter,
pending disposition of the petition for writ of certiorari.
April 4, 1997
The Texas IOLTA program and the Texas Supreme Court filed a petition for a writ of
certiorari before the United States Supreme Court. (Note: the caption of the case became Phillips,
et al., v Washington Legal Foundation, et al., No. 96-1578)
Many entities subsequently filed amicus curiae briefs in support of the petition for a writ of certiorari including the American Bar Association, state and local bar associations and the National Association of IOLTA Programs (NAIP).
May 5, 1997
The Washington Legal Foundation and other respondents filed a response and a
cross-petition for a writ of certiorari before the United States Supreme Court (on the
Eleventh Amendment immunity issue).
June 27, 1997
The Supreme Court granted the petition for certiorari filed by the Texas Supreme Court and
the Texas IOLTA program, limiting the issue to be considered to the Fifth Amendment claim.
On the same day, the Court denied the petition for certiorari filed by the Washington
Legal Foundation.
August 25, 1997
The Texas IOLTA program and the Texas Supreme Court filed their brief on the merits before
the Supreme Court. Nine amicus curiae briefs were filed in support of petitioners by
entities and individuals such as the American Bar Association, the United States, the
National Association of IOLTA Programs, the Conference of Chief Justices, the Council of
State Governments, 35 state attorneys general, more than 40 state bar associations and
several local bar associations.
October 10, 1997
The Washington Legal Foundation and other respondents filed a response to petitioners'
brief on the merits. Eight entities, including the Association for Objective Law, the
Pacific Law Foundation and the National Right to Work Legal Defense Foundation filed amici
curiae briefs in support of respondents.
November 10, 1997
Petitioners filed a reply brief to respondents' brief.
January 13, 1998
The U.S. Supreme Court heard oral arguments. Darrell E. Jordan, Esq. and Edwin S.
Kneedler, Esq. argued for Petitioners. Richard A. Samp, Esq. argued for Respondents.
June 15, 1998
The U.S. Supreme Court affirmed the Fifth Circuit ruling that clients have a
"property interest" in the interest generated from their attorneys' IOLTA trust
accounts. The high court, however, expressed no view as to whether these funds have been
"taken" by the state, and if so, whether the taking was compensatory. It
remanded the case to the Fifth Circuit to make those determinations.
August 31, 1998
The Fifth Circuit Court of Appeals remanded the case to the U.S. District Court of the
Western District of Texas, Austin Division.
September 16, 1998
Under the caption Washington Legal Foundation, et al. v. Texas Equal Access to Justice
Foundation, et al., the district court set a briefing schedule.
October 16, 1998
The Washington Legal Foundation filed a motion for summary judgment.
October 29, 1998
The defendants filed an unopposed motion for extension of time to reopen discovery.
October 30, 1998
The court granted the unopposed motion for extension of time to reopen discovery until
January 4, 1999.
January 19, 1999
Defendants, Justices of the Texas Supreme Court, filed a motion for judgment on the
pleadings, alleging that all claims should be dismissed against them for several reasons
including: they are immune from claims for money damages because they are sued in their
official capacity only; they are absolutely immune from suit based on action taken by the
Court in its legislative capacity, including enactment of the IOLTA rules.
March 5, 1999
Briefing was completed on plaintiffs' motion for summary judgment, defendants'
cross-motion for summary judgment and defendants', the individual Justices and former
Justices of the Texas Supreme Court, motion for judgment on the pleadings.
April 16, 1999
Judge Nowlin set a status hearing for May 19, 1999.
May 19, 1999
During a status hearing, Judge Nowlin set the case for bench trial to begin September 20,
1999, with the goal of concluding the trial within a four-day period. The Judge stated his
desire for an efficiently timed bench trial to aid him in developing a clear and accurate
record.
September 22-23, 1999
A bench trial took place before Judge Nowlin who set the following schedule for post-trial
briefs: plaintiffs’ brief is to be filed by November 1, 1999 and defendants’
brief by November 29, 1999. The Court indicated that it planned to issue its ruling in the
case by no later than January 1, 2000.
January 4, 2000
Judge Nowlin granted Justices' of the Supreme Court of Texas motion for judgment on the
pleadings, holding that they are entitled to absolute immunity. As a result, all claims
against the Justices were dismissed.
January 28, 2000
Judge Nowlin dismissed with prejudice all claims against the remaining defendants, Texas
Equal Access to Justice Foundation and its chairperson. Judge Nowlin ruled that there was
neither a taking of property nor any just compensation due and therefore, no violation of
the Fifth Amendment. Judge Nowlin also held that the Texas IOLTA program did not violate
plaintiffs' First Amendment rights.
February 22, 2000
Plaintiffs filed a Notice of Appeal of the District Court's January 20, 2000 decision with the
United States Fifth Circuit Court of Appeals.
May 30, 2000
The Washington Legal Foundation and the other plaintiffs filed their initial brief with the Fifth
Circuit Court of Appeals. Subsequently, an amicus curiae brief in support of the plaintiffs was
filed by The Association for Objective Law.
August 2, 2000
The Texas Equal Access to Justice Foundation and the Justices of the Texas Supreme Court filed their
separate responsive briefs with the Fifth Circuit Court of Appeals. Subsequently, the following filed
amicus briefs on behalf of TEAJF:
- the American Bar Association,
- the National Association of IOLTA Programs,
- the Conference of Chief Justices,
- the State Bar of Texas,
- the Independent Bankers Association of Texas, and
- a coalition of bar groups and legal services organizations in Ohio.
September 28, 2000
The Washington Legal Foundation and the other plaintiffs filed their reply briefs - one reply to the brief filed by TEAJF,
and another reply to the brief filed by the Justices of the Texas Supreme Court.
February 6, 2001
A three-judge panel of the Fifth Circuit Court of Appeals heard oral arguments. Robert Long of Covington & Burling argued
on behalf of TEAJF, and Charles Fried argued for the plaintiffs.
October 15, 2001
A three-judge panel of the Fifth Circuit Court of Appeals held that the Texas IOLTA program violates the Fifth
Amendment and reversed and remanded the case to the district court for the entry of prospective declaratory and
injunctive relief. One judge dissented, pointing out that the plaintiffs failed to prove that any just compensation
is due.
October 26, 2001
The Texas IOLTA program and the Texas Supreme Court filed a petition for rehearing en banc.
May 31, 2002
The Fifth Circuit Court, in a 7-7 decision (with one judge recused), denied the TEAJF's request for rehearing en banc.
June 26, 2002
TEAJF and the Justices of the Supreme Court of Texas filed a petition for writ of certiorari to the U.S. Supreme Court,
seeking review of the Fifth Circuit decision.
July 3, 2002
Upon motion of TEAJF, the Fifth Circuit entered an order staying the issuance of the mandate pending the petition for
writ of certiorari.
July 29, 2002
The Washington Legal Foundation and other respondents filed their brief in opposition to certiorari.
August 15, 2002
TEAJF and the Justice of the Supreme Court of Texas filed their reply brief.
