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Appeal from the United States District Court for the Western District of Texas

The Supreme Court having held in this case that, for purposes of the Takings Clause of the Fifth Amendment, interest earned on client-funds deposited in demand accounts pursuant to the Texas Interest on Lawyers Trust Accounts (IOLTA) program is the “private property” of the client, Phillips v. Washington Legal Foundation, 524 U.S. 156, 160, 172 (1998), and the Court having remanded this case for consideration, inter alia, of two other subparts of the Takings Clause (whether there has been a “taking” and, if so, what “just compensation”, if any, is due, id. at 172), and the district court, following a bench trial on remand, having concluded, inter alia, there was neither a compensable loss nor a taking, the principal issues at hand are: whether there can be a taking when, without the cost-savings provided by the IOLTA program, client-funds would not earn “net” interest; and whether, even if there is a taking, prospective injunctive relief can be a remedy.

Because we hold that the Fifth Amendment is violated, we need not reach Appellants’ claim that the IOLTA program violates the First Amendment as well. REVERSED and REMANDED.

 
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