The decision comes after U.S. District Judge Paul Crotty ruled in 2022 that the UPL statutes, as applied to the nonprofit plaintiff, trigger strict scrutiny as a content-based speech regulation. The ruling blocked James from taking action against Upsolve and the Rev. John Udo-Okon, a South Bronx pastor the organization is working with to coach people being sued by debt collectors.
In Tuesday's published opinion, U.S. Circuit Judge Richard J. Sullivan agreed that the rules regulate speech, but called that regulation "content neutral."
"The UPL statutes apply to any individual practicing law, regardless of the type of law he practices or the message or position that he seeks to promote through his legal practice," he wrote. "As the attorney general correctly notes, 'The [UPL] statutes apply equally to individuals who provide legal advice only to creditors and to those who advise only debtors.' Accordingly, it is clear that the UPL statutes do not license only certain views that the state finds acceptable, nor do they refuse to license or condemn less favored viewpoints."
The panel also maintained that the statutes "do not prohibit public discussion of an entire legal topic."
"As New York courts have repeatedly held, individuals are free to discuss legal topics or provide generalized advice, including by publishing books and guides, without running afoul of the UPL statutes," it added.
The New York Attorney General's Office did not respond to a request for comment Tuesday.
"The most important thing in today's decision is that it squarely holds that restrictions on legal advice are restrictions on speech subject to First Amendment scrutiny — something that regulators nationwide would have told you was absolutely false," Institute for Justice deputy litigation director Robert McNamara, who represents the plaintiffs, told Law360 in an email Tuesday. "It's unfortunate that it also lays out a separate First Amendment test where licensing laws can be justified with less evidence than other speech restrictions, and we look forward to asking the Supreme Court whether an occupational-licensing requirement is also a special permit to censor speech."
When the lawsuit came before the court for oral arguments back in May, Assistant Solicitor General Cleland Welton told the panel that the court's 2023 holding in Brokamp v. D.C., which said that New York's licensing requirements around mental health counseling are content neutral and therefore only subject to intermediate scrutiny, "squarely forecloses" Upsolve and Udo-Okon's First Amendment argument.
In Tuesday's opinion, the court said that the same logic that determined those requirements to be content neutral supports the same conclusion for the UPL statutes.
"[In Brokamp], we concluded that the licensing requirement was not a content-based restriction on speech because it 'd[id] not turn on the content of what a person says,'" it noted. "Specifically, we observed that the requirement did not permit the state to 'license views it finds acceptable, while refusing to license less favored or more controversial views.' Nor did it 'condemn certain ideas or viewpoints' or 'prohibit[] public discussion of an entire topic.' Rather, the 'requirement applie[d] — regardless of what [was] said — only to speech having a particular purpose, focus, and circumstance.'"
Upsolve and Udo-Okon preemptively filed their lawsuit in early 2022, asking the court to make clear with an injunction that the laws against unauthorized practice of law do not apply to the work they do, including person-to-person advice. The nonprofit sought to train nonlawyers as justice advocates to help pro se defendants facing debt-collection actions.
Several legal bodies and individuals weighed in on the case as amicus parties for both sides, including the NAACP for the plaintiffs. According to the Second Circuit opinion, New York tried to simplify the process in 2015 after many defendants ended up with default judgments due to their failure to appear in court, despite reason to believe that some of them didn't owe any or as much as what the lawsuits claimed. The state created a one-page form that defendants can submit to the court, but Upsolve has called them "inadequate" due to some of their legal language, which may be unclear to some New Yorkers.
U.S. Circuit Judges Richard J. Sullivan, Pierre Nelson Leval and Sarah A.L. Merriam sat on the panel for the Second Circuit.
Udo-Okon and Upsolve are represented by Robert McNamara and Brian Morris of the Institute for Justice.
New York is represented by Cleland Welton of the Office of the New York State Attorney General.
The case is Upsolve Inc. et al. v. James, case number 22-1345, in the U.S. Court of Appeals for the Second Circuit.
--Editing by Adam LoBelia.
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