12-1377-cv
Jacoby & Myers v. Presiding Justices
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second Circuit, held at
2 the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
3 York, on the 21st day of November, two thousand twelve.
4
5 PRESENT: JOHN M. WALKER, JR.,
6 GERARD E. LYNCH,
7 Circuit Judges,
8 JOHN GLEESON,
9 District Judge.*
10
11 ———————————————————————
12
13 JACOBY & MEYERS, LLP, on behalf of itself and all other similarly situated entities
14 authorized to practice Law in the State of New York, JACOBY & MEYERS USA, LLC,
15 Plaintiffs-Appellants,
16
17 v. No. 12-1377-cv
18
19 THE PRESIDING JUSTICES OF THE FIRST, SECOND, THIRD AND FOURTH
20 DEPARTMENTS, APPELLATE DIVISION OF THE SUPREME COURT OF THE
21 STATE OF NEW YORK,
22 Defendants-Appellees.**
23
24 ———————————————————————
25
*
The Honorable John Gleeson of the United States District Court for the Eastern
District of New York, sitting by designation.
**
The Clerk of the Court is directed to amend the official caption in the case to
conform to the caption listed above.
1 FOR APPELLANT: JAMES R. DENLEA (Jeffrey I. Carton, on the brief),
2 Meiselman, Denlea, Packman, Carton & Eberz,
3 White Plains, New York.
4
5 FOR APPELLEE: WON S. SHIN, Assistant Solicitor General, of
6 counsel (Barbara D. Underwood, Solicitor
7 General, Steven C. Wu, Senior Counsel, and
8 Michael Leo Pomeranz, Law Student Intern, on
9 the brief), for Eric T. Schneiderman, Attorney
10 General of the State of New York, New York,
11 New York.
12
13 Appeal from a judgment of the United States District Court for the Southern District
14 of New York (Lewis A. Kaplan, Judge).
15 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
16 DECREED that the case is REMANDED to the district court with instructions to VACATE
17 the judgment and grant appellants leave to amend their complaint.
18 Plaintiff-appellants Jacoby & Meyers, LLP and Jacoby & Meyers USA, LLC
19 (collectively “Jacoby & Meyers” or “plaintiffs”) brought this action against defendants-
20 appellees, the Presiding Justices of the First, Second, Third, and Fourth Departments of the
21 Appellate Division of the Supreme Court of the State of New York (“appellees”), contending
22 that New York Rule of Professional Conduct 5.4 (“Rule 5.4”), which prohibits non-lawyer
23 investment in law firms, unconstitutionally burdens various fundamental rights under the
24 First and Fourteenth Amendments and violates the dormant Commerce Clause. The district
25 court (Lewis A. Kaplan, Judge) dismissed the complaint for lack of subject-matter
26 jurisdiction on the ground that plaintiffs lacked standing to challenge Rule 5.4. We assume
27 the parties’ familiarity with the facts and prior proceedings, which we reference only as
28 necessary to explain our decision.
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1 The district court held that plaintiffs’ injury could not be redressed by invalidation of
2 Rule 5.4 because other provisions of New York state law, the constitutionality of which
3 plaintiffs specifically declined to challenge, independently and unambiguously prohibit non-
4 lawyer investment in law firms and would continue to prohibit them from accepting non-
5 lawyer equity investors even if Rule 5.4 were struck down. Specifically, appellees contend
6 (and the district court agreed) that New York Judiciary Law § 495 and New York Limited
7 Liability Company Law § 201 independently prohibit non-lawyer investment in law firms.
8 The district court concluded that, in light of the multiple laws prohibiting plaintiffs’ proposed
9 conduct, any ruling it might issue regarding Rule 5.4 would be merely advisory. . Plaintiffs,
10 relying on Cooper v. Aaron, 358 U.S. 1 (1958), argue that any order invalidating Rule 5.4
11 would bind all other New York state officials and therefore effectively preclude enforcement
12 of Judiciary Law § 495 or LLC Law § 201.
13 In light of the positions taken by the parties at oral argument, however, we need not
14 decide the interesting theoretical issues about standing and the nature of federal court
15 judgments that the parties debate in their briefs. At oral argument, Jacoby & Meyers
16 confirmed that it had declined to challenge the other provisions of New York state law out
17 of a concern that the district court, relying on uncertainty about the meaning of state law,
18 would abstain from deciding the case pursuant to Railroad Commission v. Pullman Co., 312
19 U.S. 496 (1941). Appellees, however, argued in their brief and at oral argument that the
20 alternative provisions of New York law unambiguously prohibit non-lawyer investment in
21 law firms. Indeed, appellees further conceded that, having taken that position in an effort to
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1 persuade this Court to endorse their position on standing, they (and the New York Attorney
2 General, who would represent any state officers named as defendants in a challenge to the
3 other relevant provisions of state law) would be judicially estopped from arguing to the
4 district court that the relevant provisions of state law are sufficiently unclear to warrant
5 Pullman abstention. In light of those concessions, Jacoby & Meyers agreed that it had no
6 objection to an order remanding the case to the district court so that it could amend its
7 complaint to challenge the other provisions of New York law as well.
8 Given these developments, we see no reason not to remand the case back to the
9 district court, in order to permit the plaintiffs to amend their complaint to name additional
10 state defendants and challenge the other provisions of New York law that prohibit non-
11 lawyer investment in law firms. Because the district court and appellees agree that Judiciary
12 Law § 495 and LLC Law § 201, as authoritatively interpreted by the state courts,
13 unambiguously prohibit non-lawyer investment in law firms, Pullman abstention is
14 unnecessary, and the district court can proceed to adjudicate the parties’ dispute as to
15 whether those statutes, and Rule 5.4, are constitutional.
16 Accordingly, we REMAND the case to the district court with instructions to
17 VACATE the judgment and grant appellants leave to amend their complaint.
18
19 FOR THE COURT:
20 CATHERINE O’HAGAN WOLFE, Clerk of Court
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