OVERVIEW:
The Supreme Court's decision in Hein v. Freedom from Religion Foundation, Inc.[1] (June, 2007) continues to reverberate through the lower federal courts. On March 28, Judge Charles Simpson of the U.S. District Court for the Western District of Kentucky dismissed a lawsuit brought by Alicia Pedreira ("Pedreira") and other Kentucky taxpayers against Kentucky Baptist Homes for Children, Inc ("KBHC") and several state officials. The basis for the dismissal was the plaintiffs' lack of standing (or right to bring a case) to pursue claims that Kentucky's financial support for KBHC violated the Establishment Clause.
The case arose out of KBHC's decision to dismiss Pedreira from her position as a Family Specialist at a group home for children, after KBHC learned that Pedreira was living in an openly homosexual relationship. Pedreira and another plaintiff, Karen Vance, brought suit against KBHC, alleging unlawful religious discrimination under state and federal law. Joined by seven Kentucky taxpayers, Pedreira and Vance also named relevant state officials as defendants in the suit. The plaintiffs asserted that state funding for KBHC facilities violated the First Amendment's Establishment Clause. In particular, the complaint alleged that the state was unlawfully funding KBHC's religiously discriminatory employment practices as well as its religious indoctrination of children placed by the state in KBHC homes.
In 2001, Judge Simpson dismissed the claims by Pedreira and Vance that KBHC's employment policies violated state or federal anti-discrimination statutes. As a result, the judge also dismissed at that time the Establishment Clause claim against the state officials based on allegations of support for religious discrimination in employment. Judge Simpson refused, however, to dismiss the Establishment Clause claims based on allegations that KBHC was a "pervasively sectarian" entity, and that the state was impermissibly funding religious experience at KBHC.
In light of the Supreme Court's decision in Hein, the defendants moved once more to dismiss what remained of the case on the ground that the plaintiffs lacked standing to pursue it. On March 28, Judge Simpson granted this motion and dismissed the case. He concluded that under the now-controlling principles reflected in Hein, taxpayers no longer had a right to challenge the constitutionality of public funding of KBHC.
DESCRIPTION
KBHC was founded as a response to children who had been orphaned by the Civil War, and has provided children's services in Kentucky through its homes since 1869. KBHC (www.kbhc.org) now operates under the name of Sunrise Children's Services, and describes itself as a provider of "care and hope for hurting families and children through Christ-centered ministries," "committed to presenting a clear message of Christian values."[2] KBHC receives government funds from various state agencies, which pay KBHC for the care and treatment (including medical expenses, room and board, and clothing) of children in the state's custody.[3]
In early 1998, KBHC hired Alicia Pedreira as a Family Specialist at Spring Meadows Children's Home, which offers foster care and other child welfare services. In October 1998, a photograph of Pedreira and her female life partner came to the attention of KBHC, and the organization dismissed Pedreira from her position. In so doing, KBHC invoked its requirement that its employees exhibit, in their professional conduct and personal lives, values that are consistent with its Christian mission. KBHC also cited its explicit employment policy that "homosexuality is a lifestyle that would prohibit employment with KBHC."[4]
Pedreira brought suit against KBHC. A second plaintiff, Karen Vance, joined the suit, alleging that she wanted to apply for a job as a social worker with KBHC, but refrained from doing so because KBHC's policies would unlawfully exclude her from consideration because she was a lesbian. The complaint alleged that KBHC had violated state and federal employment discrimination statutes.
Seven Kentucky taxpayers also joined the suit. Their portion of the complaint named as defendants the heads of the state's Cabinet for Health and Family Services ("CHFS"), and the Department of Juvenile Justice ("DJJ"). Both of these agencies provide funding for KBHC child welfare services, including foster care for children who have become wards of the state. The complaint alleged that the state officials had violated the Establishment Clause of the First Amendment by funding a "pervasively sectarian" organization that fills "staff positions . . . according to religious tenets," and provides "services designed to instill Christian values and teachings in the children."[5]
In a decision rendered in July 2001, Judge Simpson dismissed Pedreira's and Vance's claims of religious discrimination against KBHC.[6] As Judge Simpson analyzed the case, it did not involve religious discrimination at all, because KBHC did not engage generally in religious selectivity in its employment decisions; that is, KBHC did not limit its hiring to Baptists, or to Christians.[7] Instead, the judge concluded, KBHC had engaged in discrimination based on sexual orientation, which is not prohibited by Kentucky law or federal law. Although Judge Simpson acknowledged that KBHC's policies about openly gay and lesbian employees were the product of religious values, he nevertheless concluded that Pedreira and Vance had been discriminated against based on their behavior or life-style choices. Because KBHC had not required employees to hold particular religious beliefs or engage in particular religious activities, KBHC had not violated the state or federal prohibition on religious discrimination in employment.[8]
Judge Simpson then turned to the Establishment Clause claims by Pedreira and the other Kentucky taxpayers against the state officials responsible for funding children's services provided by KBHC. The judge dismissed those claims that related to the funding of religious discrimination in employment. Having found that KBHC was not limiting employment to those of a particular faith, Judge Simpson concluded that the state could not be in violation of the Establishment Clause for funding the employment positions at issue in the lawsuit.
Judge Simpson did not, however, dismiss the Establishment Clause claim premised on state funding of religious experience. With respect to that part of the case, he said, the plaintiffs claimed that KBHC integrated religious activities with their government-funded children's services. In particular, the plaintiffs alleged that the funds supported "attendance at Baptist religious services, informal religious training, and inculcation of Baptist Christian values. . . ."[9] Citing the Supreme Court's decision in Bowen v. Kendrick,[10] which held that government may not fund "specifically religious activities" as an element of social services, Judge Simpson ruled that this part of the case could go forward.[11] Later, in April, 2003, Judge Simpson ruled explicitly that Kentucky taxpayers had standing to pursue this remaining portion of the case.[12]
For reasons that remain unclear from Judge Simpson's opinion of March 28, 2008, the litigation drifted along without resolution until quite recently.[13] After the Supreme Court's 2007 decision in Hein v. Freedom from Religion Foundation, Inc., however, the state defendants and KBHC once more moved to dismiss what remained of the case for lack of taxpayer standing to pursue it. This time, Judge Simpson granted that motion.
The plurality opinion in Hein made a sharp distinction between legislatively authorized funding of faith-based providers and executive branch decisions to spend taxpayer dollars on causes related to religion or religious entities. Under the Supreme Court's earlier opinions in Flast v. Cohen[14] and Bowen v. Kendrick,[15] taxpayers have standing to raise Establishment Clause challenges to expenditures that Congress has directly authorized. The Hein decision ruled that the right of taxpayers to challenge expenditures as violations of the Establishment Clause should not be extended to discretionary expenditures by the executive branch.
Judge Simpson first concluded that the Hein ruling, which involved federal taxpayers only, applied to state taxpayers as well. After examining the allegations regarding state funding of KBHC, he ruled that "the claim of taxpayers in this case is comparable to that in Hein rather than Bowen or Flast."[16] The allegations, according to Judge Simpson, do not identify any particular legislative appropriation in favor of KBHC. Instead, the allegations involve "executive branch allocation . . . [through] "contracts between KBHC and the Kentucky agencies."[17] "Thus," he concluded, "no nexus has been shown between any legislation, state or federal, and the alleged constitutional violation."[18] Rejecting any attempt to amend the complaint to specify state and federal legislation that provides financial support for KBHC, Judge Simpson granted the defendants' motion to dismiss the Establishment Clause claim.[19] Now that the district court has disposed of all the claims advanced by the plaintiffs, the case is ripe for appeal.
ANALYSIS
The plaintiffs in Pedreira offered a variety of arguments as to why the Hein decision should not lead to a dismissal of their case. First, they argued that the reasoning in Hein, which involved federal taxpayers, should not be extended to state taxpayers. Second, they asserted that even if Hein does apply to state taxpayers, the Kentucky legislature had appropriated monies for a scheme of foster care services in which it was completely foreseeable that state funds would flow to KBHC and other faith-based foster care facilities. Under the reasoning of the Hein plurality, the plaintiffs argued, such legislative action was sufficient to serve as a basis for taxpayer standing under the Establishment Clause. As we discuss below, their first argument was destined to fail, but their argument about legislative authorization for the challenged expenditures was much stronger than the district court seemed to recognize.
1. Hein and State Taxpayer Standing
To show their standing to bring Establishment Clause claims, the plaintiffs in Pedreira relied primarily on their status as Kentucky taxpayers. They argued that the reasoning in Hein derives from separation-of-powers principles regarding the federal government, and therefore should not apply to claims by state taxpayers that state funds are being spent in violation of the Establishment Clause.
In an Update on Hein prepared shortly after the decision, we raised the possibility that state and local taxpayers might ultimately be treated differently from federal taxpayers for purposes of standing to sue in the federal courts.[20] But, as Judge Simpson pointed out, the Supreme Court's decisions on the standing of taxpayers to challenge state expenditures in the federal courts have thus far not made this distinction.[21]
On the contrary, in the recent decision of DaimlerChrysler Corp. v. Cuno,[22] the Court expressly equated the statui s of federal and state taxpayers in this regard. The Court in DaimlerChrysler rejected taxpayer standing to challenge the constitutionality of various state tax credits, on the ground that taxpayer standing is ordinarily not permitted in the federal courts. With respect to both federal and state taxpayers, courts ordinarily consider their claim of having been harmed by an unlawful expenditure to be too generalized and remote to satisfy the constitutional requirement of injury.
Judge Simpson invoked this premise of the parity of state and federal taxpayers from the DaimlerChrysler decision. Moreover, he noted that the U.S. Court of Appeals for the Seventh Circuit relied on DaimlerChrysler Corp and Hein to reject a claim of state taxpayer standing in an Establishment Clause case.[23] Accordingly, and we think correctly, Judge Simpson concluded that Hein applied in full force to the contention that Kentucky taxpayers had standing to pursue this claim.
2. Legislative Action in Pedreira
Did Judge Simpson correctly apply the reasoning of the Hein plurality opinion to the facts of Pedreira? With virtually no analysis of the relevant Kentucky and federal legislative materials, Judge Simpson concluded that the plaintiffs had shown "no nexus between any legislation, state or federal, and the alleged [Establishment Clause] violation."[24]
An examination of the relevant legislation and related materials, however, suggests that the case for state taxpayer standing here was considerably stronger than Judge Simpson's opinion indicates. Those materials include evidence that the Kentucky legislature contemplated that a portion of the state's support for institutional care of children would regularly go to facilities operated by KBHC and other faith-based organizations. As described in the plaintiffs' brief in Pedreira, the legislative nexus with these payments is demonstrated by the following:[25]
Statutory authorization to the Cabinet for Health and Family Services and Department of Juvenile Justice to place children under the state's control in facilities operated by private organizations
Statutory requirements that such private child-care facilities be licensed, meet appropriate standards, maintain records, and comply with reporting requirements
Bi-annual appropriations for purposes of caring for such children
In 2005-06, an explicitly earmarked appropriation to KBHC for educational facilities at one of its group foster homes
A 2006 Report of the Kentucky Legislative Research Commission that mentions KBHC as having played a significant role in the history of placement of children in Kentucky
The fact that at least 20 of the 54 currently licensed private organizational facilities for children are religiously affiliated
Wide and longstanding newspaper coverage of the role of KBHC in caring for children and being reimbursed by the state for doing so
A 2006 legislative citation, in which one house of the Kentucky legislature praised KBHC for its contributions to the welfare of the state's children
We have not independently verified all of the items in this documentation in support of the proposition that the Kentucky legislature has a specific nexus to the challenged payments to KBHC. If most or all can be verified, however, they make Pedreira seem quite close to Flast, in which the relevant legislation did not mention religious schools as potential grant recipients. Indeed, what appears to be the longstanding relationship between KBHC and the state of Kentucky may make the case for taxpayer standing even stronger here than it was in Flast. This sort of evidence of legislative involvement makes the Pedreira case dissimilar to Hein, in which the challenged payments were discretionary administrative expenditures for conferences to promote the Federal Faith-Based and Community Initiative, an enterprise that Congress has never explicitly authorized. Judge Simpson's opinion did not analyze any of this particular evidence in dismissing the Pedreira complaint.[26]
In addition, at least some of the monies paid to KBHC by the Kentucky agencies appear to have originated with the federal government, as a result of both the Supplemental Security Income (SSI) program, and Title IV-E of the Social Security Act. These federal laws authorize payments to states to support the foster care of disabled children under SSI, and other children from poor families eligible under Title IV-E. Because Title IV-E and SSI are subject to the Charitable Choice provisions of the welfare reform statutes enacted by Congress in 1996, religious entities must be allowed to compete for the relevant funds on a basis equal to that of comparable secular organizations.
Although Congress may not have specifically known that payments under these programs would support religious providers, Congress may have been sufficiently aware to satisfy the Hein standard. Faith-based, institutional foster care for orphans and other children in need of custodial arrangements has a long and storied history in the U.S. - Spencer Tracy's famous portrayal of Father Flanagan in the film Boys' Town, about a Roman Catholic facility for orphans, comes to mind - and Congress might reasonably be presumed to be aware that federal funds paid out through SSI or Title IV-E would flow through the states to faith-based facilities for the care of children.
In our Update on Hein, prepared in July, 2007, we suggested that some lower court judges would read Hein quite aggressively, and rely on it to reject taxpayer standing in all cases in which the legislature had not explicitly authorized grants to, or contracts with, faith-based entities. That is precisely what Judge Simpson appears to have done. The Supreme Court's decision in Flast v. Cohen - which the Hein plurality took pains to say was not being overruled - did not itself require this degree of explicitness of legislative authority to transfer funds to religious entities. Rather, the Hein plurality described Flast as a case in which Congress "surely understood" that much of the relevant aid would go to religiously affiliated schools.[27] In light of the long list of legislative contacts with the program of payments to foster care facilities, Judge Simpson's conclusion that the state contracts with KBHC were "executive allocations" made without specific legislative authority to enter into such arrangements with faith-based entities thus seems open to serious doubt. Accordingly, his decision to dismiss the case for lack of state or federal taxpayer standing seems quite vulnerable to reversal on appeal.
CONCLUSION
We expect the plaintiffs in Pedreira to appeal the dismissal of their Establishment Clause claim for lack of standing, and we believe that the plaintiffs have a good chance of prevailing in this appeal. If the 6th Circuit reverses the district court, the case will be returned to the district court for a decision on whether or not the transfer of government funds to KBHC violates the Establishment Clause.[28]
Despite the apparent strength of this appeal, there is no guarantee of its success. The district court's opinion in Pedreira is a stark reminder of Hein's potency as a signal that the federal courts may become increasingly less hospitable to lawsuits designed to enforce the restrictions of the Establishment Clause.
Notes:
[1]. 127 S. Ct. 2553 (2007). We analyze Hein directly in a Roundtable Update posted in July of 2007, http://www.religionandsocialpolicy.org/legal/legal_update_display.cfm?id=60, and in a recently published article, Ira C. Lupu & Robert W. Tuttle, Ball on a Needle: Hein v. Freedom from Religion Foundation, Inc. and the Future of Establishment Clause Adjudication, 2008 BYU L Rev. 115, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1022398.
[2]. Sunrise Mission Statement, KBHC Mission and Values: Sunrise Children's Services
[3]. 2008 U.S. Dist. LEXIS at *11.
[4]. Pedreira v. KBHC, 186 F. Supp. 757, 759 (WD Ky 2001). This opinion primarily involves questions of employment discrimination that were resolved at an earlier phase of the litigation, and is described further in the text above.
[5]. 186 F. Supp. 2d at 759.
[6]. Pedreira's claim was based on the Kentucky civil rights act. Vance's claim was based on both Kentucky law and federal law (Title VII of the 1964 Civil Rights Act.)
[7]. If KBHC had been doing so, it could have relied on the exemptions in both state and federal law for religion-based hiring by religious organizations.
[8]. 186 F. Supp. 2d at 760-62. Judge Simpson's opinion relied heavily on the decision of the U.S. Court of Appeals for the 6th Circuit in Hall v. Baptist Memorial Healthcare Corp., 215 F.3d 618 (6th Cir. 2000), which involved facts similar to those in Pedreira's case. Kentucky is located within the 6th Circuit, so the decision in Hall was binding on the district court.
[9]. 186 F. Supp. 2d at 764.
[10]. 487 U.S. 589 (1988).
[11]. No evidence pertaining to these activities had at that time been produced, so Judge Simpson refused to enter a judgment in favor of the plaintiffs. 186 F. Supp. 2d at 766.
[12]. 2008 U.S. Dist. LEXIS at *4-*5.
[13]. A brief opinion, dated January 29, 2007, by Judge Simpson alludes to the plaintiffs' earlier amendments to their complaint, an unsuccessful attempt by the plaintiffs to obtain appellate review of his 2001 ruling that dismissed the employment discrimination claims, a change of counsel, and a change in parties. 2007 U.S. Dist Lexis 6723, *5-6. The 2007 ruling refused to permit the plaintiffs to amend their complaint further to include assertions that KBHC is a state actor and to include the possibility of recovery of wrongfully paid state funds from KBHC. Id. at *6.
[14]. 392 U.S. 83 (1968).
[15]. 487 U.S. 589 (1988).
[16]. 2008 U.S Dist. LEXIS 25724, at *21-*22.
[17]. Id. at *22.
[18]. Id.
[19]. Id. at *23-*25.
[20]. Our comment on Hein is available at http://www.religionandsocialpolicy.org/legal/legal_update_display.cfm?id=60.
[21]. The standing of municipal taxpayers to challenge local expenditures is sometimes seen by judges as being on a different footing from taxpayer challenges to federal or state expenditures. Doremus v. Board of Education, 342 U.S. 429 (1952). But the Pedreira litigation does not involve a challenge to local or municipal expenditures.
[22]. 547 U.S. 332 (2006). The DaimlerChrysler decision did not involve the Establishment Clause.
[23]. Hinrichs v. Speaker of the House of Representatives of the Indiana General Assembly, 506 F. 3d 584 (7th Cir. 2007). Judge Simpson rejected the plaintiffs' assertion that the 6th Circuit's opinion in Johnson v. Economic Development City of Oakland, 241 F. 3d 501 (6th Cir. 2001), which upheld taxpayer standing in a different legal context, required a finding in favor of state taxpayer standing. If the plaintiffs appeal the district court's decision in Pedreira, we think it likely that the 6th Circuit will be heavily influenced - as was the district court - by the Supreme Court's intervening decisions in DaimlerChrysler and Hein.
[24]. 2008 U.S. Dist. LEXIS 25724, at *22.
[25]. The itemized list that follows is drawn from Plaintiffs' Memorandum in Opposition to Defendants' Motion to Dismiss, Pedreira et al. v. Kentucky Baptist Homes for Children, Inc., et al, U.S. District Court, Western District of Kentucky Civ. Action No. 3:00-CV-210-S, filed Aug. 28, 2007 (copy on file with and available from the authors of this Update).
The defendants' memoranda in support of the motion to dismiss do not offer a sharply different view of the relationship among the Kentucky legislature, the state's executive branch, and the payments to KBHC. Rather, the defendants emphasize the degree of executive discretion in the Kentucky scheme and argue that the Kentucky legislature has not explicitly mandated expenditures to faith-based facilities for children in need of foster care. Commonwealth's Memorandum in Support of of Its Motion to Dismiss, Pursuant to Rule 12(b)(1) and 12(h)(3), For Lack of Standing, Pedreira et al. v. Kentucky Baptist Homes for Children, Inc., et al, U.S. District Court, Western District of Kentucky Civ. Action No. 3:00-CV-210-S, filed Aug. 10, 2007; Defendant Kentucky Baptist Homes for Children's Memorandum in Support of of Its Motion to Dismiss For Lack of Standing, Pedreira et al. v. Kentucky Baptist Homes for Children, Inc., et al, U.S. District Court, Western District of Kentucky Civ. Action No. 3:00-CV-210-S, filed Aug. 10, 2007. (Copies of both memoranda are on file with and available from the authors of this Update). For reasons offered in text above, we think that the defendants' view of the Hein plurality opinion is too narrow. In any event, Judge Simpson did not grapple with the sharply competing views of Hein offered by the parties, and we expect that the appellate judges on the U.S. Court of Appeals for the 6th Circuit would feel compelled to do so if the plaintiffs appeal
[27]. 127 S. Ct. at 2565, note 3.
[28]. If there is such a remand, the issues will be similar to those presented by the decision in Teen Ranch v. Udow, 479 F.3d 403 (6th Circuit, 2007), which we discuss here, http://www.religionandsocialpolicy.org/legal/legal_update_display.cfm?id=56, and the lawsuit in Freedom from Religion Foundation Inc. v. Bjergaard, now pending in the U.S. District Court for North Dakota, which we discuss here, http://www.religionandsocialpolicy.org/legal/legal_update_display.cfm?id=61. If it is permissible for government to pay for foster care in private families that include the foster child in religious experience, is it equally permissible for government to pay for such care in institutions that similarly include religious experience?
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