Procedural barriers to court

by Nicole Flatow

Access to the courts is under assault on a number of fronts, at a time when more and more people have legal issues arising from the economic downturn, The Huffington Post reports.

At the state level, slashed state court budgets have become a serious concern, resulting in significant staff resource cuts, reduced operating hours, increased fees and cases delayed for as long as ten years. “[M]any court advocates bristle that the third branch of government is being treated as nothing more than a state agency begging for scraps,” the article notes.

Meanwhile, “the attack on courts at the state level is coinciding with one of the worst federal judicial crises the country has seen,” the article explains. Just last night, the Senate recessed for a full month without voting on 20 fully vetted nominees.

Then there are legal services organizations, which are suffering blows in federal, state and private funding. While the economic downturn meant cuts to local and state funding for many organizations, and a loss of other sources of revenue such as Interest on Lawyer Accounts and private donations, the House Appropriations Committee has proposed a 26-percent cut to the Legal Services Corporation budget, which would require legal services organizations to turn away some 235,000 people, according to LSC estimates.

All of this means that people coming into the court system without representation have nowhere to turn for help.

“When people don't have a lawyer to represent them and explain the court system's complicated procedures to them, they need extra assistance from judicial staff -- who are now in short supply because of the budget cuts,” the article explains.

Not long after the U.S. Supreme Court limited securities fraud lawsuits against a mutual fund’s investment adviser in its June 5 – 4 opinion in Janus Capital Group v. First Derivative Traders, Howard A. Fischer wrote that the decision may have left another avenue open to pressing a securities fraud claim.

Fischer, a senior trial counsel in the New York Regional Office of the Securities and Exchange Commission (SEC), wrote for Thomson Reuters Accelus that the Janus opinion may have opened the door for actionable claims to be lodged pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO).”

The New York Law Journal reports, however, that at least one federal appeals circuit has “rebuffed” an attempt by investors harmed by the Bernard Madoff Ponzi scheme to use a RICO action to recover some of their loses.

The U.S. Court of Appeals for the Second Circuit, Mark Hamblett for the Journal reports, held that the “RICO claim was precluded by § 107 of the Private Securities Litigation Reform Act, 18 U.S.C. § 1964, as the court adopted a restrictive analysis on the bar against RICO actions in securities cases.”

The Journal notes that Circuit Judge Robert D. Sack “said the scope of that bar is unsettled in the circuit, so the question was whether it bars all RICO claims involving the purchase or sale of securities “or only RICO claims in cases where that plaintiff could have asserted a fraud claim against the named defendant.”