Alexander et al v. Cahill et al

Filing 43

TRANSCRIPT of Proceedings (Unredacted): Motion Argument held on 4/13/07 before Judge Frederick J. Scullin, Jr., Court Reporter: Jodi L. Hibbard. (jlh, )

Alexander et al v. Cahill et al

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK --------------------------------------------x JAMES L. ALEXANDER; ALEXANDER & CATALANO LLC; PUBLIC CITIZEN, INC., Plaintiffs, vs. 2007-CV-117

DIANA MAXFIELD KEARSE, in her official capacity as Chief Counsel for the Grievance Committee for the Second and Eleventh Judicial Districts, et al., Defendants. --------------------------------------------x Transcript of Motion Argument held on April 13, 2007, at the James Hanley Federal Building, 100 South Clinton Street, Syracuse, New York, the HONORABLE FREDERICK J. SCULLIN, JR., Senior Judge, Presiding.

APPEARANCES For Plaintiffs: PUBLIC CITIZEN LITIGATION GROUP 1600 20th Street N.W. Washington, D.C. 20009 BY: GREGORY A. BECK, ESQ. BRIAN WOLFMAN, ESQ. NEW YORK STATE ATTORNEY GENERAL 615 Erie Boulevard West Suite 102 Syracuse, New York 13204 BY: PATRICK F. MacRAE, ESQ.

For Defendants:

JODI L. HIBBARD, RPR, CRR, CSR [phone]

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2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Beck. THE COURT: All right, Mr. Beck. You gentlemen. MR. MacRAE: Your Honor, Patrick MacRae, (Open Court, 11:10 a.m.) THE COURT: motions here first? THE CLERK: THE COURT: THE CLERK: I have Alexander & Catalano first. All right. Court now calls James L. Which order are we hearing the

Alexander, Alexander & Catalano, Public Citizen, versus Diana Maxfield Kearse, et al., it's 07-CV-117, appearances for the record, please. Appearances for the record. My name is Greg Beck, your Honor, I I'm here with my co-counsel Brian

MR. BECK: represent the plaintiffs.

Wolfman, and my client James Alexander is also here at counsel table. THE COURT: Good morning, thank you,

New York State Attorney General's office for the defendants herein. THE COURT: Thank you, Mr. MacRae. Is that

why we have so many lawyers here today? Anyway, interesting lawsuit. sorry, Mr. Wolfman? MR. BECK:

I assume it is.

Let me ask first of all -- I'm

I'll be arguing today, your Honor.

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3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 problem. with that? represent both Alexander & Catalano and the Public Citizen, Inc.? MR. BECK: That's correct, your Honor, we

represent all the plaintiffs. THE COURT: But you're a not-for-profit

organization, is that correct? MR. BECK: Public Citizen is a not-for-profit

corporation, that's right. THE COURT: All right. There's not a problem

I've never seen that before where a

not-for-profit organization represents individuals as well. MR. BECK: I don't -- I'm not aware of any

We've certainly, we have a litigation group within

Public Citizen, we do a fair number of cases in federal and state court. THE COURT: Are you retained by outside people

to do work for them as well? MR. BECK: Yes, definitely, your Honor. We

have -- we're a 10-attorney nonprofit law firm which is part of the Public Citizen umbrella organization. litigation. THE COURT: Mr. Alexander, you're a member of Public Citizen

this group here, citizen group? MR. ALEXANDER: THE COURT: No, I'm not a member as yet.

You're not?

JODI L. HIBBARD, RPR, CRR, CSR [phone]

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4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ALEXANDER: No, but having found out the

good works they do, we do intend to join. THE COURT: You may want to join after the

lawsuit because otherwise you may have a problem representing Mr. Alexander, if he's a member. MR. BECK: For standing purposes.

Well, your Honor, we're asserting

different bases for standing as for different parts of the lawsuit, but we can bring a suit on behalf of our members in New York and that's the basis of Public Citizen standing in the case, which I think is separate from the standing that Alexander & Catalano and James Alexander bring to the case, which is as individual attorneys who are directly affected by that. The Supreme Court in Virginia Board of Pharmacy and in subsequent cases has made it clear that the main purpose of the commercial free speech doctrine is to protect consumers in their ability to access information, and in fact in the Virginia Board of Pharmacy case itself, the plaintiffs were a consumer group, they were consumer groups, not individual pharmacists and the first holding of the court in that case was that those consumer groups had standing to bring an action, a First Amendment action on behalf of their members in the state. THE COURT: Well, we're going to jump right

into the standing issue then, which is part of your

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5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cross-motion, Mr. MacRae, and I think it's probably appropriate we deal with your cross-motion before we discuss the substance of the motion by the plaintiff here for preliminary injunction. The standing issue that I brought up

and that Mr. Beck is addressing here is somewhat of a problem. You've pointed out here in your argument that you

do not feel that the organization has standing to represent -- to take part in this lawsuit. MR. MacRAE: That's correct, your Honor. The

fundamental basis for the state's position or for the defendant's position with regard to the standing issue is that -- I should back up just a moment, your Honor, and say that in -- I have received counsel's reply to my papers and as one of the exhibits they attached an affidavit of someone who had indicated that all corporate fees had been paid by Public Citizen so having no -- nothing to refute that, I really don't have any basis for arguing further on that point. However, the entity itself argues that it has standing in this case because of a potential for harm to the organization and yet all it has as a connection to New York State by its own acknowledgment is the presence of some members who happen to join an out-of-state organization by having paid a certain annual fee to the organization to support its mission which its websites indicate are largely

JODI L. HIBBARD, RPR, CRR, CSR [phone]

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6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 focused on legislative matters and things of that sort at the federal level. The -- there is no indication that it has any

presence in New York, it says that it -- that if these, if this injunction is not granted, that it would have a potential risk of harm in the event that it should seek to represent some of its members on a pro bono basis in New York, but there's no indication that it -- at least there's no allegation in the papers that it has or even has any intention to actually do so. That being the case, your Honor, it, it's -what they're really relying on then is just simply the mere transmission of website information that can be received in New York. And as the Court is aware, I'm sure, do a website

search and you get, you can get things from jurisdictions far removed from wherever you may live. THE COURT: Well, I don't know what criteria

you're referring to, what case would hold that that's necessary, Mr. MacRae, but I will point out that as the defendants have, or plaintiffs have identified, there is a leading case here, dealing with standing, association standing, United Food & Commercial Workers, which they cite in their reply papers, and that case is Supreme Court 1996, made it clear that an association has standing to sue on behalf of its members when a member would have standing, the interests to be protected are germane to the association's

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7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 purpose, and neither the claim nor the relief requested require the participation of its members. That's why I was

getting to that point, Mr. Beck, about Mr. Alexander, whether he's a member or not. But you only argue the association

standing in your papers. MR. BECK: That's right, your Honor, we're

solely asserting at least at this point that our standing comes from our members in New York. THE COURT: to meet, Mr. MacRae. MR. MacRAE: The problem that I see with that, And that's the criteria they need

though, your Honor, is that there's no indication that the members have any interest in this action. There's -- there's

a representation that merely because there are members in New York State, that gives them standing. But in reality,

there's no indication that those members are in any fashion affected by or influenced by whatever the outcome of this case may be. THE COURT: Well, the papers seem to indicate

that they are, there are First Amendment issues are involved and there are members here in New York State. MR. MacRAE: Only, however, if Public Citizen

were to, were to proceed, were to actually practice in New York. It says that, in its papers, it says it only is a

potential impact in the event that if it should seek to -- I

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8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 aside. point? MR. BECK: Well, your Honor, as a preliminary can't think of the word. THE COURT: So you're saying that the

interests to be protected are not germane to the association's purpose, is that what you're saying? MR. MacRAE: THE COURT: That's correct. All right. Mr. Beck, as to that

matter I should just point out there's been no challenge to the standing of Alexander & Catalano and James Alexander. THE COURT: That's true. I'm not addressing

their position at this point, talking about the organization. MR. BECK: I just wanted to set that part

And as you correctly identified, your Honor, the

pressing United Food & Commercial Workers does not include any requirement of the sort that the state seeks to impose, that members have some sort of leadership role in the organization, that's simply not an element of the test. And

multiple other cases hold that members have standing, that organizations have standing on behalf of their members. Another case you could look at is Havens Realty v. Coleman, 455 U.S. 363 which holds that an organization may assert claims on behalf of its members when its members suffer an injury, as a result of the challenged regulation. THE COURT: Well, Mr. MacRae's attacking one,

JODI L. HIBBARD, RPR, CRR, CSR [phone]

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9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the one criteria they are attacking is whether or not your interests is germane to the purpose of the organization, you argue that it is. MR. BECK: And as we explain in our brief,

your Honor, Public Citizen is an organization devoted to free speech and consumer rights issues. We've been involved in

attorney advertising and commercial free speech issues since the Virginia Board of Pharmacy case in 1976 which we, in which we represented the consumer rights groups in that case, and we've consistently advocated on behalf of consumers' rights to receive commercial information that may be of interest to them. And I just want to make clear that we're not simply, I think the defense is confusing the idea that Public Citizen is directly impacted by advertising in the state against with -- with the Public Citizen's interest in protecting its members' rights to receive information, and we're not just saying that we want to advertise in the state, we're saying that our members have a right to receive advertising from any lawyer and it could be a lawyer down the road, not necessarily Alexander & Catalano, not Public Citizen, but some other lawyer who needs to distribute commercial information to consumers, and that's the kind of situation that Virginia Board of Pharmacy deals with, which -- in which consumers are actually cut off from

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10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 information that they have interest in and that's the sole basis of standing that we're asserting at this point. THE COURT: And I think you summed it up, it's

the need for your consumers, association members, consumers to receive information about the availability and quality of legal services. MR. BECK: THE COURT: That's correct, your Honor. Now as to the participation or

need for participation by any member of your association, your position is there is no need for it? MR. BECK: No, your Honor, there's no members

of the organization who've been involved in the litigation directly and there will be no need for that. THE COURT: Let me skip back now, kind of

jumped over a couple other points that the defense cross-motion had brought forward. proper parties involved here. MR. BECK: Well, your Honor, I think that the Whether or not there are

defendant's brief pretty much sums up the important role that chief counsels play in the important role process. THE COURT: Let me just ask Mr. MacRae then,

isn't it true, Mr. MacRae, that the chief attorney may investigate, do investigation of complaints of attorney misconduct, given the fact they're involved with some degree of enforcement and decision making with respect to the

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11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 enforcement, doesn't that satisfy Ex Parte Young requirement that they have some connection with the enforcement of the act and be a properly named party? MR. MacRAE: Your Honor, the chief counsel

serve only as a functionary of the committees which are empowered only through the appellate divisions. The chief

counsel do not investigate except on the receipt of complaints or information provided to them. They do not have

any independent power or authority to act except in the capacity given to them by the committee which receives its authority from the appellate divisions. THE COURT: But they are involved with some

enforcement by virtue of their office. MR. MacRAE: Well, they are, I don't know that

that's actually an accurate description of it, your Honor. The committee -THE COURT: initiating investigations. MR. MacRAE: THE COURT: Yes. They do include making Well, the duties do include

recommendation concerning whether a complaint proceeds to a formal disciplinary proceeding. MR. MacRAE: THE COURT: Correct. The duties they have, the officer

has, as such, aren't they acting as enforcement officers?

JODI L. HIBBARD, RPR, CRR, CSR [phone]

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12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Young? MR. MacRAE: Well, your Honor, no, I don't MR. MacRAE: They, only -- they're only able

to enforce if given that authority to do so by the committee. THE COURT: But that's their job, I understand

that, but their job is to do that. MR. MacRAE: THE COURT: Yes. Regardless of what source they

have for that authority, whether it be statutory, whether it be committee decision, their job is to enforce. MR. MacRAE: THE COURT: That's -- well -Doesn't that satisfy Ex Parte

believe so, because I think if, we need to step back and look at what enforcement is. To enforce the disciplinary rules is

an act of enforcement rather than just simply the presentation of information from which an enforcement can be undertaken. I believe that in the use of the -- of the

disciplinary rules, it's the appellate division that actually -- that actually enforces. The counsel will

investigate the allegations and they will make recommendations to the committee which then can either accept or reject, essentially, accept or reject those recommendations. If they accept them, then counsel is given

the responsibility to move forward and present the results of their investigation to the appellate division from which a --

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13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that? MR. BECK: Well, your Honor, I think the the more formal disciplinary process can be -- can unfold. But the counsel have no independent authority to act on their own, and yet the appellate division and committee has an independent responsibility to proceed with enforcements regardless of their -- of their chief counsel. THE COURT: Mr. Beck, do you wish to reply on

defense is just confusing the concepts of enforcement and adjudication. For example, if a plaintiff wanted to enjoin

an unconstitutional law, federal law, they would sue the prosecutor, not you, your Honor, the judge, who would be ultimately responsible for making the decision. THE COURT: Isn't it true when a complaint

comes in, that the officer would have the authority to initiate an investigation? MR. MacRAE: THE COURT: I'm sorry, your Honor? Without going before the appellate

division, the officer would have the authority to initiate the investigation, the chief attorney? MR. MacRAE: Chief attorney would have the

authority to undertake an investigation if -THE COURT: When a complaint comes in, the

chief attorney has the authority to undertake an investigation, yes?

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14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MacRAE: I believe that it first goes to

the committee for an evaluation to determine whether or not there would be a basis to undertake an investigation. THE COURT: How can they tell if it's a mere I think you may be My

complaint without the investigation?

misunderstanding the role of the chief attorney there.

understanding is, correct me if I'm wrong, that when the complaints come in, his office initiates investigations, as Mr. Beck says, and then you have the result of that investigation going before the appellate division, am I wrong about that? MR. MacRAE: Let me just take for just a

second, your Honor, I think I just need to -- a little clarification on what -- on a fine point of that. THE COURT: I thought, in fact I thought you

conceded to that in your papers, it was the duty of the chief attorney to initiate investigations. MR. BECK: Your Honor, I think I understand

how the process works if you don't mind if I jump in. THE COURT: MR. BECK: All right, what's your view of it? From my understanding of the

regulations, the defendants cite the chief attorney is the one that receives the complaints in the first instance, initiates an investigation and if the attorney believes that there's cause to bring charges, then brings the charge in

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15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 issue there. And lastly, in your cross-motion, you ask the Court to consider abstaining from deciding the issue until New York State has had an opportunity to review and decide the matter, and I think you're referring to the Burford front of the disciplinary committee and at that point recommends an outcome. That's how the process -That's how I understand it to be. That's correct. It doesn't go initially to the

THE COURT: MR. MacRAE: THE COURT: appellate division. MR. MacRAE: THE COURT:

That is correct, your Honor. So I think we have satisfaction

notwithstanding your arguments that the Ex Parte Young doctrine does apply, that the criteria has been met. So I'm

going to deny your motion on that grounds and also on the standing grounds. Now with respect to right to sue, you suggest, Mr. MacRae, that the Public Citizen is prohibited by the New York State Business Law, but I think now that you've received some reply on that matter, that section of law doesn't, you're referring to 1312(a), does not apply, does it? MR. MacRAE: THE COURT: That's correct, your Honor. All right. So we don't have any

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16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 abstention doctrine, are you not? MR. MacRAE: THE COURT: Yes, your Honor. All right. And on that, as the

court makes quite clear, is appropriate in cases "involving complex issues of state law for which the state has specialized knowledge and a centralized system for judicial review." That's not the case here, though, is it? MR. MacRAE: I believe it is, your Honor. In

this case we have rules of attorney conduct that are extensive and broad, and there is a very thorough and complete system in place for the application of those rules, and it consists, as we've indicated, the initiating with the -- or beginning with the investigation, determination as to whether anything was done improperly, at that point it can then be, it can be resolved either at the committee level, if not at that point, then it would go to the appellate division and from the appellate division it would go directly to the New York State Court of Appeals for final resolution. THE COURT: Well, that may be, but the only

issue before this court is the federal claim challenging the constitutionality of the rules under the First Amendment. MR. MacRAE: Yes, and constitutionality is

always available as a defense in any of the proceedings before -THE COURT: But that's the only issue before

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17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this court, it's not a complex state issue which I need to defer to the state courts for. MR. MacRAE: Well, your Honor, the counsel

quoted in his reply papers the Felmeister case, and although it did actually support their proposition that the court elected not to abstain under the circumstances that presented which were essentially the same as what we have here where there are rules that have been asserted and, or rules that are being challenged, but there has been no underlying proceeding commenced by the disciplinary committee, and thereby no way to really assess how the disciplinary committees or the appellate division would even interpret these new rules. There was a determination in Felmeister

that even though they, the Second Circuit, or excuse me, the Third Circuit in that case found that abstention wasn't appropriate, that the case should nonetheless be dismissed on ripeness grounds, and I would suggest to the Court that even if abstention wasn't to be considered here, that on the basis of what counsel for the plaintiffs have submitted, that ripeness is clearly an issue to allow the state courts to assess its own rules and make a determination as to the constitutionality of them. THE COURT: Mr. Beck, as to the ripeness

issue, is there a ripeness issue here? MR. BECK: There's not a ripeness issue, your

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18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. Felmeister discussed ripeness but in that particular

case the plaintiff had not identified exactly how his particular ads would violate the regulations and the court was concerned about that, and concerned about how it would adjudge whether the rules would affect that lawyer if the lawyer couldn't explain how his ads were affected by the rules. Since Felmeister was decided, there have been two or three Supreme Court cases that have involved similar situations to this, where a professional has sought to advertise but because of a regulation, has refrained from doing so, forced to refrain from doing so and thus was able to bring a 1983 claim in federal court. In particular that happened in the Went For It case and Edenfield case as well. And you might -- two cases

that really discuss this in detail are the Ficker case, which is Fourth Circuit case cited in the briefs, where the Court specifically addresses the question of what to do when an attorney sues to enjoin allegedly unconstitutional attorney advertising regulations, but hasn't actually been brought up on disciplinary charges yet. In that case the court held

that as long as, this comes from a line of Supreme Court cases including Steffel v. Thompson, that if the attorney is forced to refrain from engaging in speech that the attorney otherwise would have engaged in, in that case then a claim

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19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will lie, there is standing and the claim is ripe for adjudication. And that -THE COURT: What's the cite on that case?

You're supposed to know it off the top of your head, come on. This is just a test, all right, never mind. MR. BECK: THE COURT: MR. BECK: I have it right here, your Honor. Never mind. 119 F.3d 1150, and the Schwartz v.

Welch case also I would draw your attention to which is Southern District of Mississippi which is in our briefs as well and that's 890 F.Supp. 565, it discusses the same issue. There's been innumerable cases where attorneys have brought lawsuits against disciplinary rules. THE COURT: Is there a way to unwind him or I've got

once he's wound up, you got to let it run down?

your point, thank you, and I think you have the law on your side on this one without going much deeper than this. I

don't think the Burford abstention applies here, Mr. MacRae, and I'm going to deny your motion on that grounds as well. So with respect to your cross-motion, denied on all four grounds, but that brings us back to the motion for preliminary injunction. First issue I wish to address with you, I don't know if I stated it or not, but for the record, the plaintiffs had requested the Court to grant a preliminary

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20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this case. injunction preventing the enforcement of the selected provisions of the New York Disciplinary Rules of New York's Code of Professional Responsibility which took place on -took effect on February 1st, 2007. Now generally speaking, the proponent of a preliminary injunction must establish that it will suffer irreparable harm in the absence of an injunction and either a likelihood of success on the merits, or a sufficiently serious question going to the merits to make them a fair ground for litigation and a balance of hardships tipping towards them. However, when a proponent challenges

government action taken in the public interest, pursuant to statutory or regulatory scheme, it has to go a little further; in addition to establishing irreparable harm, it must establish that there is in fact a likelihood of success on the merits. Now here in this case, we have something additional as well, if the injunction would alter the status quo rather than maintain it; in other words, if the injunction is an affirmative direction, mandatory direction, rather than prohibitory direction, the proponent must show by a clear and substantial basis there is a likelihood of success on the merits. And gentlemen, I think that's where we are on You wish to be heard on that?

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21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BECK: THE COURT: MR. BECK: Yes, your Honor. All right, Mr. Beck. Well, as you observe, your Honor,

the key issue in this case is the likelihood of success on the merits. And the state seeking to restrict the

fundamental right of freedom of speech faces a very heavy burden. The state in this case has simply failed to carry In fact the state cannot justify its

that burden.

regulations based precisely on the source of the grounds that the Supreme Court has repeated -THE COURT: Well, before you get to the

merits, let's talk about the standard. MR. BECK: THE COURT: Okay. That's what we're talking about, I

believe the standard, based upon what you're asking this court to do here, is going to alter the status quo, because you already have, you already have the rules in effect being applied, and secondly, it is more of a requirement that things change and the heightened standard should, it's more prohibitory than mandatory, wouldn't you say? MR. BECK: Yes, your Honor, I'm sorry if I

misunderstood your initial question, and yes, we believe it's purely prohibitory, it purely seeks to prohibit enforcement of rules that are already in effect. We're not asking for

anything to change, simply for the duration of the

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22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 asking for. MR. BECK: Temporary complete relief, that's litigation, the rule should not be enforced, and that relief is in no way complete and no way requires mandatory action on behalf of any government officials. THE COURT: Well, one thing, it will alter the

status quo, but even though it's prohibitory rather than mandatory, would you have to have complete relief if I grant the preliminary injunction, wouldn't it be the same as being successful on the merits? MR. BECK: No, your Honor, because the relief

would be purely temporary, it would only be relief for the length of the litigation. THE COURT: But it would be the relief you're

right, but the kind of complete relief that's dealt with in the case, and the line of reasoning that you're talking about is, for example, if a plaintiff brings a complaint to allow a parade that was prohibited by state officials, the parade happens, at that point the plaintiff's gotten all the relief that the plaintiffs, once the case is over, it need not go any further. THE COURT: Similarly here, the advertising

would go forward, once the advertising is out there, you can't withdraw it, it's done, it's over, out there. MR. BECK: For the duration of the litigation,

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23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 but -THE COURT: For whatever ads are able to be

received and to be promoted during that period of time, yes. MR. BECK: But your Honor, I respectfully

would suggest that I just don't think that that can be characterized as complete relief because that, I mean that's a typical situation in a preliminary injunction. THE COURT: Until and unless it's changed,

it's complete relief, right? MR. BECK: Right, and the complete relief

looks at, whether what you get in the preliminary injunction is all you're asking for in the case, that's not all we're asking for, we're also asking for permanent injunction and declaratory judgment that the rules are unconstitutional. THE COURT: Mr. MacRae, you want to address

that point, whether it's necessary to show it's a permanent injunction, do they have complete relief? MR. MacRAE: Your Honor, as you have pointed

out, during the period of the preliminary injunction would be in effect, plaintiffs would have complete relief that's sought in the complaint. The harm that would be affected by

that is, has occurred on every time that an ad is put out there, and assuming that there is merely a possibility of success on the merits, there's an equal possibility at least of -- or at least there's -- there is also a possibility of,

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24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that the plaintiffs will not be successful on the merits. which case during that, if the injunction is then subsequently denied and the rules are found to be constitutional, then for the entire period before that decision is made, the public has been continue -- has continued to suffer the insult of the improper advertising. And I should point out, your Honor, that what's important to keep in mind here is that this is not a ban on advertising, this is a -- this is merely a restriction in certain forms of advertising. To the best of my In

knowledge, I'd have to say, your Honor, first that prior to my involvement in this case, I never saw any of these ads that we have on CD before the Court. THE COURT: However --

Mr. Alexander, he hasn't seen any

of your ads, you better do a little more research, get a few more stations involved here. MR. MacRAE: Have to involve public

television, your Honor, but on the other hand, since then I have seen some of their ads which are still on TV since the -- since these rules have gone into effect, obviously they are modified to comply with the new rules. But the fact

is that the plaintiff doesn't stand to suffer in the sense that he's not prevented from -- or they're not prevented from advertising, they're not prevented from having their internet websites up and available to the public, but what does happen

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25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 if there is an injunction placed, put in place, even preliminarily, is that the public is, continues then to be subject, to be bombarded by the advertising that is the subject of these new regulations. THE COURT: All right. Well, I'm not sure,

arguably you may have a point on that temporary relief being not quite total relief, Mr. Beck, but I think it's close enough and I still think there is, you're altering the status quo by granting this injunction, so I do think the higher standard does apply, and I'm going to use that higher standard. Having said that, since I don't think, Mr. MacRae, you've really addressed any of these issues in detail because you focused on your cross-motion more than anything else, I think your recommendation that we have a consolidated trial on the merits for the motion is a good one. I think rather than go through this twice, we can have,

we can have a trial that will address the needs of both sides as soon as possible. So I'm going to apply the higher

standard, irreparable harm, I think both parties realize that First Amendment issues normally meet that standard, but that there must be a clear and substantial showing of likelihood of success on the merits, all right. Now, for a consolidated trial/hearing, how many days do you think you'll need? I know you haven't gone

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26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 through discovery yet, so can you give me an idea? MR. BECK: Your Honor, first just to clarify,

I just want to know if this means that you're denying our motion for preliminary injunction. THE COURT: consolidate it. MR. BECK: As far as plaintiffs are concerned, I'm reserving on it, I'm going to

your Honor, it's clear to us that the defendants aren't -don't have any evidence to present and I would, I would request that your Honor ask defendants if they intend to present any evidence. If they do intend to present evidence,

then I think it's reasonable to give them some time, but I also think that in the meantime, the preliminary injunction should go into effect to protect my clients' First Amendment rights which is an irreparable harm. THE COURT: I'm sure you do believe that, I The ruling of the Court

have no question you believe that.

is that I'm going to reserve on the motion and consolidate it with the trial on the merits pursuant to Rule 65(a)(2) of the Federal Rules of Civil Procedure. And as you asked for in

the alternative in your papers, I think it's a good suggestion. We need to set a date for it, that's why I'm asking how many days it will be. Mr. MacRae, there is some

discovery you have to provide with respect to the basis for

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27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 earlier. MR. MacRAE: don't know offhand. THE COURT: Could probably expedite that if I didn't bring it with me so I that. some of these findings when you implemented the amended rules, so you'll need to do that. MR. MacRAE: Yes, your Honor, and I would also

ask for some discovery from the plaintiffs since they have alleged specific economic damages as a result of the imposition of these rules. So I do believe there is -- there

is discovery that would be necessary for the trial of the matter. THE COURT: Well, there's no question about

Now, you do have a Rule 16 conference at least

scheduled I believe with Magistrate Judge Lowe, when is that scheduled for, is it June? MR. MacRAE: THE COURT: I believe it is June, your Honor. 16th or something. I saw it

you wish, might be a good idea, contact Magistrate Judge Lowe. MR. BECK: We would appreciate that, your

Honor, because we would like relief as soon as possible. THE COURT: All right. Now, if we look to a

trial on the merits here, we're talking two or three days, I wouldn't think any longer than that, it's nonjury.

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28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MacRAE: THE COURT: MR. MacRAE: Yeah. Because of injunctive relief. I would think two- or three-day

trial, bench trial would be sufficient. MR. BECK: THE COURT: I agree, your Honor. All right. Can we find a date?

Our soonest, we looked at this earlier, as I recall our soonest date is going to be in June. THE CLERK: THE COURT: your schedules? MR. MacRAE: THE COURT: MR. BECK: THE COURT: For trial? For trial. That should be fine, your Honor. All right. We'll have to advance June 18th. June 18th, how does that fit into

this with discovery with Magistrate Judge Lowe so contact him right away, you contact him right away, advise him what's going on. Let me focus you on what I think is important for the trial on the merits. discovery. A lot of it will depend on your

And it really needs to focus on the clear and

substantial likelihood of success on the merits, as I said, Mr. MacRae, I don't think the irreparable harm issue is going to be that difficult for the plaintiffs to overcome. I would suggest that you follow the Central

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29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Hudson Gas & Electric Corporation criteria, and that is if the government seeks to regulate speech that is not inherently misleading, although you may suggest that it is, but where it is not inherently misleading or speech that has potential to be presented in either misleading or nondeceptive manner, the government is required to, 1, assert a substantial interest in support of the regulation; 2, demonstrate that the restriction directly and materially advances the interest of the government, public interest; and 3, establish that the restriction is narrowly drawn, especially the last two bases. that. I think we need to focus on

I think in many respects you already have, but I don't

think the defendant has done so as of yet but I think that needs to be done. I would also suggest you maybe break this down into different categories because you have different rules here. Let me suggest this to you. It may be easier for the

Court to follow I think for the development in the course of the trial for us to decide the issues if you break it down in these three categories. First, the plaintiffs have challenged rules concerning misleading advertisements. The amendments I think

are 22 NYCRR Section 1200.6(c) which prohibits endorsements and testimonials on matters still pending, portrayals of judges, techniques to obtain attention which lack relevancy

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30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to selecting counsel, portrayals of lawyers with characteristics unrelated to legal competence, and also the pop-up advertisements. there. The second, plaintiffs challenge 30-day blackout rules for contacting injury or wrongful death victims, personal injury or wrongful death victims. That That could be one category, that area

could be a different category because I think they're different issues involved. Third, the plaintiffs challenge the rules as they apply to lawyers whose primary purpose is not pecuniary gain, such as the Public Citizen. I think those are three

different categories to be addressed separately, all right? Any questions about this? MR. MacRAE: THE COURT: MR. BECK: THE COURT: No, your Honor. Okay. One moment. All right.

(Pause in Proceedings.) MR. BECK: Your Honor, I just wanted to raise

one point which is that we suspect that much of the disputed facts, to the extent there are any in this case, the facts I should say will be able to be resolved through stipulations and similar methods and we wanted to bring to your attention the possibility that at some point it might make sense to

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31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 resolve the case on a summary judgment basis rather than on a trial basis. THE COURT: It may be. I think I need to have

more discovery, I need to have more information from the defense side here before I can really make any rulings. MR. BECK: THE COURT: as a trial date. All right, thank you, your Honor. All right. So let's look for that

If it can be resolved short of that, fine,

but I will make sure both of you contact Magistrate Judge Lowe and we'll let him know today that's forthcoming as soon as he can fit it into his schedule, all right? gentlemen. Appreciate your arguments. MR. BECK: Thank you, your Honor. Thank you,

(Court Adjourned, 11:54 a.m.)

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CERTIFICATION

I, JODI L. HIBBARD, RPR, CRR, CSR, Official Court Reporter in and for the United States District Court, Northern District of New York, DO HEREBY CERTIFY that I attended the foregoing proceedings, took stenographic notes of the same, and that the foregoing is a true and correct transcript thereof.

________________________________ JODI L. HIBBARD, RPR, CRR, CSR Official U.S. Court Reporter

JODI L. HIBBARD, RPR, CRR, CSR [phone]