Petition for Writ of Certiorari — Rojas v. Fitch
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Supreme Court, U.S.
971550 mar 18 1998
No. ___QFFICE OF THE CLERK
In The
Supreme Court of the United States
October Term, 1997
GUADALUPE ROJAS,
Petitioner,
LAWRENCE FITCH, et al.,
Respondents.
On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The First Circuit
PETITION FOR WRIT OF CERTIORARI
CAROLINE COLE CORNWELL JOHN WILLIAM DINEEN
Counsel of Record YESSER, GLASSON & DINEEN
Jones & ASSOCIATES One Providence Washington
72 South Main Street Plaza
Providence, RI 02903 Providence, RI 02903
(401) 274-4446 (401) 331-3550
COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831
SE ii a UTE ANY oy Sala
QUESTIONS PRESENTED
1. Does Agostini v. Felton, ___ U.S. ___, 117 S.Ct. 1997
(1997), and other Establishment Clause precedent support
the unemployment tax exemption which now expressly
divides the universe of all non-profit, charitable, and
educational employers into two categories, the religious
and the secular, granting the exemption to the religious
and denying it to the secular?
2. Where a statutory benefit on its face targets reli-
gion as the beneficiary, excluding similar but secular
entities, does the government bear the burden of produc-
ing evidence of a secular purpose?
3. Does a statutory tax exemption granted to an
employer, based on the employer’s religious status,
which operates to deny an employee eligibility for a
Social Security Act benefit, contravene the Establishment
Clause and prior decisions of this Court?
a
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LIST OF PARTIES
Guadalupe Rojas, Plaintiff and Petitioner
Lee H. Arnold, Director, R.I. Department of Employment
and Training, Defendant and Respondent, substituted for
original defendant Lawrence Fitch, former Director.
Secretary, United States Department of Labor, Defendant
and Respondent |
The Salvation Army, Defendant and Respondent
TABLE OF CONTENTS
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Constitutional Provisions and Statutes Involved.... 2
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| ba App. 1
TABLE OF AUTHORITIES
Page
CASES
Agostoni v. Felton, __. U.S. __, 1117S sae 1997, 138
Siete Pe Che Be ci occa aks 2, Os Fs Ws a, ae
California v. Grace Brethren Church, 457 U.S. 393
RL 3 Saag pana Dir ig arise ms miaremencheges Oe Le Fay by Me es
Carmichael v. Southern Coal & Coke Co., 301 U.S.
ORs, ee De A Eas oc ob oaks wees dew sees 11
City of Boerne v. Flores, 117 S.Ct. 2157 (1997) ......... 3
Jimmy Swaggart Ministries v. Board of Equalization,
S93 tS. S37 TIO BA. Be Tas cw i ws kceedn 16, 17
Metz! v. Lew:inger, 57 F.3d 618 (7th Cir. 1995)........ 19
Rojas v. Fitch, 928 F. Supp. 155 (D.R.I. 1996), aff'd,
LZ? Poe 2 CEBU Ca, BROT ws ese tens lL, oy 6 2 28
St. Martin Evangelical Lutheran Church v. South
EROE ESL Si SFA CA Sak co akes aca oe 5 We
State of Alabama v. Marshall, 626 F.2d 366 (5th Cir.
1980), cert. denied, 452 U.S. 905 2. SOS eps 22, 23
Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct.
SOs: Oe Ens Dae RAO wey ick eee hae Sk Okeke 11
Texas Monthly v. Bullock, 489 U.S. 1, 109 S.Ct. 890,
Sie Dante 2 LEE GaSe ks eek ele ew passim
United States v. Lee, 455 U.S. 252, 102 S.Ct. 1051
ERNE ES oars k Ak OOS EES OES coos 10, 17
Walz v. Tax Commission, 397 U.S. 664, 90 S.Ct. 1409
CRE ois ko RVs hea EM hi hoes B, 32, ta, 34 16, 23
Se
ee
TABLE OF AUTHORITIES —- Continued
Page
CONSTITUTION
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STATUTES
mT Gen. Laws Section 26-426. oii. cc ce csc ivian 2p yO
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OTHER AUTHORITIES
FER. Bites, 2d; CRSTE I ae ae
PETITION FOR WRIT OF CERTIORARI
Guadalupe Rojas (“Rojas”) respectfully prays that a
writ of certiorari issue to review the judgment and opin-
ion of the United States Court of Appeals for the First
Circuit entered in this proceeding on October 9, 1997, in
order to correct serious inconsistencies with this court’s
Establishment Clause decisions, in relation to a statute of
national application.
OPINIONS BELOW
The opinion of the United States Court of Appeals for
the First circuit is reported as Rojas v. Fitch, 127 F.3d 184
(1st Cir. 1997), and that decision affirmed the judgment of
the District Court for the District of Rhode Island, Rojas v.
Fitch, 928 F. Supp. 155 (D.R.I. 1996). By order dated
December 18, 1997, the First Circuit denied the petition
for rehearing and suggestion for rehearing en banc. App.
41.
JURISDICTION
On October 9, 1997, the Court of Appeals for the First
Circuit issued its judgment and opinion upholding the
constitutionality of the challenged Federal Unemploy-
ment Tax Act (FUTA) provision exempting churches from
coverage. App. 1.
On October 18, 1998, the Court of Appeals denied the
petition for rehearing and suggestion for rehearing en
banc. Jurisdiction to review the decision of the Court of
Appeals is invoked pursuant to 28 U.S.C. § 1254.
*
CONSTITUTIONAL PROVISIONS
AND STATUTES INVOLVED
(1) United States Constitution, Amendment I:
Congress shall make no law respecting an
establishment of religion, or prohibiting the free
exercise thereof; or abridging the freedom of
speech, or of the press; or the right of the people
peaceably to assemble, and to petition the gov-
ernment for a redress of grievances.
(2) 28 U.S.C. § 3309
(set forth in full in Appendix 43)
(3) R.I. Gen. Laws, § 28-42-8
(set forth in full in Appendix 46)
+
STATEMENT OF THE CASE
(a) Nature of the Proceedings
This is an action that was commenced by Guadalupe
Rojas (Rojas) in the District Court in Providence, seeking
declaratory and injunctive relief. Rojas challenged the
statutory exemptions, both federal and state, in the
unemployment insurance program. Those exemptions
apply to religious employers and resulted in the denial of
unemployment benefits to her.
In her amended complaint, Rojas added the United
States Secretary of Labor as a defendant, along with the
original defendant, the Director of the R.I. Department of
Employment and Training (DET), the state agency which
administers the joint federal-state unemployment insur-
ance program. The Salvation Army, Rojas’ former
employer, was allowed to intervene as a defendant, with-
out objection. The federal defendant moved to dismiss on
various grounds. The parties submitted a joint stipulation
of facts and documents, which was accepted by the Dis-
trict Court as the record in this case on February 27, 1996.
An administrative appeal in state court, appealing the
denial of unemployment benefits, was stayed by the state
court pending resolution of the federal claims in this
action. The federal court action was filed prior to the state
court action.
On June 10, 1996, the District Court entered final
judgment for defendants, in accordance with the opinion
of June 7, 1996. That decision is reported as Rojas v. Fitch,
928 F. Supp. 155 (D.R.I. 1996).
On June 20, 1996, Rojas moved to alter or amend the
judgment under F.R.C.P. Rules 52(b) and 59. On October
11, 1996, the District Court denied that motion, and a
timely appeal to the First Circuit followed. The state
defendant cross-appealed, Rojas v. Arnold, 97-1089, First
Circuit.
The Court of Appeals for the First Circuit enlarged
the time for argument in this case and granted a request
for post-argument memoranda limited to discussion of
Agostini v. Felton, __ U.S. _, 117 S. Ct. 1997, 138 L.Ed.2d
391 (1997), and City of Boerne v. Flores, __ TS. hae
Ct. 2157 (1997).
Thereafter the Court of Appeals rendered its decision
on October 9, 1997, and denied rehearing on December
18, 1997.
The docket reflects a non-jury one-day trial, which
was actually the acceptance of a Joint Stipulation of Facts
and Documents, followed by extensive legal argument. In
addition, the District Court received a number of exten-
sive memoranda from the parties.
The facts of the case are as follows (taken from The
Joint Stipulation submitted to both the District Court and
the Court of appeals):
1) Rojas worked for The Salvation Army in Provi-
dence for a total of approximately six years, from
1986-1994, interrupted by a brief employment with Cath-
olic Social Services in 1990-1991. She returned to The
Salvation Army when the Catholic Social Services grant
expired.
2) Rojas’ position at The Salvation Army was a
social caseworker for a predominantly Spanish-speaking
caseload. She was not clergy nor was her job a religious
function. In fact, Rojas has never been a member of The
Salvation Army.
3) On March 18, 1994, Rojas was terminatea, effec-
tive that day, allegedly due to financial constraints.
4) Rojas applied for unemployment benefits on or
about April 13, 1994.
5) DET denied unemployment benefits to Rojas. The
only stated reason was the exemption of her former
employer, under Section 28-42-8(4) of the Rhode Island
General Laws.
6) DET first concluded that The Salvation Army was
an exempt employer in 1987.
7) Rojas requested that DET produce any documen-
tation DET had concerning the decision to exempt The
Salvation Army, and DET agreed to do so.
8) DET relied on the 1955 Internal Revenue Service
letter in reaching its 1987 conclusion that The Salvation
Army was exempt.
9) The DET did not rely on any other information in
reaching the 1987 decision.
10) When Rojas began working for The Salvation
Army, her employer had not yet been declared exempt by
DET.
11) No written decision was issued by DET in 1987,
nor was any formal decision made. There were telephone
calls between DET (then D.E.S., Department of Employ-
ment Security) and The Salvation Army which resulted in
DET terminating the employer’s account.
12) Prior to 1987, The Salvation Army was a cov-
ered employer.
13) There were no communications between the
federal government and DET in 1987 on the issue of
whether to exempt The Salvation Army.
14) There were, and are, no application forms, regu-
lations, rules, procedures, definitions, or stated criteria
used by DET in deciding whether an employer’s request
for the church exemption should be granted.
15) In Rhode Island, churches and individual par-
ishes can choose to be exempt or not exempt, depending
on their preference. A church can choose to be voluntarily
covered even though DET would allow the exemption.
16) An employer known as Catholic Cemeteries at
some point had its coverage discontinued, and the
exemption granted, at its request.
17) Most churches which are exempt are self-
declared, i.e., they do not register as employers with DET
and are not in the system, without any affirmative grant-
ing of the exemption by DET.
18) Employees of exempt employers, or covered |
employers who become exempt, are not required to be |
notified of the exemption possessed by their employers.
19) DET does not distinguish between different
types of employees or jobs within an employer’s work-
force. If the employer is deemed exempt, all employees
are outside the unemployment insurance system.
20) It is not possible for the employer to be exempt
from the tax and yet have any employee still covered by
unemployment insurance.
21) Non-profit corporate employers, which qualify
as 501(c)(3) entities, have the option of being covered by
the DET payroll tax or of being “self-insured”, which
means reimbursing DET dollar for dollar for any
employee’s unemployment benefits. Either way, such
employers are not exempt, and their employees are cov-
ered.
22) If a non-profit employer (which was not a
church) performed the same type of social services in the
community as that performed by The Salvation Army, it
could not be exempt.
ee ee
23) DET does not maintain any list or record of
exempt employers because most never entered the sys-
tem.
24) At the Referee hearing, DET could not recall any
instance of denying a request by an employer for the
church exemption.
25) The Catholic Diocese of Providence was treated
by DET for many years as covered by the tax, as were all
churches. Then in “the ’80’s” the Diocese demanded that
it be exempt and that the state refund all the money that
it had ever paid in. Rhode Island refunded the money.
26) One criteria used by DET is “if someone calls
themself [sic] a church, and it is through common knowl-
edge that they are a church, then we grant the exemption,
i.e., the Diocese of Providence, The Episcopal Diocese of
Providence”.
27) The DET official with authority to rule on
exemption issues testified that he understood the federal
government to require the church exemption.
28) The Salvation Army described Rojas’ job as a
caseworker, dealing with utility problems, food, and
social services. She worked Monday through Friday at an
office at 386 Broad Street, Providence, Rhode Island. She
was not, and was not required to be, a member or soldier
of The Salvation Army in order to obtain or hold her job.
29) In general, except for certain top positions,
employees are not required to be Salvation Army mem-
bers.
30) The Salvation Army asserted that the layoff of
Rojas was part of a Northeast regional financial cutback
of employees and equipment.
31) The Salvation Army testified that Rojas and
other employees were given the October 1993 revised
employee Manual which stated that The Salvation Army
was exempt. The employer did not have knowledge of
any prior notice to Rojas. (The Salvation Army was not
exempt when Rojas was hired). Rojas recalled no such
prior notice.
32) Rojas testified that none of her work involved
any religious or “lay minister” function.
33) On August 16, 1994, the Board of Review of DET
upheld the Referee’s Decision and affirmed that Rojas
could not collect unemployment benefits because her
employer, The Salvation Army, was exempt under Section
28-44-8(4)(A) of Rhode Island General Laws.
34) On September 9, 1994, plaintiff commenced this
action in federal court.
ARGUMENT
Summary
This Court should grant certiorari because the deci-
sion of the Court of Appeals is contrary to several Estab-
lishment Clause decisions of this Court, including Texas
Monthly v. Bullock, 489 U.S. 1, 109 S. Ct. 890, 103 L.Ed.2d 1
(1989); Walz v. Tax Commission, 397 U.S. 664, 90 S. Ct. 1409
(1970); and Agostini v. Felton, __ U.S. __, 117 S. Ct. 1997,
138 L.Ed.2d 391 (1997).
Rojas was denied unemployment benefits solely
because her former employer was exempt by federal and
state statute, an exemption which is no longer available
to the broad range of non-profit, educational, and charita-
ble employers originally encompassed in the statute. This
exemption is now a government benefit which is not
neutrally and generally available. Rather the statute
expressly targets the benefit to the religious non-profit
and denies it to all other non-profit employers which lack
the religious identification.
The Court of Appeals discussed Agostini but disze-
garded its essential teaching as well as other recent Estab-
lishment Clause cases, that a government benefit must
utilize neutral secular criteria, must neither favor nor
disfavor religion, and must be available to both religious
and secular beneficiaries on a non-discriminatory basis.
This case involved a federal statutory benefit which
expressly uses religion as the touchstone and divides the
universe of all non-profit employers into two categories —
the religious (eligible for the government benefit) and the
secular (not eligible).
The Court of Appeals also disregard the holding and
rationale of Texas Monthly v. Bullock, supra, which found a
Texas sales tax exemption for religious periodicals uncon-
stitutional even though the state also exempted a variety
of other unrelated items such as food, agricultural items,
and property used in manufacture. This Court’s plurality
opinion in Texas Monthly focused on the availability of
“like benefits” to a wide array of nonsectarian groups. Id.
at 899, n. 4.
10
The Court of Appeals, like the District Court, also
parted company with this Court’s precedents on secular
purpose, when it discerned or created such a purpose even
though none appears in the record or in the statute itself.
Lastly, the Court of appeals ignored another aspect of
Rojas’ argument, as well as another precedent of this
court, United States v. Lee, 455 U.S. 252, 102 S. Ct. 1051,
1057 (1982) (“Granting an exemption from social security
taxes to an employer operates to impose the employer’s
religious faith on the employees.”) The decision below
did not address the uniqueness of this case, in which the
government's religious criteria for granting a benefit to
an employer s:multaneously operates to exclude a third
party (Rojas) from an otherwise available Social Security
Act program.
1) Until 1970 FUTA Exempted Churches and a
Broad Range of Secular Charities and Non-
Profits. In 1970 and Again in 1976 Congress
Narrowed the Exemptions so that a Broad
Range of Non-Profits is no Longer Exempt.
The Federal Unemployment Tax Act (“FUTA” or
“The Act”), 26 U.S.C. Section 3301-3311, is part of the
Social Security Act’s federal-state system providing bene-
fits to unemployed workers. Under this scheme,
employers pay a federal tax based on a percentage of
wages but are given credit for payments made into feder-
ally approved state unemployment compensation pro-
grams. 26 U.S.C. Section 3301-02. All states participate,
and in order to remain eligible the states’ own laws must
be consistent with FUTA’s requirements.
11
Early in its history, FUTA survived various constitu-
tional challenges, including challenges to certain exemp-
tions. See Steward Machine Co. v. Davis, 301 U.S. 548, 57
S. Ct. 883, 889, 81 L.Ed. 1279 (1937); Carmichael v. Southern
Coal & Coke Co., 301 U.S. 495, 57 S. Ct. 868, 873 (1937).
Up until 1970 FUTA excluded from coverage “service
performed in the employ of a religious, charitable, educa-
tional, or other tax exempt organization”. California v.
Grace Brethren Church, 457 U.S. 393, 397 (1982). Then, “in
1970 Congress amended FUTA to require state plans to
cover employees of non-profit organizations, state hospi-
tals, and state institutions of higher education, thus elim-
inating the broad exemption available to non-profit
organizations.” Grace Brethren Church, 457 U.S. at 397
(opinion of Justice O’Connor, for the Court; emphasis
added). “At the same time, Congress enacted Section
3309(b) to exempt from mandatory state coverage a nar-
row class of religious and educational employees”. Id.
(emphasis added).
That “narrow class” in 1970 consisted of employers
of:
1) Employees of churches or primarily religious
organizations;
2) Ministers and members of religious orders; and
3) Those “in the employ of a school which is not an
institution of higher education”.
Grace Brethren Church, at 398.
Six years later in 1976, Congress narrowed still fur-
ther this already narrow class of exempt employers,
deleting the third category (school employees). “In order
12
to maintain compliance with FUTA, the states promptly
amended their corresponding state programs”. Id., at 398.
Similarly, in St. Martin Evangelical Lutheran Church v.
South Dakota, 451 U.S. 772 (1981), this Court heard both
statutory and constitutional challenges to FUTA by plain-
tiff churches which sought to have their church-related
schools exempt from coverage. The court analyzed Con-
gressional intent in the 1970 and 1976 amendments and
concluded that the schools in question were included in
the church exemption. Thus the Court did not reach the
churches’ argument that Congress must grant the exemp-
tion under the First Amendment. Id., at 788.
The district court in the present case acknowledged
that Congress in 1970 had retained only a narrow class of
exempt charitable entities and that it had narrowed the
class still further in 1976, to the religious category. Rojas v.
Fitch, 928 F. Supp. at 158. The Court of Appeals also
acknowledged the repeal of the previously broad exemp-
tion available to all nonprofits. Rojas, 127 F.3d at 186.
2) This Court’s First Amendment Tax Exemption
Cases Focus on the General Availability of an
Exemption to a Range of Similar Entities in
Addition to Churches.
In Walz v. Tax Commission, 397 U.S. 664, 90 S. Ct. 1409
(1970), the Court upheld a New York City tax exemption
for religious organizations. The exemption was part of a
broad provision, actually derived from the state constitu-
tion:
Exemptions from taxation may be granted only
by general laws. Exemptions may be altered or
13
repealed except those exempting real or per-
sonal property used exclusively for religious,
educational or charitable purposes as defined by
law and owned by any corporation or associa-
tion organized or conducted exclusively for one
or more of such purposes and not operating for
profit.
Walz, at 666-7
Chief Justice Burger, for the Court, focused on the
neutrality principle. Id. at 669-673. He looked at the lan-
guage of the exemption to analyze the purpose.
It [New York] has not singled out one particular
church or religious group or even churches as
such; rather, it has granted exemption to all
houses of religious worship within a broad class
of property owned by non-profit, quasi-public
corporations which include hospitals, libraries,
playgrounds, scientific, professional, historical
and patriotic groups.
In 1989 a state sales exemption was invalidated in
Texas Monthly v. Bullock, 489 U.S. 1, 109 S. Ct. 890, 10°
L.Ed.2d 1 (1989). There the statute exempted periodicals
of a religious nature, an exemption not granted to any
broad variety of non-sectarian publications as well.
Texas did extend a sales tax exemption to an assort-
ment of other entities (for sales of food, agricultural
items, and property used in the manufacture of articles
for ultimate sale). 109 S. Ct. at 899 n. 4. However, it was
the lack of the exemption for similar but secular entities
that caused the statute to fail under the Establishment
Clause. “What is crucial is that any subsidy afforded
14
religious organizations be warranted by some overarch-
ing secular purpose that justifies like benefits for non-
religious groups.” Id., at 899, n. 4. A list of exemptions
from the same Texas sales tax, for a variety of entities,
“for different purposes does not rescue the exemption for
religious periodicals from invalidation.” Id. (Emphasis in
original).
‘
In Texas Monthly it was noted that “every tax exemp-
tion constitutes a subsidy that affects non-qualifying tax-
payers, forcing them to become indirect and vicarious
donors”. Id., at 899. “Insofar as that subsidy is conferred
on a wide array of nonsectarian groups as well as reli-
gious organizations in pursuit of some legitimate secular
end, the fact that religious groups benefit incidentally
does not deprive the subsidy of the secular purpose and
primary effect mandated by the Establishment Clause”.
Id.
Relying on Walz, the Texas Monthly plurality opinion
noted that “the breadth of New York’s property tax
exemption was essential to our holding that it was not
aimed at establishing, sponsoring, or supporting religion
... but rather possessed the legitimate secular purpose
and effect of contributing to the community’s moral and
intellectual diversity and encouraging private groups to
undertake projects that advanced the community’s well
being and that would otherwise have to be funded by tax
revenues or left undone”. Texas Monthly, 109 S. Ct. at 898.
Justice Brennan’s opinion in Texas Monthly quoted
Justice Harlan’s separate opinion in Walz, where the latter
stated that:
15
As long as the breadth of exemption includes
groups that pursue cultural, moral, or spiritual
improvement in multifarious secular ways,
including, I would suppose, groups whose
avowed tenets may be anti-theological, atheistic,
or agnostic, I can see no lack of neutrality in
extending the benefit of the exemption to orga-
nized religious groups.
Texas Monthly, 109
S. Ct. at 898-9.
An important question is how expansive the broad
range of exempt groups should be.
How expansive the class of exempt organiza-
tions or activities must be to withstand constitu-
tional assault depends upon the State’s secular
aim in granting a tax exemption. If the State
chose to subsidize, by means of a tax exemption,
all groups that contributed to the community’s
cultural, intellectual, and moral betterment, then
the exemption for religious publications could
be retained, provided that the exemption swept
as widely as the property tax exemption we
upheld in Walz. By contrast, if Texas sought to
promote reflection and discussion about ques-
tions of ultimate value and the contours of a
good or meaningful life, then a tax exemption
would have to be available to an extended range
of associations whose publications were sub-
stantially devoted to such matters; the exemp-
tion could not be reserved for publications
dealing solely with religious issues, let alone
restricted to publications advocating rather than
criticizing religious belief or activity, without
signaling an endorsement of religion that is
16
offensive to the principles informing the Estab-
lishment Clause.
Texas Monthly, 489
U.S. at 15.
The Court of Appeals sidestepped Agostini by claim-
ing that Rojas is urging that a statutory benefit must
include “every group that could also conceivably fall
within the secular rationale for the exemption provision.”
127 F.3d at 189; App. 11. This is simply not what Texas
Monthly or Walz indicates, and it is not the issue in this
case. The question presented by Ms. Rojas is whether
Congress had any secular purpose in 1970 and 1976 when
it eliminated the non-profit exemption for all employers
except those having a religious identity. Section 3309(b) is
not challenged on the grounds of under — inclusiveness. It
is challenged because it preserves the nonprofit-charita-
ble exemption expressly for one type of employer and
one type only — the religious employer.
At least two other tax cases under the First Amend-
ment are worth noting. In Jimmy Swagegart Ministries v.
Board of Equalization, 493 U.S. 378, 110 S. Ct. 688 (1990), a
unanimous Court upheld California’s generally applica-
ble sales and use tax against a church’s argument that the
Free Exercise Clause prevented application of the tax to
transactions involving religious materials. The Court
expounded on what it referred to as the plurality opinion
in Texas Monthly v. Bullock, 489 U.S. 1, 109 S. Ct. 890
(1989), and noted that a tax which is not a flat tax, is not a
prior restraint, and applies neutrally to all retail sales
does not contravene the Free Exercise Clause. 110 S. Ct. at
695.
17
The Court in Swaggart reiterated that both taxation
and exemption involve some level of involvement
between government and religion. Id., at 697-8. The opin-
ion goes on to note that “we have held that generally
applicable administrative and record-keeping regulations
may be imposed on religious organizations without run-
ning afoul of The Establishment Clause”. Id., at 698.
“[A]nd the record-keeping requirements of the Fair Labor
Standards Act, while perhaps more burdensome in terms
of paperwork, are not significantly more intrusive intc
religious affairs”. Id.
Even if the required payment of social security and
unemployment taxes did violate an employer's funda-
mental religious belief, and burden free exercise, that
burden is still justified in light of government’s very
strong interest in “assuring mandatory and continuous
participation in and contribution to the social security
system”. United States v. Lee, 455 U.S. 252, 102 S. Ct. 1051,
1056 (1982). In Lee, an Amish employer objected to
required social security and unemployment taxes. An
exemption by statute was available to self-employed
Amish but not to an Amish employer. As the Court noted,
“Granting an exemption from social security taxes to an
employer operates to impose the employer’s religious
faith on the employees. Congress drew a line in Section
1402(g), exempting the self-employed Amish but not all
persons working for an Amish employer”. Lee, 102 S. Ct.
at 1057.
18
3) The Court of Appeals Decided the Secular Pur-
pose Issue in a Manner Which Conflicts with
the Relevant Decisions of This Court.
The Court of Appeals, like the District Court, simply
found a secular purpose which existed nowhere in the
record and nowhere in the Congressional record of the
1970 and 1976 amendments. 127 F.3d at 188. Like the
District court, it used the original Congressional purpose
from the 1930’s, which had a constitutionally valid pur-
pose of bestowing an exemption on all non-profits, chari-
ties, schools, whether religious or not. Rojas has never
contended that the original exemption statute, prior to
1970, was invalid. 928 F. Supp. at 163. However, the Court
of Appeals did not seek the secular purpose Congress
had in mind in 1970 (and 1976), when it withdrew the
exemption from the previously broad group and
“enacted” a narrow exemption. Grace Brethren, at 398.
Congress did not then use neutral criteria which
focused on the size of the employer, the irregular employ-
ment patterns, or the lack of easy accountability of wages.
If it had, such criteria would no doubt be valid. Instead
Congress used religion. Thus if a secular non-profit has
irregular employment patterns or wages not easily
accountable, it is still covered by the tax. But The Salva-
tion Army, and other church organizations, which may be
very large, very stable, and with thousands of regularly
employed staff, are exempt.
The supposed secular purpose not only has been
created as a post-hoc attempt to buttress a religiously
targeted benefit, but it also lacks all logic.
19
In Texas Monthly, the court pointed out that “there is
no evidence in the record” of some “secular legislative
policy that motivated similar tax breaks for non-religious
activities”. Id., 198 S. Ct. at 899, n. 4. The same is true in
the present case, with statutory provisions (and history)
which expressly favored religion and expressly removed
the broad range of non-profits.
The Court of Appeals decision in this case is in
conflict with the Seventh Circuit on the issue of burden of
production in a facial Establishment Clause challenge.
In Metz! v. Leininger, 57 F.3d 618, 622 (7th Cir. 1995),
the court invalidated a state law closing public schools on
Good Friday. Chief Judge Posner, for the majority, rea-
soned that the burden of presenting evidence of a secular
purpose rested with the government. Id., at 622. Judge
Manion, dissenting, distinguished the burden of produc-
tion from the burden of persuasion, which he believed
always stayed with the plaintiff. Id., at 625.
Even under the Judge Manion test, the FUTA exemp-
tions must fall. In Metzl, the plaintiff had alleged that the
legislature sought to favor Christians over other religions
and had failed to show that intent, according to the
dissent. In the present case, Rojas does not allege that
FUTA favors one religion over another, but that it favors
religious non-profits over similarly situated secular non-
profits. The fact and evidence of that selective benefit is
found in the statute’s current wording, not in an effort to
discern the subjective purposes of members of Congress.
Chief Judge Posner pointed out that the Illinois stat-
ute “on its face ... violates the Establishment Clause
unless it has a secular justification. The existence of such
20
a justification is in the nature of a defense, and the
burden of producing evidence in support of a defense is,
of course, normally on the defendant”. Id., at 622. He
goes on to state:
We do not wish to make a fetish of the rules of |
evidence. The constitutionality of statutes is typ-
ically determined by reference to general con-
siderations, values, intuitions, and other
“legislative facts” (in the sense of considerations
that typically influence legislative judgments)
rather than to facts presented through testimony
and other formal evidence subject to rules of
evidence developed largely for the control of lay
juries. Still, when the facts necessary for judg-
ment, however, they might be adduced, are mis-
sing in a case, the court has to decide who shall
bear the onus for having failed to place them
before the court. It seems to us that where as in
this case the challenged law places the support
of the state behind a wholly sectarian holiday
and the only possible justification concerns the
internal operations of a branch of state govern-
ment, the burden of presenting whatever type of
fact might support the justification should rest
on the state. It was the state’s decision to pitch
its defense on the infeasibility of keeping the
schools open on Good Friday The question of
feasibility is not one that can be settled as a
matter of first or general principles. It requires a
showing of fact that the state has not attempted
to make.
Applying that reasoning to the present dispute, it
should have been the job of the state or federal govern-
ment to present to the court the “defense” that the facial
distinction in the statutes between religious non-profits
21
and secular non-profits can somehow be explained. Is
there some administrative facilitation difference between
two otherwise similar employers? Are we to simply
hypothesize that religious entities and their workforces
are less “permanent” or less “stable”?
In St. Martin, supra, the Court had to closely analyze
the Congressional purpose in order to decide if the
remaining exemption extended far enough to include sit-
uations where the employment was not in the church
building but under the umbrella of the church organiza-
tion. St. Martin, 451 U.S. at 781. Justice Blackmun relied
on Senator Long’s explanation and on the 1970 House
Report, which had identical language to the Senate
Report:
“This paragraph excludes services of persons
where the employer is a church or convention or
association of churches, but does not exclude
certain services performed for an organization
which may be religious in orientation unless it is
operated primarily for religious purposes and is
operated, supervised, controlled or principally
supported by a church (or convention or asso-
ciation of churches). Thus, the services of the
janitor of a church would be excluded, but ser-
vices of a janitor for a separately incorporated
college, although it may be church related,
would be covered. A college devoted primarily
to preparing students for the ministry would be
exempt, as would a novitiate or a house of study
training candidates to become members of reli-
gious orders. On the other hand, a church
related (separately incorporated) charitable
organization (such as, for example, an
orphanage or a home for the aged) would not be
22
considered under this paragraph to be operated
primarily for religious purposes”. H.R. Rep. No.
91-612, p. 44 (1969).
The repeal of Section 3309(b)(3) brought back into the
system the non-profit private school. St. Martin, supra.
But if that exact same school is religious, then it is still
exempt by Section 3309(b)(1).
If size of the employer, number of permanent
employees, or “stability” of the employer had been the
Congressional concerns, then secular categories or crite-
ria could easily have been used. In fact Congress had
demonstrated that it knows exactly how to exempt the
very marginal employer from the system. See 26 U.S.C.
Section 3309(c) (exempting non-profits which do not have
at least four employees at least twenty days a year). That
exemption can stand on its secular footing rciating to the
administrative convenience in not covering the very
small or impermanent employment situation.
Following the 1976 amendments, litigation ensued
over whether church schools were now in the system
because of the elimination of the school exemption or still
exempt because of the church exemption. See, e.g., State
of Alabama v. Marshall, 626 F.2d 366 (5th Cir. 1980), cert.
denied, 452 U.S. 905 (1981). The courts concluded, even
before St. Martin, supra, that Congressional intent was
clear in the amendments, that the exemption was for
schools having an integral part of the religious mission of
the governing church. State of Alabama, at 368. “Although
both sides of this case point to evidence of Congressional
intent favoring their positions, the law is well settled that
23
a statute must be interpreted according to its plain lan-
guage unless a clear contrary legislative intention is
shown”. Id.
Thus, the Court of Appeals in the present case
ignored the admitted religious criteria and purpose of
Section 3309(b) and substituted its own creation, an
“administrative” secular purpose which is superfluous in
light of the Section 3309(c).
In order to reach this result, the Court of Appeals had
to disregard the analysis of both the dissenters and the
majority in Agostini v. Felton, 117 S. Ct. 1997 (1997), all of
whom closely examined the neutral secular criteria used
by Congress in the Title I funding program at issue.
Under the First Circuit’s analysis in Rojas, the
Agostini result would be the same even if Congress now
amended the Title I program and made it available to
religious schools only, not to all schools. This is such a
serious misreading of Agostini that Rule 10(c) of this
Court is appropriately invoked. In fact, it would be
entirely consistent with Agostini to grant certiorari, vacate
the First Circuit judgment, and remand for further con-
sideration in light of Agostini and other decisions of this
Court. No new ground need be broken to correct the
error in this case. In light of Walz, Texas Monthly, Grace
Brethren, and Agostini, the decision below is simply incor-
rect on the law.
24
CONCLUSION
The Decision of the Court of Appeals is contrary to
relevant decisions of this Court on an important federal
question. The decision seriously misconstrues Agostini v.
Felton and must be corrected. The petition for certiorari
should be granted, and this matter scheduled for full
briefing, or alternatively, the judgment of the Court of
Appeals should be vacated and remanded in light of
established precedents of this court.
Respectfully submitted:
Petitioner, Guadalupe Rojas,
By her Attorneys:
CAROLINE COLE CORNWELL
Jones & ASSOCIATES
72 South Main Street
Providence, RI 02903
(401) 274-4446
JOHN WriuiaAmM DINEEN
YesserR, GLASSON & DINEEN
One Providence Washington Plaza
Providence, RI 02903
(401) 331-3550
App. 1
Guadalupe ROJAS, Plaintiff-Appellant,
v.
Lawrence FITCH, et al., Defendants-Appellees.
Guadalupe ROJAS, Plaintiff-Appellee,
v.
Dr. Lee H. ARNOLD, et al.,
Defendants-Appellants.
Nos. 96-2328, 97-1089.
United States Court of Appeals,
First Circuit.
Heard June 2, 1997.
Decided Oct. 9, 1997.
John W. Dineen, with whom Yesser, Glasson &
Dineen, Providence, RI, was on brief for appellant Gua-
dalupe Rojas.
Scott Glabman, Attorney, Washington, DC, with
whom J. Davitt McAteer, Acting Solicitor of Labor, Mount
Hope, WV, Charles D. Raymond, Associate Solicitor for
Employment and Training, Legal Services, and Harry L.
Sheinfeld, Counsel for Litigation, U.S. Department of
Labor, Office of the Solicitor, Washington, DC, were on
brief for appellee Cynthia A. Metzler, Acting Secretary of
Labor.
Rebecca Tedford Partington, Assistant Attorney Gen-
eral, Providence, RI, for appellee Dr. Lee Arnold, Direc-
tor, Rhode Island Department of Labor and Training.
Michael G. Dolan, with whom Cadwalader, Wick-
ersham & Taft, and Gerard P. Cobleigh, Warwick, RI, were
on brief for appellee Salvation Army.
App. 2
Before TORRUELLA, Chief Judge, CAMPBELL,
Senior Circuit Judge, and BOUDIN, Circuit Judge.
TORRUELLA, Chief Judge.
Plaintiff-Appellant Guadalupe Rojas, a former
employee of the Salvation Army, sought a declaratory
judgment that exemptions for religious employers under
the Rhode Island unemployment tax statute and under
the Federal Unemployment Tax Act (“FUTA”), 26 U.S.C.
S§ 3301-3311, violate the Establishment Clause and the
Equal Protection Clause of the federal Constitution, as
well as Article Il, § 3 of the Rhode Island Constitution,
which protects the Freedom of Religion. She named as
defendants the director of the Rhode Island Department
of Employment and Training (“DET”) and the Secretary
of the federal Department of Labor. The Salvation Army
intervened as a defendant. The district court rejected all
of Rojas’s substantive arguments for declaratory relief, see
Rojas v. Fitch, 928 FSupp. 155, 162-67 (D.R.I. 1996), and
now, on appeal, she reasserts her federal Establishment
Clause and Equal Protection claims. We affirm.
BACKGROUND
The following facts are not disputed. Rojas was a
paid employee of the Salvation Army, serving as a social
case worker from 1988 to 1994, except for a short inter-
ruption in 1990 and 1991 when she worked for Catholic
Social Services. Rojas was not, and was not required to
be, a soldier or member of the Salvation Army when
employed as a case worker. The Salvation Army termi-
nated her employment on March 18, 1994, citing financial
constraints.
App. 3
Approximately one month after her termination,
Rojas applied for unemployment insurance benefits from
the DET. The DET found that Rojas was ineligible because
her former employer, the Salvation Army, was exempt
from contributing to Rhode Island’s unemployment
insurance scheme under sections 28-42-8(4) and 28-44-11
of the Rhode Island General Laws.! Pursuant to the
exemption for religious employers under section
28-42-8(4), no taxes were withheld from Rojas’s wages by
the Salvation Army, and her income was not reported to
the DET. The DET’s denial of benefits was upheld by a
DET referee after a hearing, and later the referee’s deter-
mination was upheld by the DET Board of Review.
On September 9, 1994, Rojas initiated an action in
federal district court against the Director of the DET,
seeking declaratory invalidation of the exemption under
either the Establishment Clause,? the Equal Protection
Clause,* or Article I, § 3 of the Rhode Island Constitu-
tion.t In an amended complaint, Rojas added the
| In 1987, the DET determined that the Salvation Army is a
“church” and thus entitled to an exemption pursuant to R.I.
Gen. Laws § 28-42-8(4).
°
2 U.S. Const. amend. I (“Congress shall make no law
respecting an establishment of religion, or prohibiting the free
exercise thereof. ... ”).
3 U.S. Const. amends. V, XIV.
4 Article I, § 3 provides, in pertinent part:
. no person shall be compelled to frequent or to
support any religious worship, place, or ministry
whatever, except in fulfillment of such person’s
voluntary contract; nor enforced, restrained,
molested, or burdened in body or goods; nor
App. 4
Secretary of the Department of Labor as a defendant, on
the theory that FUTA’s allowance of state exemptions for
religious employers in the federal-state unemployment
insurance system was an underlying cause of the Rhode
Island exemption she challenged. See 26 U.S.C. 3309(b)
(FUTA provision listing permissible employer exemp-
tions, including exemption for religious employers). The
Salvation Army was allowed to intervene, without objec-
tion, as a defendant.
FUTA establishes a federal-state unemployment ben-
efit scheme requiring employers to pay a federal excise
tax, see 26 U.S.C. § 3301 (computing the tax as a percent-
age of wages of covered employees), but encouraging the
development of state unemployment insurance programs
in the following ways: first, employers paying into a
qualifying state unemployment fund are entitled to a
credit on the federal tax, see 26 U.S.C. § 3302, and second,
a qualifying state is entitled to receive federal grants
toward the cost of administering the state’s unemploy-
ment compensation program, see 42 U.S.C. § 503. Rhode
disqualitied from holding any office; nor otherwise
suffer on account of such person’s religious belief;
and that every person shall be free to worship God
according to the dictates of such person’s conscience,
and to profess and by argument to maintain such
person’s opinion in matters of religion; and that the
same shall in no wise diminish, enlarge, or affect the
civil capacity of any person.
R.I. Const. art. I, § 3. Rojas also appealed the decision of the DET
board in state court, a suit which has been stayed pending
resolution of her federal civil action.
App. 5
Island’s unemployment fund qualified for participation
in the FUTA system.
FUTA exempts certain classes of employees from
mandatory state coverage by a qualifying state plan. See
26 U.S.C. § 3309(b). The current scope of exemptions
reflects amendments made to FUTA by Congress in 1976.
The 1976 Amendments narrowed the set of employees
who were exempt from mandatory state coverage, by
requiring, for example, that previously exempted school
employees be covered. In 1970 as well, the scope of FUTA
exemptions was narrowed significantly by Congress
when it repealed a broad exemption previously available
to all nonprofit organizations. See generally California v.
Grace Brethren Church, 457 U.S. 393, 397, 102 S.Ct. 2498,
2502, 73 L.Ed.2d 93 (1982) (describing the 1970 and 1976
FUTA Amendments).
Currently, the segments of the labor force that the
states are not required to cover under FUTA section
3309(b) include persons “in the employ of (A) a church or
convention or association of churches, or (B) an organiza-
tion which is operated primarily for religious purposes
and which is operated, supervised, controlled, or princi-
pally supported by a church or convention or association
of churches.” 26 U.S.C. § 3309(b)(1). Also exempt are
employees of small nonprofit organizations (having fewer
than four regular employees), see § 3309(c), elected state
employees, see § 3309(b)(3), employees at certain reha-
bilitation facilities, see § 3309(4)(A), and inmates of custo-
dial or penal institutions, see § 3309(b)(6).
The Rhode Island Employment Security Act
(“RIESA”), R.LG.L. §§ 28-42-1 et seq., exempts a variety of
App. 6
kinds of employment from coverage. See R.I. Gen. Laws
§ 28-42-8 (1995). Apparently tracking the language of
FUTA, Section 28-42-8(4)(i) exempts service performed
“in the employ of: (A) A church or convention or associa-
tion of churches, or (B) an organization which is oper-
ated, supervised, controlled, or principally supported by
a church or convention or association of churches.” Other
exempted employees under RIESA include certain insur-
ance brokers, golf caddies, certain rehabilitation center
employees, and certain real estate brokers. R.I. Gen, Laws
§§ 28-42-8(11), (9), (4)(B)(iii), (10).
The defendants raised a number of procedural claims
below, all of which were rejected by the district court.
Upon reaching the merits of Rojas’s suit, the district court
rejected all of her claims. On appeal, Rojas argues that the
Rhode Island and FUTA exemptions for religions violate
the Establishment Clause and the Equal Protection Clause
of the federal Constitution, while the appellees reassert
their claims that jurisdiction is lacking because of the Tax
Injunction Act, 28 U.S.C. § 1341 and that the appellant
lacks standing.
DISCUSSION
Because we find that the appellant's claims fail on the
merits, we need not reach either the claim put forward by
the federal defendant-appellee that Rojas lacks standing
to challenge FUTA or the claim put forward by the state
defendant-appellee that the Tax Injunction Act bars fed-
eral jurisdiction over the suit. See Norton v. Mathews, 427
U.S. 524, 530-31, 96 S.Ct. 2771, 2774-75, 49 L.Ed.2d 672
(1976); Hachikian v. FDIC, 96 F.3d 502, 506 n. 4 (Ist
App. 7
Cir.1996) (“ ‘It is a familiar tenet that when an appeal
presents a jurisdictional quandary, yet the merits of the
underlying issue, if reached, will in any event be resolved
in favor of the party challenging the court's jurisdiction,
then the court may forsake the jurisdictional riddle and
simply dispose of the appeal on the merits.’ ”) (quoting
United States v. Stoller, 78 F.3d 710, 715 (1st Cir.1996)).
I. The Establishment Clause Claim
At the core of the Establishment Clause is the idea
that government cannot “favor religion over nonreligion,
nor sponsor a particular sect, nor try to encourage partici-
pation in or abnegation of religion.” Walz v. Tax Comm'n,
397 U.S. 664, 694, 90 S.Ct. 1409, 1424, 25 L.Ed.2d 697
(1970) (Harlan, J., concurring) (noting that while dis-
agreements over applications of Establishment Clause are
common, its core ideal is well established). In order to
vindicate this constitutional guarantee, two tests have
long guided judicial review of any challenged legislation:
first, the law must have a purpose other than to advance
or inhibit religion; second, the primary effect of the law
must not be to advance or inhibit religion. See, e.g.,
Abington School District v. Schempp, 374 U.S. 203, 222, 83
S.Ct. 1560, 1571-72, 10 L.Ed.2d 844 (1963) (“The test may
be stated as follows: what are the purpose and primary
effect of the enactment? If either is the advancement or
inhibition of religion then the enactment exceeds the
scope of legislative power as circumscribed by the Con-
stitution.”). A third practical concern under the Establish-
ment Clause is that the net effect of governmental
programs avoid “excessive governmental entanglement
with religion.” Walz, 397 U.S. at 674, 90 S.Ct. at 1414.
App. 8
These threads were united in the well-known three-
part test in Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105,
29 L.Ed.2d 745 (1971), which provides: “First, the statute
must have a secular legislative purpose; second, its prin-
cipal or primary effect must be one that neither advances
or inhibits religion; finally, the statute must not foster ‘an
excessive government entanglement with religion.’ ” Id.
at 612-13, 91 S.Ct. at 2111 (quoting Walz ) (citation omit-
ted). The district court applied the Lemon test in the
course of holding that FUTA and the RIESA did not
violate the Establishment Clause. See 928 F.Supp. at
163-66. This approach was appropriate, for the Supreme
Court, despite criticisms of previous applications of the
Lemon test, essentially confirmed in Agostini v. Felton, ___
U.S. __, 117 S.Ct. 1997, 138 L.Ed.2d 391 (1997), that the
Lemon criteria still apply. See ____ U.S. at ___, __, 117 S.Ct.
at 2010, 2015.
In Agostini, the Court overruled its Establishment
Clause decision in Aguilar v. Felton, 473 U.S. 402, 105 S.Ct.
3232, 87 L.Ed.2d 290 (1985) — which had barred the New
York City Board of Education from sending public school
teachers into sectarian private schools to teach remedial
classes pursuant to Title I — but nevertheless stated that
the general tests used in analyzing challenged legislation
under the Establishment Clause had not changed. The
Agostini decision reaffirmed the need to ascertain that
laws have a secular purpose and a primary effect other
than advancing religion, see __ U.S. at __, 117 S.Ct. at
2010, and explicitly incorporated the entanglement prong
into the effects calculus, thereby making the third prong
of Lemon a part of the second prong, see id. at 2016. The
Court in Agostini noted that what has changed since
App. 9
Aguilar are certain presumptions regarding the effects of
neutral laws that incidentally confer benefits to religions.
oa. DS 6 «. 27 66k a Beis (stating that
the Court no longer considers the presence of public
school employees on parochial school property to lead
ineluctably to the impermissible effect of advancing or
endorsing religion where their presence is part of neutral
program).
The district court properly found that the FUTA and
RIESA exemptions had neither an impermissible purpose,
nor an impermissible effect on religion. First, both the
FUTA and the RIESA exemption provisions serve the
secular purpose of facilitating the administration of the
federal-state unemployment insurance program by
excluding from coverage a variety of workers whose
employment patterns are irregular or whose wages are
not easily accountable. With regard to FUTA, Rojas con-
cedes that the original purpose of the coverage exemp-
tions was to address administrability concerns. She
contends, however, that the current 26 U.S.C. § 3309,
viewed in the wake of the 1970 and 1976 Amendments,
reflects the purpose of favoring religion rather than the
secular purpose of providing ease of administration.
Rojas is unable to direct our attention to, nor can we find,
any indications in the legislative history of the 1970 and
1976 Amendments that suggest an impermissible purpose
of advancing religion in general or any particular reli-
gion. See, e.g., Wallace v. Jaffree, 472 U.S. 38, 56, 105 S.Ct.
2479, 2489, 86 L.Ed.2d 29 (1985) (“[T]he First Amendment
requires that a statute must be invalidated if it is entirely
motivated by a purpose to advance religion.”). Moreover,
the current exemption for religious employment, even
App. 10
after the amendments, still rests within the context of a
variety of other exemptions, all of which appear to share
a common secular purpose. Efficient administration of
the unemployment compensation system is particularly
enhanced through the exemptions for religion because it
eliminates the need for the government to review
employment decisions made on the basis of religious
rationales. These considerations are also true of the
exemptions listed in R.I. Gen. Laws § 28-42-8(1). The
exemption for religions contained therein, when viewed
in context, is innocuous. It appears to serve the interest in
facilitating the administration of federal and state unem-
ployment benefits programs, and Rojas can point to no
other evidence that the “purpose that animated adop-
tion” was to advance religion. Edwards v. Aguillard, 482
U.S. 578, 585, 107 S.Ct. 2573, 2578, 96 L.Ed.2d 510 (1987).
In Walz, the Supreme Court upheld property tax exemp-
tions for religious institutions, arguing that such exemp-
tions, although not required by the Free Exercise Clause,
were valid governmental actions “productive of a benev-
olent neutrality which will permit religious exercise to
exist without sponsorship and without interference.” 397
U.S. at 669, 90 S.Ct. at 1412. Including religious institu-
tions within a set of unemployment tax exemption recip-
ients — selected on the basis of reducing difficulties in
administering an unemployment insurance program -
reflects less of a desire to sponsor religion than the direct
property tax exemptions upheld in Walz.
Rojas’s brief on appeal places much weight on Texas
Monthly v. Bullock, 489 U.S. 1, 109 S.Ct. 890, 103 L.Ed.2d 1
(1989), which struck down a narrow Texas sales and use
periodicals that are published or
“ae
tax exemption for
App. 11
distributed by a religious faith and that consist wholly
of writings promulgating the teaching of the faith and
books that consist wholly of writings sacred to a religious
faith.” Id. at 5, 109 S.Ct. at 894 (quoting Texas statute).
Although Texas Monthly stands for the proposition that a
subsidy that is granted only to religious publications and
not to other similar publications “lacks sufficient breadth
to pass scrutiny under the Establishment Clause,” it also
stated that “[i]nsofar as [a tax] subsidy is conferred upon
a wide array of non-sectarian groups as well as religious
organizations in pursuit of some legitimate secular end,
the fact that religious groups benefit incidentally does not
deprive the subsidy of the secular purpose and primary
effect mandated by the Establishment Clause.” 489 U.S. at
14-15, 109 S.Ct. at 899. The exemption provisions at issue
in the instant case fall within the latter category. We
decline Rojas’s invitation to read Texas Monthly as requir-
ing that a provision incidentally benefitting religion must
grant a like benefit to every group that could also con-
ceivably fall within the secular rationale for the exemp-
tion provision. Texas Monthly nowhere requires this
underinclusiveness analysis, but instead indicates that
when a “wide array” of groups are benefitted by a provi-
sion that pursues a single, unifying, secular end, one of
these groups may indeed be religious institutions. In
Texas Monthly, the other Texas sales tax exemptions did
not serve the same purpose as the narrow exemption for
religious periodicals, and thus their existence could not
rescue the challenged exemption. By contrast, an ade-
quate array of groups are exempted under the FUTA and
RIESA provisions, reinforcing our conclusion that the
religious exemptions here serve the legitimate secular
App. 12
purpose of facilitating the administration of the unem-
ployment insurance system.°
The second basic Establishment Clause concern is
that of avoiding the effective promotion or advancement
of particular religions or of religion in general by the
government. Although favoritism toward any particular
sect is not an issue raised by this appeal, it is not dis-
puted that religious institutions as a whole benefit from
the FUTA and RIESA tax exemptions. An incidental bene-
fit to religion does not, however, render invalid a statu-
tory scheme with a valid secular purpose. See, ¢.g.,
Agostini, __ U.S. at __, 117 S.Ct. at 2014; Zobrest v.
Catalina Foothills Sch. Dist., 509 U.S. 1, 113 S.Ct. 2462, 125
L.Ed.2d 1 (1993); Witters v. Washington Dept. of Servs., 474
U.S. 481, 488-89, 106 S.Ct. 748, 751-52, 88 L.Ed.2d 846
(1986); Walz, 397 U.S. at 664. The exemptions is not to
force the general public to subsidize religion. Rather, the
primary practical effect of the exemptions for religious
> We therefore need not address the defendants’ alternative
legal argument in defense of the exemptions, namely that even
were the exemption provided only to religions, it would still
serve the legitimate secular purpose of decreasing
governmental entanglement with religion. It is well established
that “it is a permissible legislative purpose to alleviate
significant governmental interference with the ability of
religious organizations to define and carry out their religious
missions.” Corporation of the Presiding Bishop of the Church of Jesus
Christ of the Latter-day Saints v. Amos, 483 U.S. 327, 335, 107 S.Ct.
2862, 2868, 97 L.Ed.2d 273 (1987) (upholding exemption for
religious institutions from Title VII’s prohibition against
religious discrimination in employment for secular activities of
a nonprofit). But again, we do not need to consider whether the
exemptions at issue here are supported on this accommodation
rationale.
App. 13
institutions is to exclude former employees of such insti-
tutions from participating in the Rhode Island unemploy-
ment insurance system.
Finally, as the district court correctly reasoned, entan-
glement concerns are in fact reduced through the adop-
tion of the exemptions in this case. See 928 F.Supp. at 165.
II. Equal Protection
With regard to Rojas’s claim that the FUTA and
RIESA tax exemptions for religious employers violate
constitutional equal protection principles, we affirm the
district court for substantially the grounds given in its
opinion. See 928 F.Supp. at 166. Although Rojas recasts
her equal protection claim slightly on appeal, arguing
that the district court erred by focusing on the difference
in treatment of employers rather than on the difference in
treatment of employees of exempt and non-exempt enti-
ties, the rationality requirement under the equal protec-
tion clause is equally lenient from either vantage. The
same considerations that led the district court to find no
equal protection violation with regard to the difference in
treatment of exempt and non-exempt employers applies
to exempt and non-exempt employees as well.
CONCLUSION
For the reasons stated above, the decision of the
district court is affirmed.
App. 14
Guadalupe ROJAS
v.
Lawrence FITCH, Individually and in His
Capacity as Director of the Rhode
Island Department of Employment and
Training; The Salvation Army of Rhode
Island, Inc., Defendant Intervenor; and
Robert Reich, in His Official Capacity
as Secretary, United States Department
of Labor.
Civ. A. No. 94-0483B.
United States District Court,
D. Rhode Island.
June 7, 1996.
John William Dineen, Yesser, Glasson & Dineen,
Providence, RI, for Plaintiff.
Rebecca Tedford Partington, William Kolb, Attorney
General’s Office, Providence, RI, Everett Samartino, U.S.
Attorney’s Office, Providence, RI, Scott Glabman, Office
of the Solicitor, U.S. Dept. of Labor, Washington, D.C.,
Gerard Paul Cobleigh, Cobleigh, Watt, Rock & Giacobbe,
Warwick, RI, Florence Barber, Cadwalader, Wickersham &
Taft, New York City, Patricia Andrews, Providence, RI,
for Defendant.
OPINION
FRANCIS J. BOYLE, Senior District Judge.
This action is a constitutional challenge to a federal
statute and a Rhode Island statute which operate to
exempt religious organizations from the payment of
App. 15
Rhode Island State unemployment taxes. Plaintiff claims
that the statutes violate the Establishment Clause, and the
Equal Protection Clause of the United States Constitution,
as well as, Article I, § 3 of the Rhode Island Constitution.
Defendants contend that the action should be dismissed
from the federal forum pursuant to the Tax Injunction Act
and the doctrine of abstention. Federal defendant also
contends that plaintiff lacks standing to bring this action
against him. In the alternative, defendants argue that the
statutes withstand constitutional scrutiny. For the follow-
ing reasons, the defendants’ procedural challenges to this
action are rejected. The statutes, however, are found to be
constitutional.
I. BACKGROUND
The Federal Unemployment Tax Act (“FUTA” or “the
Act”), 26 U.S.C. §§ 3301-3311, establishes a cooperative
federal-state scheme to provide benefits to unemployed
workers. The Act requires employers to pay a federal
excise tax equal to a percentage of wages paid to “cov-
ered” employees, but also entitles them to a credit on
contributions paid into federally approved state unem-
ployment compensation programs. 26 U.S.C. §§ 3301,
3302. Prior to 1970, FUTA excluded from the definition of
covered employment “service performed in the employ of
a religious, charitable, educational, or other [tax exempt]
organization.” This “exemption” meant that such organi-
zations were not required to pay either federal excise
taxes or state unemployment taxes.
In 1970, Congress amended FUTA, requiring state
plans to cover employees of non-profit organizations,
—— ee — — —— — —eeEeeeEee
App. 16
state hospitals, and state institutions of higher education,
thereby eliminating the broad state exemption available
to non-profit organizations.! See Employment Security
Amendments of 1970, Pub.L. 91-373, § 104(b)(1), 84 Stat.
697. At that same time, however, Congress enacted
§ 3309(b), exempting from mandatory state coverage a
narrow class of religious and educational employees? as
well as other specifically enumerated services. In 1976,
Congress once again amended FUTA, eliminating the
blanket state exemption for school employees contained
in § 3309(b)(3), but retaining the exemptions for religious
employees and other services.
1 Although nonprofit organizations are required to be
covered by federally approved state unemployment
compensation laws, they continue to be exempt from the federal
excise tax on wages as § 3306(c)(8), excluding services
performed for such organizations from the definition of
“employment,” has not changed.
2 § 3309(b), at that time, exempted (in part) services
performed:
(1) in the employ of (A) a church or convention or
association of churches, or (B) an organization which
is operated primarily for religious purposes and
which is operated, supervised, controlled, or
principally supported by a church or convention or
association of churches;
(2) by a duly ordained, commissioned, or licensed
minister of a church in the exercise of his ministry or
by a member of a religious order in the exercise of
duties required by such order;
(3) in the employ of a school which is not an
institution of higher education. [. . . ] Pub.L. 91-373,
§ 104(b)(1), 84 Stat. 698.
a
App. 17
Title 28, chapters 42-44 of the General Laws of Rhode
Island comprise the Rhode Island Employment Security
Act. The purpose of this act is to provide “for the accu-
mulation of a fund to assist in protecting the public
against the ill effects of unemployment ... ” R.I.G.L.
§ 28-42-2. Section 28-42-8 exempts certain types of
employment from the requirements of the Employment
Security Act. For instance, the statute exempts from cov-
erage some domestic servants, golf caddies, certain insur-
ance brokers and agents, as well as other services.
R.L.G.L. § 28-42-8(1), (9) & (11). As pertains specifically to
this action, § 28-42-8(4) exempts from Act coverage:
(4) Service performed:
(i) In the employ of:
(A) A church or convention or association
of churches or
(B) An organization which is operated pri-
marily for religious purposes and which is oper-
ated, supervised, controlled, or principally
supported by a church or convention or associa-
tion of churches . . . R.I.G.L. § 28-42-8(4)(I)(A) &
(B) (Michie 1995).
Accordingly, religious organizations and churches which
qualify as exempt under § 28-42-8(4) are not required to
pay an unemployment tax.
The Salvation Army was founded in 1865 as an inter-
national religious and charitable organization. A funda-
mental belief of the Army is that the physical needs of a
person must be administered to before that person can
truly receive and accept spiritual guidance. Therefore, as
App. 18
part of its religious mission, The Salvation Army con-
ducts rehabilitative programs, maintains shelters for the
homeless, soup kitchens, day care centers and provides
many other charitable services. The Salvation Army has
been deemed a “church” for tax purposes by both the
federal government and the government of the State of
Rhode Island. In 1955, the Internal Revenue Service
(“IRS”) determined that The Salvation Army constituted
a “church or a convention or association of churches” for
purpose of the Internal Revenue Code. Likewise, in 1987
the Rhode Island Department of Employment and Train-
ing determined that the Salvation Army was a “church”
and thus entitled to an exemption pursuant to
§ 28-42-8(4)(a).
Plaintiff worked for The Salvation Army in Provi-
dence, Rhode Island from 1988 to 1994 with a brief inter-
ruption in 1990-91 during which she was employed by
Catholic Social Services. During her time with The Salva-
tion Army, she worked as a social case worker. On March
18, 1994, plaintiff was terminated due to “financial con-
straints.”
Approximately one month later, plaintiff filed an
application for unemployment insurance benefits with
the Rhode Island Department of Employment and Train-
ing (“DET”). DET determined that plaintiff was ineligible
for unemployment benefits due to the fact that her former
employer was exempt under § 28-42-8(4) of the Rhode
Island General Laws. Plaintiff appealed, and a hearing
was held before a DET referee on May 12, 1994. At that
hearing, plaintiff argued that The Salvation Army was
not a “church” within the meaning of R.I.G.L.
§ 28-42-8(4), and that even if it was a church, § 28-42-8(4)
—
App. 19
ts 7 a, OnE
was violative of the First, Fourth and Fifteenth Amend-
ments to the U.S. Constitution and Article I, § 3 of the
Rhode Island Constitution.
The referee, in a decision dated June 6, 1994, affirmed
the DET’s denial stating in part, “claimant’s wages are
exempt under the provisions of Section 28-42-8(4) of the
: Employment Security Act [and] cannot be used to estab-
lish a valid Employment Security claim.” Furthermore,
the referee stated that based upon a review of the case
law cited by plaintiff, the Rhode Island statute did not
violate either the United States Constitution or the Rhode
Island Constitution. Plaintiff appealed that decision to the
DET Board of Review. In a decision dated August 16,
1994, the Board “approved and confirmed” the referee’s
decision.
On September 9, 1994, plaintiff initiated this action in
the United States District Court for the District of Rhode
Island by filing a complaint naming the Director of DET
as defendant. In that complaint, plaintiff sought a judg-
ment declaring R.I.G.L. § 28-42-8(4) as violative of the
First, Fifth and Fourteenth Amendments to the United
States Constitution and Article I, § 3 of the Rhode Island
Constitution.
Approximately one week later, plaintiff initiated a
similar action in the District Court of the State of Rhode
Island. That action, however, has been stayed by agree-
ment of the parties pending a decision in the federal
action.
In December of 1994, the Salvation Army moved
without objection to intervene in this action on the
grounds that it was a party to the DET proceedings and
| EERE eee ee ET ae em
App. 20
that its exemption under § 28-42-8(4) is at issue. The
motion was granted. In March of 1995, plaintiff moved to
amend her complaint to add the Secretary of the United
States Department of Labor on the grounds that § 3309(b)
of FUTA was inextricably connected with the Rhode
Island statute in question. This motion was also granted.
Il. ANALYSIS
A. Procedural Issues
1. Tax Injunction Act.
Defendants first contend that this action should be
dismissed from the federal forum under the Tax Injunc-
tion Act. This contention, however, is without merit.
The Tax Injunction Act provides:
The District Courts shall not enjoin, suspend or
restrain the assessment, levy or collection of any
tax under State law where a plain, speedy and
efficient remedy may be had in the courts of
such State. 28 U.S.C. § 1341 (West 1993).
It is clear from the very text of the statute that it is not
applicable in this instance. The present action is not an
action to “enjoin, suspend or restrain” the collection of
taxes. In fact, it is quite the opposite. This is, in essence,
an action to compel the State of Rhode Island to collect
taxes. See Moton v. Lambert, 508 F.Supp. 367, 368
(N.D.Miss.1981) (plaintiffs action to invalidate tax exemp-
‘tion for racially segregated schools was not enjoined
because it was a “demand that taxes be collected and not
enjoined”).
App. 21
Defendants rely on the 1982 United States Supreme
Court case of California v. Grace Brethren Church, 457 U.S.
393, 408, 102 S.Ct. 2498, 2507-08, 73 L.Ed.2d 93 (1982), for
their assertion that “the Act also prohibits a district court
from issuing a declaratory judgment holding state tax
laws unconstitutional.” That reliance is misplaced. Justice
O’Connor in the majority opinion specifically stated,
“Congress’ intent in enacting the Tax Injunction Act was
to prevent federal-court interference in the assessment and
collection of state taxes.” Id. at 411, 102 S.Ct. at 2509
(emphasis added). Grace Brethren involved an action initi-
ated by parties seeking a declaratory judgment to enjoin
state collection of unemployment taxes on constitutional
grounds. Id. at 398, 102 S.Ct. at 2502-03. The Court held
that the Act prohibited a federal court from issuing a
declaratory judgment holding a state tax law unconstitu-
tional only if it would “in every practical sense operate to
suspend collection of taxes.” Id. at 408, 102 S.Ct. at 2508
(quoting Great Lakes Dredge & Dock Co. v. Huffman, 319
U.S. 293, 299, 63 S.Ct. 1070, 1073, 87 L.Ed. 1407 (1943).)
Accordingly, because this action does not seek to enjoin
or suspend the assessment and collection of taxes, the Tax
Injunction Act does not apply.
2. Doctrine of Abstention.
Defendants also contend that this action should be
dismissed from the federal forum under the doctrine of
abstention. The abstention doctrine is actually a collection
of several legal theories under which a federal court
should or may abstain from hearing an action otherwise
properly brought in this forum. See Colorado River Conser-
vation Dist. v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47
App. 22
L.Ed.2d 483 (1976); Younger v. Harris, 401 U.S. 37, 91 S.Ct.
746, 27 L.Ed.2d 669 (1971); Burford v. Sun Oil Co., 319 U.S.
315, 63 S.Ct. 1098, @7 L.Ed. 1424 (1943); Railroad Comm'n v.
Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941);
Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 60 S.Ct.
628, 84 L.Ed. 876 (1940). In a classic example of the “lets
throw out as many theories as possible and hope one
sticks to the wall” approach, defendants have argued that
all five different theories of abstention are applicable to
this case. All five arguments are without merit.
It should be noted initially that the doctrine of
abstention “is an extraordinary and narrow exception to
the duty of a District Court to adjudicate a controversy
properly before it.” County of Allegheny v. Frank Mashuda
Co., 360 U.S. 185, 188, 79 S.Ct. 1060, 1063, 3 L.Ed.2d 1163
(1959). Thus, abstention can only be justified in excep-
tional circumstances. Id. at 188-89, 79 S.Ct. at 1063. Defen-
dants first argue that the Pullman abstention doctrine
applies to this action. This doctrine requires federal
abstention when a state law is unclear and “a state court’s
resolution . . . would obviate the need for a federal
constitutional ruling.” Pustell v. Lynn Public Schools, 18
F.3d 50, 53 (1st Cir.1994); see also Hawaii Housing Authority
v. Midkiff, 467 U.S. 229, 236-37, 104 S.Ct. 2321, 2327, 81
L.Ed.2d 186 (1984). In this instance, however, there is no
“unclear” state law. The state statute in question is unam-
biguous. All parties agree as to its meaning, and the only
question before this court is whether that connotation is
unconstitutional. As the Supreme Court has stated, “fed-
eral courts need not abstain on Pullman grounds when a
state statute is not ‘fairly subject to an interpretation
-" ~ ie a ae
— Je itech alias. we sa Raceline AAR “Ue potlemanR eR eas S DOR atre e ee)
App. 23
which will render unnecessary’ adjudication of the fed-
eral constitutional question.” Hawaii Housing Authority,
467 U.S. at 236, 104 S.Ct. at 2327 (quoting Harman v.
Forssenius, 380 U.S. 528, 535, 85 S.Ct. 1177, 1182, 14
L.Ed.2d 50 (1965)). Accordingly, the Pullman doctrine is
not applicable.
Defendants next argue that Burford abstention should
apply. The Burford doctrine applies where “the state has a
unified scheme for review of its administrative orders
and federal intervention in cases in which diversity is
present would have a disruptive effect on the state’s
efforts to establish a coherent policy on a matter of sub-
stantial public concern.” 17A Charles A. Wright, Arthur
R. Miller & Edward H. Cooper, Federal Practice and Pro-
cedure § 4244 at 86. Burford type abstention has been held
to be “generally limited to cases in which a federal court
decision would ‘disrupt a state administrative pro-
cess .. . or unnecessarily enjoin state officials from exe-
cuting domestic policies.’” State Farm Fire & Cas. Co. ¥.
Sweat, 547 F.Supp. 233, 241 (N.D.Ga.1982) (quoting Alle-
gheny, 360 U.S. at 189, 79 S.Ct. at 1063). Neither of these
factors are present in this instance. First, plaintiff has
exhausted her state administrative remedies without suc-
cess. Thus, it cannot be said that the present action is
interrupting the state administrative process. Secondly,
while it could be argued that this is an action to “enjoin
state officials from executing a domestic policy,” the reso-
lution of such a serious constitutional query can hardly
be called “unnecessary.” See Allegheny, 360 U.S. at 189, 79
S.Ct. at 1063; Sweat, 547 FSupp. at 241. Accordingly,
Burford type abstention does not apply.
App. 24
Defendants next argue that abstention is required
because a difficult question of state law is involved.
Defendants cite to Thompson v. Magnolia Petroleum Co., 309
U.S. 478, 60 S.Ct. 628, 84 L.Ed. 876 (1940), for their asser-
tion that “a federal court must abstain to avoid deciding a
difficult question of state law.” This argument is com-
pletely without merit. First, Thompson does not stand for
such a broad-based assertion. Secondly, even if it did, this
action does not involve only a question of state law; this
action also involves, in fact is dominated by, serious
federal Constitutional issues which must be decided.
Lastly, assuming arguendo that the state law question in
this action is in fact difficult, the Supreme Court has
stated that “difficulties and perplexities of state law are
no reason for referral of the problem to the state court.”
McNeese v. Board of Education for Community School District
187, 373 U.S. 668, 673 n. 5, 83 S.Ct. 1433, 1436 n. 5, 10
L.Ed.2d 622 (1963) (citing Meredith v. Winter Haven, 320
U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9 (1943)). Thus, this argu-
ment is rejected.
Defendants next argue that Younger abstention
should apply. The Supreme Court in Younger v. Harris, 401
U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), established a
theory of abstention under which a federal court should,
under certain circumstances, abstain where federal juris-
diction has been evoked for the purpose of restraining
state criminal proceedings against the federal plaintiff.
Defendants are correct in stating that this doctrine has
been extended to also protect state civil proceedings, but
only under certain circumstances. Middlesex County Ethics
Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 102
TRC er rene nee re Sin rT bee
App. 25
S.Ct. 2515, 2521, 73 L.Ed.2d 116 (1982). Those circum-
stances are not present in this action. As the First Circuit
has recently reiterated, Younger abstention is appropriate
when “there is (1) an ongoing state judicial proceeding,
instituted prior to the federal proceeding . . . , that (2)
implicates an important state interest, and (3) provides an
adequate opportunity for the plaintiff to raise the claims
advanced in his federal lawsuit.” Brooks v. New Hampshire
Supreme Court, 80 F.3d 633, 638 (1st Cir.1996) (citing Mid-
dlesex County Ethics Comm., 457 U.S. at 432, 102 S.Ct. at
2521) (emphasis added). In this instance, the federal pro-
ceeding was brought prior to the state proceeding. Conse-
quently, the assertion that Younger abstention applies is
without merit.
The last type of abstention that defendants argue is
applicable has come to be known as Colorado River type
abstention. See Colorado River Water Conservation District
v. U.S., 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).
While the Supreme Court did not see itself creating
another abstention theory, Colorado River, 424 U.S. at
817-18, 96 S.Ct. at 1246, that is exactly what lower courts
have interpreted the Colorado River decision to mean. See,
e.g., Ash v. Richard J. Lynch & Co., 644 F.Supp. 315, 317 (“In
Colorado River . . . the Supreme Court conferred legit-
imacy on a ‘fourth type’ of abstention”). Under this the-
ory, a federal court should abstain to avoid duplicative
litigation. 17A Wright, Miller & Cooper, Federal Practice
and Procedure § 4247 at 117. This type of abstention,
however, is not freely exercised. See, e.g., Bethlehem Con-
tracting Co. v. Lehrer/McGovern, Inc., 800 F.2d 325, 327 (2d
Cir.1986); Ash, 644 F.Supp. at 317. In fact, the Colorado
River Court cautioned that such action should only be
App. 26
undertaken under exceptional circumstances. Id. at 818,
96 S.Ct. at 1246-47. In this instance, notwithstanding the
fact that there would be no duplicative litigation due to
the fact that state court proceedings have been stayed, no
such exceptional circumstances exist to warrant Colorado
River type abstention. Therefore, this argument is also
rejected. Accordingly, none of the theories of abstention
apply to this action.
3. Standing to Bring Action Against Federal Defen-
dant.
Federal defendant, Secretary of Labor, has moved to
dismiss the claim against him on the grounds that plain-
tiff has failed to state a claim upon which relief can be
granted. See Fed.R.Civ.P. 12(b)(6). Federal defendant
asserts that plaintiff lacks standing, because the exemp-
tions under FUTA are permissive and not mandatory.
That is, that the exemptions merely permit a state to
exclude religious organizations from coverage, but do not
mandate such an exclusion. Accordingly, the federal
defendant argues that it is the state and state alone that
has denied plaintiff benefits, and it is the state and state
alone which can redress plaintiff’s alleged injury.
Plaintiff, on the other hand, argues that FUTA
requires states to exempt religious employers from feder-
ally approved state unemployment programs, and
accordingly, the Secretary of Labor can redress the prob-
lem. Plaintiff misinterprets the provisions of FUTA. FUTA
mandates state coverage of all employees except those
enumerated in § 3309(b). That is, states must, in order to
have a federally approved unemployment compensation
App. 27
program, cover employees who perform all services
except those specifically exempted. See 26 U.S.C.
§ 3309(b). However, while FUTA does not mandate state
coverage of those employees listed in § 3309(b), it does
not prohibit states from taxing excluded services and
organizations. See St. Martin Lutheran Church v. South
Dakota, 451 U.S. 772, 775 n. 3, 101 S.Ct. 2142, 2144 n. 3, 68
L.Ed.2d 612 (1981); see also Employment Div. v. Rogue Valley
Youth for Christ, 307 Or. 490, 770 P.2d 588, 589 n. 3 (1989)
(“nothing in FUTA prohibits Oregon from taxing even
excluded organizations”). In other words, FUTA permits,
but does not mandate, state exclusion of those services
enumerated in § 3309(b).
SARE A bt BAG Re TREES Ae BORE AED
AAD EVER SODA Tiet BK
It does not follow, however, from such a determina-
tion that plaintiff lacks standing to sue the federal defen-
dant. In order to have standing, a plaintiff “must allege
personal injury fairly traceable to the defendant's
allegedly unlawful conduct and likely to be redressed by
the requested relief.” Allen v. Wright, 468 U.S. 737, 751,
104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). In this
instance, the alleged unlawful conduct (the unconstitu-
tional denial of unemployment benefits) is not only
“fairly traceable” but is directly traceable to the federal
statute. Id. While FUTA does not mandate an exemption
for churches and religious organizations, it does permit
such an exemption. If FUTA did not provide for such an
exemption, a state could not exclude religious groups
from unemployment coverage and still be in compliance
with FUTA.
Federal defendant's assertion that FUTA compliance
is voluntary for each state, while true, is of no conse-
quence. There are heavy incentives for states to maintain
|
App. 28
FUTA compliant unemployment compensation programs.
That is why all 50 states have chosen to do so. It is not
only unlikely, but highly unlikely, that an amendment to
26 U.S.C. § 3309(b) removing churches and religious orga-
nizations from the exemption would cause any states to
opt out of FUTA. Thus, it is also clear that a finding that
§ 3309(b) is unconstitutional is likely to redress the plain-
tiff’s alleged injuries. See Allen, 468 U.S. at 751, 104 S.Ct.
at 3324. Accordingly, federal defendant’s motion to dis-
miss is denied.
B. Constitutional Analysis
1. Establishment Clause.
The First Amendment to the United States Constitu-
tion provides in part: “Congress shall make no law
respecting an establishment of religion, or prohibiting the
free exercise thereof . . . ” U.S. Const. amend I. These
provisions, more commonly known as the Establishment
and Free Exercise Clauses, are also applicable to the
States through the Fourteenth Amendment. See Abington
School District v. Schempp, 374 U.S. 203, 215-16, 83 S.Ct.
1560, 1567-68, 10 L.Ed.2d 844 (1963). The purpose of the
Establishment Clause is to ensure that government will
not sponsor or promote any particular religion. See Walz
v. Tax Comm'n, 397 U.S. 664, 669, 90 S.Ct. 1409, 1411-12, 25
L.Ed.2d 697 (1970). Conversely, the purpose of the Free
Exercise clause is to safeguard the free exercise of a
chosen form of religion. Id. Plaintiff brings this action
under the former clause, arguing that the statutes in
question promote religion.
ae OO OI a ee CARES NT IEE
:
4
App. 29
The Establishment Clause has been said to have been
intended to erect “a wall of separation between church
and state.” McCollum v. Board of Education, 333 U.S. 203,
211, 68 S.Ct. 461, 465, 92 L.Ed. 649 (1948) (quoting Everson
v. Board of Education, 330 U.S. 1, 16, 67 S.Ct. 504, 512, 91
L.Ed. 711 (1947)). In 1971, in Lemon v. Kurtzman, 403 U.S.
602, 612-13, 91 S.Ct. 2105, 2111, 29 L.Ed.2d 745 (1971), the
Supreme Court identified a three-part test it distilled
from prior Establishment Clause jurisprudence to deter-
mine whether or not that wall has been traversed. Under
the Lemon test, in order for a statute to survive an Estab-
lishment Clause challenge it: (1) must have a secular
legislative purpose; (2) must have as its principle or
primary effect one that neither advances or prohibits
religion; and (3) must not foster excessive government
entanglement with religion. Id.
Although the continuing validity of the Lemon test
has been questioned recently, the Supreme Court has
never overruled it, and lower courts continue to apply it
to Establishment Clause jurisprudence. See, e.g., Church of
Scientology Flag Service Org., Inc. v. City of Clearwater, 2
F.3d 1514 (11th Cir.1993), reh’g denied, 12 F.3d 221, cert.
fa. 0S... , BIS SLA. 54. 150 USd.2d 13; Bd. of
Educ. of City of Chicago v. Alexander, 983 F.2d 745 (7th
Cir.1992); Fordham Univ. v. Brown, 856 F.Supp. 684
(D.D.C.1994); Clever v. Cherry Hill Bd. of Educ., 838 F.Supp.
929 (D.N.J.1993). Accordingly, the statutes in question
will be examined by parsing them in light of the three
prongs of Lemon.
The first prong is known as the “purpose prong.”
This prong focuses on the actual purpose behind the
government legislation and asks whether that purpose is
App. 30
to endorse or disapprove of religion. Edwards v. Aguillard,
482 U.S. 578, 585, 107 S.Ct. 2573, 2578, 96 L.Ed.2d 510
(1987). The Supreme Court has frequently noted that the
fact that religious organizations benefit from legislation is
of no consequence so long as the legislation has an “over-
all secular purpose.” See, e.g., Texas Monthly, Inc. v.
Bullock, 489 U.S. 1, 10, 14-15 & n. 4, 109 S.Ct. 890, 897, 899
& n. 4, 103 L.Ed.2d 1 (1989); Walz, 397 U.S. at 664, 90 S.Ct.
at 1409. In determining if there is an overall secular
purpose, the court “focuses on the purpose that animated
adoption of the [legislation].” Aguillard, 482 U.S. at 585,
107 S.Ct. at 2578 (“a governmental intention to promote
religion is clear when the State enacts a law to serve a
religious purpose”) (emphasis added). Thus, a court
faced with an Establishment Clause challenge must look
to the purpose of the questioned legislation as it was first
enacted.
The original purpose of the provisions at issue in this
case was to facilitate the administration of the federal and
state unemployment programs by excluding from cover-
age those workers who were not recognized as full mem-
bers of the permanent and stable workforce. That this
original purpose is secular can not and has not been
challenged by the plaintiff.> Plaintiff contends, however,
that amendments to the statutes over the years have
eliminated many of the non-religious exemptions, and
thus, the statutes’ purpose now offends the Establishment
3 Plaintiff states in its memo, “If this broad exemption were
still the law, the statutes at issue would survive First
Amendment Scrutiny ...”
I ie BES GCI Le EE!
SRG ashes i >
App. 31
Clause. This contention is without merit. Notwithstand-
ing the fact that the statutes still provide exemptions to
non-religious as well as religious services and employers,
the purpose of the statutes remain as they were when the
statutes were first enacted.4
It must be noted that even if the purpose and intent
of the statutes were to be evaluated with the statutes as
they are in effect today, and not when they were first
enacted, they would still pass muster under the first
prong of Lemon. The FUTA exemptions are not “confined
to religious organizations.” See Texas Monthly, 489 U.S. at
11, 109 S.Ct. at 897. FUTA, as it reads now, exempts from
mandatory state unemployment coverage services per-
formed by:
- employees of churches or church affili-
ated religious organizations, see 26 poo od
§ 3309(b)(1);
~ ministers and members of religious
orders, see 26 U.S.C. § 3309(b)(2);
— state and local elected officials, legisla-
tors, members of the judiciary, temporary emer-
gency employees and certain major policy
makers or advisors, and State National Guard or
Air National Guard, see 26 U.S.C. § 3309(b)(3);
4 That is not to say that legislation with an originally
secular purpose cannot ever be amended such that it would
violate the Establishment Clause. Such a challenge, however,
would be more properly brought under the second prong of
Lemon, for as the purpose of a statute remains unaffected by
amendments, its effect may not.
App. 32
— employees with impaired physical and/
or mental capabilities who are working in facili-
ties that provide such individuals rehabilitation
or renumerative work, see 26 U.S.C. § 3309(b)(4);
— participants in state, local, federal or fed-
erally assisted work-relief or work-training pro-
grams, see 26 U.S.C. § 3309(b)(5);
— inmates of custodial or penal institu-
tions, see 26 U.S.C. § 3309(b)(6);
- all employees in nonprofit organizations
that do not employ at least four employees at
least twenty days a year, see 26 U.S.C. § 3309(c).
Likewise, the Rhode Island Employment Security Act
exempts not only service performed in the employ of
churches or religious organizations, but also:
- domestic service in a private home for
which the employee does not receive at least
$1000.00 per year, see R.I.G.L. § 28-42-8(1);
— service performed by a parent for a
child, by a spouse for a spouse or by a minor
child for a parent, see R.I.G.L. § 28-42-8(2);
— certain service performed in the employ
of a state government (other than Rhode Island)
or federal government, see R.I.G.L. § 28-42-8(3);
— services performed by employees with
impaired physical and/or mental capabilities
who are working in facilities that provide such
individuals rehabilitation or renumerative work,
see R.ILG.L. § 28-42-8(4)(iii);
- services performed by participants in
state, local, federal or federally assisted work-
relief or work-training programs, see R.I.G.L.
§ 28-42-8(4)(iv);
App. 33
— services performed in a hospital by
a patient of the hospital, see R.I.G.L.
§ 28-42-8(4)(v);
— services performed by an inmate of a
custodial or penal institution, see R.I.G.L.
§ 28-42-8(4)(vi);
— services which are occasional, irregular
or incidental and are not in the course of an
employer’s trade or business, see R.I.G.L.
§ 28-42-8(8);
- service as an “independent” golf caddy,
see R.I.G.L. § 28-42-8(9);
— services performed by certain commis-
sion only real estate salespersons, see R.I.G.L.
§ 28-42-8(10);
— services performed by certain commis-
sion only insurance brokers, agents or sub
agents, see R.I.G.L. § 28-42-8(11);
— services performed by students in co-op
work programs, see R.I.G.L. § 28-42-8(12);
— services performed by certain workers
on small fishing vessels, see R.I.G.L.
§ 28-42-8(13).
It is abundantly clear that neither of these statutes,
on their face, manifest any governmental intent or pur-
pose to advance or promote religion. Instead it is clear
that the statutes reflect a wholly secular purpose. That
purpose is, as it always has been, the facilitation of the
administration of the federal and state unemployment
benefits programs by excluding employees who are typ-
ically not fully active or permanent members of the stable
workforce. The amendments to these statutes do not
i ittaai.
App. 34
reflect, as plaintiff would suggest, an increasing govern-
mental interest in the promotion of religion. Instead the
amendments reflect government’s recognition of the
increasing role that certain non-profit organizations have
in our society as a whole and more specifically in provid-
ing members of the stable workforce. Thus, absolutely no
sectarian purpose is evinced by these statutes. Any reli-
gious benefit that results as a consequence of this secular
purpose is purely incidental. Accordingly, the first prong
of the Lemon test is met.
The second prong of Lemon requires that the chal-
lenged statute must not have a principle or primary effect
that either advances or inhibits religion. 403 U.S. at 612,
91 S.Ct. at 2111. This does not mean that a law is uncon-
stitutional because it allows churches to advance religion.
Corp. of Presiding Bishop of the Church of Jesus Christ of
Latter-day Saints v. Amos, 483 U.S. 327, 337, 107 S.Ct. 2862,
2869, 97 L.Ed.2d 273 (1987). The Amos Court pointed out
that many laws that have been held constitutional have
allowed religious groups to more ably advance their pur-
poses. Id. at 336, 107 S.Ct. at 2868. The statutes in ques-
tion here are no exception. Without question, the FUTA
and Rhode Island Employment Security Act exemptions
benefit religious organizations by not compelling them to
pay unemployment taxes. It could even be said that the
exemptions may allow religious groups to better advance
their purposes because of the monetary savings involved.
This, however, is not unconstitutional. See Amos, 483 U.S.
at 336-37, 107 S.Ct. at 2868-69.
In order for a law’s effects to run afoul of the second
prong of Lemon, “it must be fair to say that the government
itself has advanced religion through its own activities and
App. 35
influence.” Id. at 337, 107 S.Ct. at 2869 (no emphasis
added). In this instance, it can hardly be said that the
governments’ actions (i.e.: unemployment tax exemp-
tions) advance religion.5 No reasonable person is likely to
form a religious belief based in any part on the fact that
the organization does not have to pay unemployment
taxes. It would be ludicrous to say that this exemption
would compel “nonadherents to support the practices or
proselytizing of . . . religious organizations.” Texas
Monthly, 489 U.S. at 9, 109 S.Ct. at 896. Additionally, as
noted above, the statutes in question provide exemptions
to non-religious groups and services as well. Thus, the
primary effect of the statutes is not to advance religion,
and the second prong of Lemon is not offended.
The third prong of the Lemon test provides that a
statute must not foster an excessive government entan-
glement with religion. Lemon, 403 U.S. at 613, 91 S.Ct. at
2111. The Supreme Court has held that the excessive
entanglement prong of Lemon “prohibits intrusive gov-
ernment inquiry into religious belief.” Amos, 483 U.S. at
339, 107 S.Ct. at 2870. The Court has also stated that this
leads to a query of “whether the [government] involve-
ment ... is a continuing one calling for official and
continuing surveillance leading to an impermissible
degree of entanglement.” Walz v. Tax Commission of New
York, 397 U.S. 664, 675, 90 S.Ct. 1409, 1414, 25 L.Ed.2d 697
(1970). The statutes in question here lead to the exact
° In fact, to the contrary, it might be argued that because of
the exemptions, religious organizations are at a disadvantage in
being able to hire employees because they won't be covered by
unemployment benefits.
App. 36
opposite result. Rather than promoting entanglement
with religion the statutes foster the separation of church
and state that the First Amendment requires. Because of
the statutes, the federal government and state govern-
ment need not continuously monitor and audit exempt
religious organizations to ensure compliance with FUTA
and the Rhode Island Employment Security Act. In fact,
the Supreme Court addressed this very issue in Walz,
stating that the primary effect of a tax exemption was not
to sponsor religious activity but to “restrict the fiscal
relationship between church and state” and to “comple-
ment and reinforce the desired separation insulating each
from the other.” 397 U.S. at 676, 90 S.Ct. at 1415; see also
Texas Monthly, 489 U.S. at 43, 109 S.Ct. at 914-15 (Scalia J.,
dissenting). Accordingly, the statutes do not promote
excessive government entanglement in matters of reli-
gion, and the third and final prong of Lemon is met.
Plaintiff relies heavily on the Supreme Court’s opin-
ion in Texas Monthly v. Bullock, supra. That reliance, how-
ever, is misplaced. First, this case is easily distinguished.
Most importantly, the statute at issue in Texas Monthly
exempted only religious organizations. 489 U.S. at 14, 109
S.Ct. at 899. As noted above, that is simply not so in this
case. Additionally, the Supreme Court made particular
note of the fact that the exemption in Texas Monthly was
only “targeted at writings that promulgate the teachings of
religious faiths.” Id. at 13, 15, 109 S.Ct. at 898, 899-900.
(emphasis not added). Again that is not so in this case.
Nevertheless, plaintiff also contends that Texas Monthly
stands for the proposition that if tax exemptions extend
to religious organizations, they must also extend to a
broad array of non-profit organizations in order to be
OO itty! Pate PO a
App. 37
constitutional. That, however, is not correct. The Court in
Texas Monthly specifically stated, “[h]ow expansive the
class of exempt organizations or activities must be to
withstand constitutional assault depends upon the State’s
secular aim in granting a tax exemption.” 489 U.S. at 15,
109 S.Ct. at 900. In this instance the list of exempt services
and organizations is wholly consistent with the secular
purpose as noted above. Accordingly, the statutes in
question do not run afoul of the Supreme Court’s deci-
sion in Texas Monthly, and more importantly, also pass
muster under the Lemon test. Thus, they do not violate
the Establishment Clause of the First Amendment to the
United States Constitution.
2. Equal Protection
Plaintiff also argues that the exemptions violate the
Equal Protection Clause. Because the statutes in question
are rationally related to a legitimate interest, this claim
also fails.
There is no fundamental right to the payment of
unemployment benefits, and there is no suspect or quasi-
suspect classification involved. Accordingly, in order to
withstand an equal protection challenge, the statutory
exemptions in question here need only be rationally
related to a legitimate governmental interest. Ohio Bureau
of Employment Servs. v. Hodory, 431 U.S. 471, 489, 97 S.Ct.
1898, 1908-09, 52 L.Ed.2d 513 (1977). This burden is met.
It has long been held that “[nJeither due process nor
equal protection imposes upon a state any rigid rule of
equality of taxation.” Carmichael v. Southern Coal & Coke
Co., 301 U.S. 495, 509, 57 S.Ct. 868, 872, 81 L.Ed. 1245
App. 38
(1937). So long as a distinction rests upon a rational basis,
inequalities which result from singling out a particular
class or classes for taxation or exemptions are not uncon-
stitutional. Id. This rational-basis standard is a relaxed
standard which reflects the belief that creating distinc-
tions is an unavoidable legislative task. Hodory, 431 U.S.
at 489, 97 S.Ct. at 1908-09. Therefore, when a statute does
not involve a fundamental interest or affect with partic-
ularity a protected class, it is presumed to be valid. Id.
In this instance, the purposes behind the religious
exemptions of FUTA and the Rhode Island Employment
Security Act are noted above. Additionally, the statutes
promote the efficient administration of Rhode Island’s
unemployment insurance program by avoiding undue
government involvement in problems peculiar to reli-
gious employment. See Claim of Klein, 78 N.Y.2d 662, 578
N.Y.S.2d 498, 504, 585 N.E.2d 809, 815 (1991). The statutes
are rationally related to these legitimate governmental
purposes. Thus, the Equal Protection Clause is not
offended.
3. Rhode Island Constitution
Plaintiff also contends that R.I.G.L. § 28-42-8(4) vio-
lates Article I, § 3 of the Rhode Island Constitution.
Article I, § 3 is titled “Freedom of Religion” and provides
in relevant part:
“
. no person shall be compelled to frequent
or to support any religious worship, place, or
ministry whatever, except in fulfillment of such
person’s voluntary contract; nor enforced
restrained, molested, or burdened in body or
goods; nor disqualified from holding any office;
et a a
divs sith’, (Ae >
App. 39
nor otherwise suffer on account of such person’s
religious belief; and that every person shall be
free to worship God according to the dictates of
such person’s conscience, and to profess and by
argument to maintain such person’s opinion in
matters of religion; and that the same shall in n
[sic] wise diminish, enlarge, or affect the civil
capacity of any person.” (Michie 1987)
For the following reasons, the religious exemptions to the
Rhode Island Employment Security Act do not offend the
above provision.
A federal court, in deciding a question of state law,
sits in place of the highest state court and must discern
how that court would decide the state issue. See Oresman
v. G.D. Searle & Co., 321 F.Supp. 449, 453 (D.R.1.1971). In
this instance, however, that is not necessary as the
Supreme Court of Rhode Island has already decided the
issue of whether tax exemptions for religious organiza-
tions violate the Rhode Island Freedom of Religion
Clause. In the 1961 case of General Finance Corp. v.
Archetto, 93 R.1. 392, 176 A.2d 73 (1961), the Rhode Island
Supreme Court had before it the question of whether or
not an exemption for religious organizations from the
payment of property taxes offended Article I, § 3 of the
State Constitution. In deciding that the Freedom of Reli-
gion Clause was not violated, the court noted that exemp-
tions for churches and religious groups “were common
prior to as well as after the adoption of [the Rhode
Island] constitution in 1842.” Id., 176 A.2d at 77. Thus, the
relevant inquiry was whether the people intended, by
adopting Article I, § 3, to prohibit to the legislature the
authority to exempt religious organizations from certain
tax burdens. Id. The Rhode Island Supreme Court
App. 40
answered that query in the negative. Id. A federal court is
“bound . . . by the actual expression of the state’s highest
court” on issues of state law. Jackson v. Liquid Carbonic
Corp., 863 F.2d 111, 115-16 (1st Cir.1988), cert. denied, 490
U.S. 1107, 109 S.Ct. 3158, 104 L.Ed.2d 1021 (1989). Accord-
ingly, the religious exemptions of R.I.G.L. 28-42-8(4) do
not offend the Freedom of Religion Clause of the Rhode
Island Constitution.
Il. CONCLUSION
For the foregoing reasons, the provisions of FUTA
and the Rhode Island Employment Security Act exempt-
ing religious organizations and churches from the pay-
ment of unemployment benefit taxes are held to be
constitutional under both the United States Constitution
and the Rhode Island Constitution.
So Ordered.
ee ee ee ee ee ee eT ee ey ee ee ges
App. 41
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 96-2328
(SUADALUPE ROJAS,
Plaintiff-Appellant,
v.
LAWRENCE FITCH, ET AL.,
Defendants-Appellees.
No. 97-1089
GUADALUPE ROJAS,
Plaintiff-Appellee,
V.
DR. LEE H. ARNOLD, ET AL.,
Defendants-Appellants.
BEFORE
TORRUELLA, Chief Judge,
CAMPBELL, Senior Circuit Judge,
SELYA, BOUDIN, STAHL AND LYNCH, Circuit Judges.
ORDER OF COURT
Entered: December 18, 1997
The panel of judges that rendered the decision in
these cases having voted to deny the petition for rehear-
ing and the suggestion for the holding of a rehearing en
banc having been carefully considered by the judges of
the court in regular active service and a majority of said
App. 42
judges not having voted to order that the appeals be
heard or reheard by the court en banc.
It is ordered that the petition for rehearing and the
suggestion for rehearing en banc be denied.
By the Court:
PHOEBE D. MORSE, CLERK
By: /s/ Janice M. O’Men
Chief Deputy Clerk
[cc: Messrs. Dineen, Glabman, Dolan and Ms. Partington]
a Os vo
Dal
Pasco Wir NW NARI ili MEER RE RRR ON Rade c ee SL A Te er
App. 43
26 U.S.C.S. § 3309. State law coverage of services per-
formed for nonprofit organizations or governmental
entities.
(a) State law requirements. For purposes of section
3304(a)(6) -
(1) except as otherwise provided in subsec-
tions (b) and (c), the services to which this para-
graph applies are —
(A) services excluded from the term
“employment” solely by reason of para-
graph (8) of section 3306(c), and
(B) services excluded from the term
“employment” solely by reason of para-
graph (7) of section 3306(c), and
(2) the State law shall provide that a govern-
mental entity or any other organization (or
group of governmental entities or other organi-
zations) which, but for the requirements of this
paragraph, would be liable for contributions
with respect to service to which paragraph (1)
applies may elect, for such minimum period and
at such times as may be provided by State law,
to pay (in lieu of such contributions) into the
State unemployment fund amounts equal to the
amounts of compensation attributable under the
State law to such service. The State law may
provide safeguards to ensure that governmental
entities or other organizations so electing will
make the payments required under such elec-
tions.
(b) Section not to apply to certain service. This section
shall not apply to service performed -
App. 44
(1) in the employ of (A) a church or convention
or association of churches, or (B) an organiza-
tion, which is operated primarily for religious
purposes and which is operated, supervised,
controlled, or principally supported by a church
or convention or association of churches;
(2) by a duly ordained, commissioned, or
licensed minister of a church in the exercise of
his ministry or by a member of a religious order
in the exercise of duties required by such order;
(3) in the employ of a governmental entity
referred to in paragraph (7) of section 3306(c), if
such service is performed by an individual in
the exercise of his duties -
(A) as an elected official;
(B) as a member of a legislative body, or a
member of the judiciary, of a State or political
subdivision thereof;
(C) as a member of the State National Guard or
Air National Guard;
(D) as an employee serving on a temporary
basis in case of fire, storm, snow, earthquake,
flood, or similar emergency; or
(E) in a position which, under or pursuant to
the State law, is designated as (i) a major non-
tenured, policymaking or advisory position, or
(ii) a policymaking or advisory position the per-
formance of the duties of which ordinarily does
not require more than 8 hours per week;
(4) in a facility conduced for the purpose of
carrying out a program of -
App. 45
(A) rehabilitation for individuals whose
earning capacity is impaired by age or phys-
ical or mental deficiency or injury, or
(B) providing remunerative work for indi-
viduals who because of their impaired
physical or mental capacity cannot be
readily absorbed in the competitive labor
market, by an individual receiving such
rehabilitation or remunerative work;
(5) as part of an unemployment work-relief or
work-training program assisted or financed in
whole or in part by any Federal agency or an
agency of a State or political subdivision
thereof, by an individual receiving such work
reliet ox work training; and
(6) by an inmate of a custodial or penal institu-
tion.
(c) Nonprofit organizations must employ 4 or more.
This section shall not apply to service performed during
any calendar year in the employ of any organization
unless on each of some 20 days during such calendar year
or the preceding calendar year, each day being in a differ-
ent calendar week, the total number of individuals who
were employed by such organization in employment
(determined, without regard to section 3306(c)(8) and by
excluding service to which this section does not apply by
reason of subsection (b)) for some portion of the day
(whether or not at the same moment of time) was 4 or
more.
App. 46
Rhode Island General Laws
28-42-8. Exemptions from “employment” — The
term “employment” shall not include:
(1) Domestic service in a private home performed
for a person who did not pay cash remuneration of one
thousand dollars ($1,000) or more in any calendar quarter
after December 31, 1977, in the current calendar year or
the preceding calendar year to individuals employed in
that domestic service in a private home;
(2) Service performed by an individual in the
employ of his or her son, daughter, or spouse, and service
performed by a child under the age of eighteen (18) in the
employ of his or her father or mother;
(3) Service performed in the employ of any other
state or any political subdivision thereof, the United
States government, an instrumentality of any other state
or states or their political subdivisions, or of an instru-
mentality of the United States, except that if the congress
of the United States shall permit states to require any
instrumentalities of the United States to make payments
into an unemployment fund under a state unemployment
compensation act, then, to the extent permitted by con-
gress, and from and after the date as of which permission
becomes effective, all of the provisions of chapters 42 — 44
of this title shall be applicable to those instrumentalities
and to services performed for those instrumentalities, in
the same manner, to the same extent, and on the same
terms as to all other employers, employing units, individ-
uals, and services; provided, that if this state should not
be certified by the secretary of labor under 26 U.S.C.
§ 3304 for any year, then the payments required of those
App. 47
instrumentalities with respect to that year shall be
deemed to have been erroneously collected within the
meaning of § 28-43-12 and shall be refunded by the
director from the fund in accordance with § 28-43-12;
(4) Service performed:
(i) In the employ of:
(A) A church or convention or association of
churches, or
(B) An organization which is operated primarily for
religious purposes and which is operated, supervised,
controlled, or principally supported by a church or con-
vention or association of churches;
(ii) By a duly ordained, commissioned, or licensed
minister of a church in the exercise of his or her ministry
or by a member of a religious order in the exercise of
duties required by that order;
(iii) Ina facility conducted for the purpose of carry-
ing out a program of rehabilitation for individuals whose
earning capacity is impaired by age, physical or mental
deficiency, or injury or providing remunerative work for
individuals who because of their impaired physical or
mental capacity cannot be readily absorbed in the com-
petitive labor market, by an individual receiving that
rehabilitation or remunerative work;
(iv) As part of an unemployment work relief or
work-training program assisted or financed in whole or
in part by any federal agency or an agency of a state or
political subdivision thereof, by an individual receiving
that work relief or work training;
App. 48
(v) In the employ of a hospital by a patient of the
hospital; or
(vi) By an inmate of a custodial or penal institution;
(5) Service with respect to which unemployment
compensation is payable under an unemployment com-
pensation system established by an act of congress; pro-
vided, that the director is hereby authorized and directed
to enter into agreements with the proper agencies under
that act of congress, which agreements shall become
effective ten (10) days after publication thereof as in the
manner provided in § 28-42-34 to provide reciprocal treat-
ment to individuals who have, after acquiring potential
rights to benefits under chapters 42 — 44 of their title
acquired rights to unemployment compensation under
that act of congress, or who have, after acquiring poten-
tial rights to unemployment compensation under that act
of congress, acquired rights to benefits under those chap-
ters;
(6) Service covered by an election duly approved by
the agency charged with the administration of any other
state or federal employment security law in accordance
with an arrangement pursuant to § 28-42-58 during the
effective period of that election, except as provided in
§ 28-42-3(15)(i);
(7) Services performed by an individual in any cal-
endar quarter on or after January 1, 1972 in the employ of
any organization exempt from income tax under 26 U.S.C.
§ 501(a) (other than services performed for an organiza-
tion defined in § 28-42-3(24) or for any organization
described in 26 U.S.C. § 401(a) or under 26 U.S.C. § 521) if
EASA high AARC is IONE a
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ie
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:
a
App. 49
the remuneration for that service is less than fifty dollars
($50.00);
(8) Service which is occasional, incidental, and
occurs irregularly, and is not in the course of the employ-
ing unit’s trade or business; provided, however, that ser-
vice for a corporation shall not be excluded;
(9) Service as a golf caddy, except as to service
performed solely for a club with respect to which the club
alone bears the expense; and a golf caddy, except as in
this subdivision specifically provided, shall not be con-
strued to be an “employee” as defined in § 28-42-3(14);
(10) Notwithstanding any provisions of titles 5 and
27, service performed by an individual as a real estate
salesperson if all the service performed by that individual
is performed for remuneration solely by way of commis-
sion;
(11) Notwithstanding any provisions of titles 5 and
27, service performed by an individual as an insurance
broker, agent, or sub-agent if all the service performed by
that individual is performed for remuneration solely by
way of commission; provided, however, that this exemp-
tion shall not apply to service performed as industrial
and debit insurance agents;
(12) Service performed by an individual who is
enrolled at a non-profit or public educational institution
which normally maintains a regular faculty and curricu-
lum and normaily has a regular organized body of stu-
dents in attendance at the place where its educational
activities are carried on, as a student in a full-time pro-
gram, taken for credit at that institution which combine
App. 50
academic instruction with work experience, if that service
is an integral part of that program, and that institution
has so certified to the employer, except that this subdivi-
sion shall not apply to service performed in a program
established for or on behalf of an employer or group of
employers; and
(13) Service performed by an individual on a boat
engaged in catching fish or other forms of aquatic animal
life under an arrangement with the owner or operator of
that boat pursuant to which:
(i) That individual does not receive any cash remu-
neration other than a share of the boat’s catch of fish or
other forms of aquatic animal life or a share of the pro-
ceeds from the sale of that catch; and
(ii) The operating crew of that boat is normally
made up of fewer than ten (10) individuals.
(14) Services performed by a member of an Ameri-
corp program.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.