January 4, 2013

Religious Institutions Update: January 2013

Lex Est Sanctio Sancta
Holland & Knight Update
Nathan A. Adams IV

Timely Topics

In 2000, Congress enacted the Religious Land Use and Institutionalized Persons Act, 42 U.S.C. §2000cc et seq. (RLUIPA), in recognition that "new, small, or unfamiliar churches in particular, are frequently discriminated against ... in the highly individualized and discretionary process of land use regulation." RLUIPA is available to a "religious assembly or institution" and applies to "land use regulation" defined in part as a "zoning or landmarking law." 42 U.S.C. §2000cc-5(5). Its multiple prongs include: (1) substantial burden; (2) equal treatment; (3) nondiscrimination; and (4) total exclusion or unreasonable limitation.

Under the first prong, government may not impose or implement a land use regulation in a manner that imposes a "substantial burden" on the religious exercise of a person, including a religious assembly or institution, unless the government demonstrates that imposition of the burden is in furtherance of a compelling governmental interest and is the least restrictive means of furthering that compelling governmental interest. The key to a claim under this prong is making a thoughtful record of the types of impositions on the church's religious exercise that failing to grant the application would cause. Courts approach the substantial burden test from either a narrow or more expansive view of what types of burdens count, so enumerating them with precision and exhaustively matters. 

The equal treatment provision forbids government from imposing or implementing a land use regulation in a manner that treats a religious assembly or institution on less than equal terms with a nonreligious assembly or institution. This requires evaluation of secular comparators, such as movie theatres, schools and private clubs, to determine whether they were treated more favorably.  

The nondiscrimination provision forbids government from imposing or implementing a land use regulation that discriminates against an assembly or institution on the basis of religion or religious denomination. These cases typically include some evidence of invidious discrimination in the record, such as off-the-cuff discriminatory remarks by zoning or council members. At a minimum, they require evidence that religious or secular comparators were treated more favorably.

The total exclusion or unreasonable limitation prong provides that government may not impose or implement a land use regulation that totally excludes religious assemblies from a jurisdiction or unreasonably limits religious assemblies, institutions or structures within a jurisdiction. These cases are the least common.

RLUIPA can be a powerful tool for any religious institution or assembly that confronts recalcitrant planning and zoning or landmarking bodies that would preclude them from building, using or expanding facilities, but it still requires the religious organization to exhaust administrative remedies and develop a careful factual record to succeed. If your organization is facing development obstacles, consult early with church-state counsel to assist with developing the best possible case.

Key Cases

Long-Term Park Lease to Boy Scouts Consistent with Establishment Clause and Blaine Amendment

In Barnes-Wallace v. City of San Diego, Nos. 04-55732 and 04-56167, 2012 WL 6621341 (9th Cir. Dec. 20, 2012), the court ruled that San Diego's long-term lease of public park land to the Desert Pacific Council of the Boy Scouts of America for nominal rent and minimum capital improvements did not violate the federal Establishment Clause, California Constitution's No Preference and No Aid Clauses, federal and state Equal Protection Clauses, municipal ordinance or state contract law.

San Diego leased 123 public properties to a wide variety of nonprofits. The city entered into two 25-year leases with the Scouts: one for Camp Balboa in exchange for the Scouts maintaining the property, paying an administration fee and expending at least $1.7 million for capital improvements, and another for Fiesta Island, where the Scouts were to expend at least $1.5 million, but actually spent $2.5 million to build the Youth Aquatic Center. The Scouts allowed any non-Scout group or individuals to use the parks, but Scouts prohibit atheists, agnostics and homosexuals from being members or volunteers and require members to affirm a belief in God.

The plaintiffs, who are lesbian and agonistic parents, as well as their scouting-aged sons, sued the municipality and the Scouts, contending that the leases were invalid and did not apply to use the camp facilities because they "refused to condone the Boy Scout's exclusionary policies." The district court granted summary judgment, but the Ninth Circuit reversed, finding that the plaintiffs’ decision not to apply to use the facilities prevented them from stating claims for violations of the Equal Protection Clause, municipal human dignity ordinance or nondiscrimination provisions in the leases. The Scouts argued that the appeal was moot and the defendants lacked standing, but the court disagreed, in part because the matter was already decided and law of the case.

The Ninth Circuit ruled there was no violation of the Blaine amendment or "no aid clause" of the California Constitution. Cal. Const. art. XVI, §5. It states:

Neither the Legislature, nor any county, city and county, township, school district, or other municipal corporation, shall ever make an appropriation, or pay from any public fund whatever, or grant anything to or in aid of any religious sect, church, creed, or sectarian purpose, or help to support or sustain any school, college, university, hospital, or other institution controlled by any religious creed, church, or sectarian denomination whatever; nor shall any grant or donation of personal property or real estate ever be made by the State or any city, city and county, town, or other municipal corporation for any religious creed, church or sectarian purpose whatever ...

The court did not reach the real estate provision in this clause due to waiver. It found there is no violation of the California no-aid clause when: (1) there is no more than incidental benefit to religion; (2) the program is available to both secular and sectarian institutions on an equal basis; (3) the program does not use public proceeds for "religious projects"; and (4) the program does not impose any financial burden on the government. The court assumed incidental benefit to the Scouts and that the Scouts are a sectarian organization, but found that, although the city negotiated the long-term leases exclusively with the Scouts, the city's overall lease practice was evenhanded. The court likewise determined that public proceeds were used primarily for secular camp activities and the leases did not impose a financial burden on the city because the Scouts had to make improvements and manage the property, saving the city from the related expenses.

For similar reasons, the court ruled that the state and federal Establishment Clause were also satisfied under the modified Lemon test. Lemon v. Kurtzman, 403 U.S. 602 (1971), modified by Agostini v. Felton, 521 U.S. 203 (1997). The court found that the city's purpose in entering into the leases was to provide facilities and services for youth activities and that a reasonable observer familiar with the city's leasing practices would conclude that they are evenhanded and do not result in religious indoctrination. It remanded the case to the district court to enter summary judgment in favor of the Scouts on these claims.

Trademark Infringement Dispute between Religious Institutions Remanded

In Sovereign Military Hospitaller Order of St. John of Jerusalem of Rhodes and of Malta v. Fla. Priory of Knights Hospitallers of Sovereign Order of St. John of Jerusalem, Knights of Malta, the Ecumenical Order, No. 11-15101, 2012 WL 6582565 (11th Cir. Dec. 18, 2012), the court of appeals affirmed the lower court's ruling that the defendant did not engage in false advertising in violation of the Lanham Act when it claimed a "shared history" with the plaintiff until the period of 1798–1802. The plaintiff alleged that the historical claim is likely to deceive customers into contributing money to the defendant. But the court of appeals agreed that the historical reference was perfectly appropriate and that defendant's express interdenominational and non-Catholic nature mooted any possibility that purchasers could be deceived. The court of appeals found that the lower court's admission of lay testimony on the subject was harmless error. The court of appeals reversed the trial court's cancelation of the plaintiff's four trademarks for fraud for lack of sufficient evidence that the applicant personally knew the defendant might claim the right to use a similar mark or lacked a subjective belief that the plaintiff's marks were superior. The court of appeals also reversed the lower court's Lanham Act infringement, state unfair competition and Florida Deceptive and Unfair Trade Practices Act (FDUTPA) ruling that defendant's mark is confusing similar to the plaintiff's based exclusively on their visual dissimilarity without reference to the marks' other features. It remanded for a multi-factor analysis of the marks. The court of appeals also declined to reassign the case, notwithstanding remarks by the trial judge the plaintiff considered disparaging.

Court Denies For-Profit S Corporation's Contraceptive Coverage Challenge

In Korte v. U.S. Dep't of Health and Human Servs., No. 3:12-CV-01072-MJR, 2012 WL 6553996 (S.D. Ill. Dec. 14, 2012), the court denied a preliminary injunction to a for-profit S corporation which challenged the contraceptive coverage mandate under the First Amendment and Religious Freedom Restoration Act (RFRA). The S corporation employs 90 full-time employees and would have to pay a tax it characterized as "ruinous," in the rough amount of $730,000 per year, if it does not provide the mandated coverage, which it also characterized as an abortion mandate. The owners seek to operate the company "in a way that reflects the teachings, mission and values of their Catholic faith"; however, they had to acknowledge that their current group health plan covers contraception and that they could not find an insurer that would issue a policy that does not cover contraception. The court decided that, because it was closely held, the S corporation had third-party standing derivative of its owners and even qualified as a "person" for purposes of RFRA, but it doubted a company has free exercise rights. Regardless, the court ruled there is a substantial likelihood: (1) the mandate will be found to be a neutral law of general applicability, notwithstanding more than 193 grandfathered plans and the religious exemption; and (2) the mandate only incidentally burdens the plaintiffs' religious exercise as evidenced by the fact that their current policy covers contraception. For purposes of RFRA, the court added that it could not overlook the corporate veil: (1) between the owners and entity actually experiencing the burden on exercise; and (2) between the entity and group health plan. The court pointed out that the corporation, not the owners, suffered the burden; also, that it was up to employees of the corporation independently to seek contraception, so that the connection between the mandate and burden was too indirect to be substantial.

Court Grants in Part and Denies in Part Motion to Dismiss Contraceptive Challenge

In Roman Catholic Archdiocese of N.Y. v. Sebelius, 12 Civ. 2542(BMC), 2012 WL 6042864 (E.D. N.Y. Dec. 4, 2012), the court granted in part for lack of standing and denied in part the plaintiffs' challenge to the contraception mandate. The court did not credit what it characterized as the conclusory assertion that the plans were not grandfathered of the Roman Catholic Diocese of Rockville Centre, New York and Catholic Charities of the Diocese of Rockville Centre. In contrast, the court found that the allegation that the remaining defendants (i.e., Catholic Health Care System and its affiliates, the Roman Catholic Archdiocese of New York and Catholic Health Services of Long Island (CHSLI)) enacted an increase in the employees' share of the insurance cost sufficiently demonstrated that their plans were not grandfathered. The court was also satisfied that the plaintiff's health plans did not cover contraceptive services. It found the Department of Health and Human Services' temporary enforcement safe harbor does nothing to reduce the certainty that plaintiffs will suffer injury from the coverage mandate in the future. It ruled that it is not a "formally announced change to official government policy" and "does not prevent the coverage mandate, as it currently exists, from going into effect." Because the coverage mandate is a final rule, the court found that "[a]ll the safe harbor does is postpone the date by which plaintiffs must comply with the coverage mandate or suffer penalties." It determined that the plaintiffs have to plan now for the changes to come and incur the related costs. In particular, CHSLI must provide health care coverage to nurses it had negotiated with the New York State Nurses Association to cover until the association backed out due to the coverage mandate. Therefore, the court ruled that the remaining plaintiffs' challenge to the coverage mandate is fit for judicial review.

Court Suspends Contraceptive Coverage Challenge Pending Adoption of New Rule

In Wheaton College v. Kathleen Sebelius, Case No. 12-5291 (D.C. Cir. Dec. 18, 2012), the court suspended the case in reliance upon the Department of Health and Human Services' binding representation that it would not enforce the contraceptive coverage mandate in its current form, 45 C.F.R. §147.130(a)(1)(iv) against the appellants or those similarly situated, but would publish a new proposed rule in the first quarter of 2013 and a new final rule by August 2013. It required the government to provide regular status reports and observed, "We take the government at its word and will hold it to it."

Divorce Decree Requiring Father to Surrender Children for Religious Instruction Deemed Constitutional

In Roberts v. Roberts, Case No. 04-11-00554-CV, 2012 WL 6604487 (Tex. App.-San Antonio Dec. 19, 2012), the court ruled that it does not violate the Establishment Clause to require a father with joint managing conservatorship and the joint right to direct the children's moral and religious training to surrender his children to his divorced wife for religious instruction on Sunday mornings during the time he would otherwise have possession of the children. The divorce decree gave the father additional time on Sundays to compensate for the period when the children attend their religion classes. "Just as the court has discretion to mold the decree to accommodate activities such as soccer games and music lessons if it finds them in the child's best interest, it may accommodate a parent's desire for the children's religious education, provided that it does not favor one parent's religion over another or over a preference for no religion."

Constitutionality of Washington's Religious Employer Exemption Certified

In Ockletree v. Franciscan Health Sys., No. 11-cv-05836 RBL, 2012 WL 6146673 (W.D. Wash. Dec. 11, 2012), the court stayed an employment discrimination case founded on allegations of race and disability discrimination pending certification to the Washington Supreme Court whether the religious institution exemption from the Washington Law Against Discrimination is unconstitutional. The WLAD exempts "religious or sectarian organization[s] not organized for private profit" and organizations with fewer than eight employees from the definition of "employer," subject to its antidiscrimination requirements. The defendant sought to dismiss the plaintiff's claim not because it terminated the plaintiff for any reason related to its religious activity, but simply because of its status as a religious institution.

Court Orders Zoning Board to Grant Special Exception Permit and Variance

In the Matter of Tabernacle of Victory Pentecostal Church v. Weiss, 2012 WL 6029100 (N.Y.A.D. 2 Dept. Dec. 5, 2012), the court reversed the lower court and granted the petitioner's petition for a special exception permit to hold religious services and an area variance to waive an off-street parking requirement. The petitioner owned a split-zoned property with the front situated in a business district and the rear situated in a residential district, and no on-site parking. The petitioner proposed to limit attendance to 105 and to transport half of its roughly 60 members to the site, resulting in the need for 8–10 off-site parking spaces. The court ruled that the zoning board failed to suggest any measures that would have accommodated the petitioner's religious use, even though the use could have been accommodated." [W]hile religious institutions are not exempt from local zoning laws, greater flexibility is required in evaluating an application for a religious use than an application for another use and every effort to accommodate the religious use must be made." The court ordered the board to grant the petitioner's application for a special exception permit and area variance "under such reasonable conditions as will allow the proposed religious use while mitigating any detrimental or adverse effects upon the surrounding community."

Religious Institutions in the News

The Commission on Accountability and Policy for Religious Organizations released a report with recommendations on tax policy for religious institutions. http://religiouspolicycommission.org/

Unbelief or "nones" are now the world's third-largest religion. http://articles.washingtonpost.com/2012-12-19/national/35929111_1_pew-forum-new-report-atheists-and-agnostics

Charities are lobbying to avoid changes in how charitable contributions are deducted as part of the "fiscal cliff" negotiations. http://www.usatoday.com/story/news/nation/2012/12/09/charitable-deduction-lobbying/1750943/

A graduate counseling student expelled from Eastern Michigan University in relation to her faith settled her case with the university. http://articles.washingtonpost.com/2012-12-12/national/35789223_1_force-students-public-universities-appeals-court; http://www.christiancentury.org/article/2012-12/update-evangelical-grad-student-settles-university

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