Opposition Brief — Rojas v. Fitch

In the Supreme Court of the Gnited States

OCTOBER TERM, 1997

(ZUADALUPE ROJAS, PETITIONER

LAWRENCE FITCH, ETAL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT

IN OPPOSITION

SETH P. WAXMAN

Solicitor General

MARVIN KRISLOV Counsel of Record

De puty Sol citor of La or Departme nt of Justice

for National Operations Washington, D.C. 20530-0001

| .

,r re Teor rm , {I02?) 514-7917

ALLEN H. FELDMAN 202) 014-<21

Associate Solicitor

NATHANIEL I. SPILLER

De puty Associate So/ mror

SCOTT GLABMAN

Attorney

De partn ent of Labor

Washi gton., et 20210

|

QUESTION PRESENTED

The Federal Unemployment Tax Act, 26 U.S.C.

3301 et seq., authorizes participating States to exempt

a number of employee services from unemployment

compensation coverage. 26 U.S.C. 3309(b) and (c).

Among those services eligible for exemption are

(i) employees of “a church or convention or associa-

tion of churches,” (ii) employees of “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,” and (iii) the services of “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.” 26 U.S.C. 3309(b)(1) and (2).

The question presented in this case is:

Whether the Federal Unemployment Tax Act’s

inclusion of employment by religious organizations

among the eligible exemptions violates the Establish-

ment Clause.

(1)

TABLE OF CONTENT

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TABLE OF AUTHORITIES

Cases:

Agostini v. Felton, 1178S. Ct. 1997 (1997) ....... 6, 7, 10, 11

Board of Educ. of Kiryas Joel Village Sch. Dist. v.

Cresmeet, GIS US. GET CIBOE) 00. cvecserccosvosesccesseesssees 11

Bowen v. Kendrick, 487 U.S. 589 (1988) ............... 12

California v. Grace Brethen Church, 457 U.S. 393

SITTIN ice iihiisteihsiniedtinstiniinaiateapanitbacvenniasnicnpbesewansenewnens 6, 7, 14

Camps Newfound/Owatonna, Inc. v. Town of

Harrison, 117 S. Ct. 1590 (1907) ............00000.s0000005. 1]

Church of the Lukumi Babalu Aye, Inc. v. City

of Hialeah, 508 U.S. 520 (1993) ..........ccceeeeeeeeeeeeees 16

Corporation of the Presiding Bishop of the Church

of Jesus Christ of Latter-Day Saints v. Amos,

I Ss Se CED serttseewineeciceeesivenniies 9, 10, 11, 12, 14, 16

Edwards v. Aguillard, 482 U.S. 578 (1987) ........... 10, 16

Gillette v. United States, 401 U.S. 487 (1971) ........ 16

Granzeier v. Middleton, 955 F. Supp. 741 (E.D.

St SD Shida diashiaktnionceebeilniianmeeedbinnndivieistesssparesees 17

Hernandez v. Commissioner, 490 U.S. 680 (1989) . 13

Jimmy Swaggart Ministries v. Board of

Equalization, 493 U.S. 378 (1990) ..........cceeeeeeeeeeees 13

Koenick v. Felton, 973 F. Supp. 522 (D. Md.

UI acts sudih acis stiscadinninbcseibssinn vs setaienepeangainn tSudeeirenenvsinneenten 17

Lemon v. Kurtzman, 403 U.S. 602 (1971) ............. 6, 7, 10

(IIT)

IV

Cases—Continued: Page

Metzl v. Leininger, 57 F.3d 618 (7th Cir. 1995) ...... 15

Mueller v. Allen, 463 U.S. 388 (1983) .............ceceeees 16

Northwestern Lutheran Academy, In re, 290 N.W.

2d 845 (1980), rev’d, 451 U.S. 772 (1981) ............... 14

St. Martin Evangelical Lutheran Church v.

South Dakota, 451 U.S. 772 (1981) ............ccseeceeees 2,3

Texas Monthly, Inc. v. Bullock, 489 U.S. 1

SUMMED cviicinnioksukuduccenbdceiemsiiacutan gp iasaewhehaindheduacssonnens 6, 9, 13

United States v. Lee, 455 U.S. 252 (1982) .............. 14

Wallace v. Jaffree, 472 U.S. 38 (1985) ................04 10, 16

Walz v. Tax Commission, 397 U.S. 664

(RPA Riciisiniiiekacnsedngctacateslntiasueesiaienkasamuaiiascunn 6, 11, 13, 16

Zorach v. Clauson, 343 U.S. 306 (1952) ................ 1]

Statutes and rule:

Balanced Budget Act of 1997, Pub. L. No. 105-33,

111 Stat. 251:

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Civil Rights Act of 1964, Tit. VII, 42 U.S.C. 2000e

et seq.:

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Be Se Fa Ne ani alesseatidanioecedoatoceaskautaaeaninte’ 9

Be RSs SD Sasak bcc dattinsaclacstokeedistanserdsnaes 9

Employment Security Amendments of 1970,

Pub. L. No. 91-373, § 104(a)-(b)(1), 84 Stat. 697 ..... 2-3

Federal Unemployment -Tax Act, 26 U.S.C. 3301

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Statutes and rule—Continued: Page

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Tax Injunction Act, 28 U.S.C. 1341 ............c.seeeeeeeeee 5

Unemployment Compensation Amendments of

1976, Pub. L. No. 94-566, § 115(b)(1), 96 Stat. 2670. 3

R.I. Gen. Laws (1995):

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In the Supreme Court of the Guited States

OCTOBER TERM, 1997

No. 97-1550

GUADALUPE ROJAS, PETITIONER

v.

LAWRENCE FITCH, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-13)

is reported at 127 F.3d 184. The district court’s

opinion (Pet. App. 14-40) is reported at 928 F. Supp.

155.

JURISDICTION

The court of appeals entered its judgment on

October 9, 1997. A petition for rehearing was denied

on December 18, 1997. Pet. App. 41-42. The petition

for a writ of certiorari was filed on March 18, 1998.

The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

(1)

STATEMENT

l. a. The Federal Unemployment Tax Act

(FUTA), 26 U.S.C. 3301 et seq., establishes a coopera-

tive federal-state program of benefits for unemployed

workers. See St. Martin Evangelical Lutheran

Church v. South Dakota, 451 U.S. 772, 775 (1981).

FUTA imposes an excise tax on employers who pay

wages to employees in covered employment. 26

U.S.C. 3301, 3306(c)." FUTA also grants covered em-

ployers a credit of approximately 90% of the federal

tax for their payment of state unemployment taxes if

the State’s unemployment compensation law meets

established federal criteria. 26 U.S.C. 3302(a)-(d)(1),

3304, 3309(a).? Participation in the FUTA program is

voluntary. Currently, all fifty States, the District of

Columbia, Puerto Rico, and the Virgin Islands are

participating.

One of the requirements for States to participate in

the FUTA program is that the State’s unemployment

compensation program cover certain types of employ-

ment. See 26 U.S.C. 3304(a)(6), 3309(a). Prior to 1970,

States could exclude from coverage all of the non-

profit organizations exempted from the federal excise

tax by 26 U.S.C. 3306(c)(8). The Employment Se-

| FUTA excepts approximately twenty classes of employ-

ment from the federal excise tax, including “service performed

in the employ of a religious, charitable, educational, or other

organization described in section 501(c)(3) which is exempt

from income tax under section 501(a).” 26 U.S.C. 3306(c)(8).

2 Although 26 U.S.C. 3302(c)(1) authorizes a federal tax

credit of 90%, Section 3302(d)(1) deems the tax rate for com-

putation of that credit to be 6%, when the rate currently

charged is 6.2%. 26 U.S.C. 3301 (authorizing 6.2% rate for cal-

endar years 1988-1998). Consequently, the current credit ceil-

ing is about 87%.

3

curity Amendments of 1970, Pub. L. No. 91-373,

§ 104(a)-(b)(1), 84 Stat. 697, changed the law by man-

dating coverage by participating States of all non-

profit organizations except those specified as eligible

for exemption under 26 U.S.C. 3309(b) and (c). See

St. Martin, 451 U.S. at 776 & n.6. In 1976, Congress

amended the list of available exemptions by removing

the exemption for some elementary and secondary

schools and replacing it with an exemption for cer-

tain government employees. See Unemployment

Compensation Amendments of 1976, Pub. L. No. 94-

566, § 115(b)(1), 90 Stat. 2670; St. Martin, 451 U.S. at

777.

At the time of petitioner’s claim for benefits,

FUTA permitted participating States to exclude

seven categories of employees from coverage under

their state plans:

(1) employees of churches and affiliated relig-

ious organizations;

(2) ministers and members of religious

orders;

(3) designated state and local government

employees;

(4) employees with impaired physical or

mental capabilities who are unable to

enter the labor market and who are work-

ing in facilities that — rehabilitation

or remunerative work;

(5) participants in federal, state, local, and

federally assisted work-relief or work-

training programs;

(6) inmates of custodial or penal institutions;

and

4

(7) employees in nonprofit organizations that

do not employ at least four employees for

at least twenty days a year.

26 U.S.C. 3309(b) and (c).”

b. Through the Rhode Island Employment Secu-

rity Act, Rhode Island elected to exempt, inter alia,

services performed “in the employ of: (A) A church

or convention or association of churches, or (B) an

organization which is * * * operated, supervised,

controlled, or principally supported by a church or

convention or association of churches.” R.I. Gen.

Laws § 28-42-8(4)(i)(A)-(B) (1995). Other employees

exempted by Rhode Island include golf caddies, real

estate salespersons and insurance brokers being paid

solely on commission, and participants in the Ameri-

corps program. Id. § 28-42-8(9)-(11), (14) (1995).

2. Except for a temporary hiatus during 1990-1991,

petitioner worked as a social worker for the Salvation

Army in Providence, Rhode Island from 1988 to 1994.

Pet. App. 2. In March 1994, financial constraints com-

pelled the Salvation Army to terminate petitioner’s

employment. /bid.

Petitioner subsequently applied for unemployment

insurance benefits. Her application was rejected be-

cause Rhode Island had elected to exempt churches

and church-operated organizations from the State’s

unemployment compensation program. Pet. App. 3.

The denial of benefits was affirmed by the Rhode

3 The Balanced Budget Act of 1997 added an additional

exemption for election workers making less than $1,000 in a

calendar year. Pub. L. No. 105-33, § 5405, 111 Stat. 604-605.

The Act also authorized States to exempt employees of elemen-

tary and secondary schools that are “operated primarily for

religious purposes.” § 5407, 111 Stat. 605.

5

Island Department of Employment and Training’s

administrative appeals process. bid.

3. In September 1994, petitioner filed suit against

Rhode Island seeking invalidation of the State’s ex-

emption for church-affiliated entities as a violation of

the Establishment Clause, the Equal Protection

Clause, and the Rhode Island Constitution. Pet. App.

3-4. The Salvation Army subsequently intervened

as a defendant in the action, and the plaintiff later

amended her complaint to add claims against the

Secretary of Labor on the ground that FUTA’s

authorization of religious exemptions “was inextrica-

bly connected with the Rhode Island statute in

question.” Jd. at 19-20.*

The district court rejected the defendants’ jurisdic-

tional objections to the suit. It held that petitioner

had standing to challenge FUTA because Rhode

Island could not have exempted the Salvation Army

and remained in compliance with FUTA if the federal

statute had not authorized the religious exemption.

Pet. App. 26-28. The district court also ruled that

neither the Tax Injunction Act, 28 U.S.C. 1341, nor

the abstention doctrine required dismissal of the suit.

Pet. App. 20-26. The district court then ruled that

neither FUTA nor the Rhode Island statute ran afoul

of the Establishment Clause. Id. at 28-37.°

4 A week after she initiated her federal action, petitioner

filed a similar complaint in Rhode Island state court. Pet. App.

19. That action has been stayed pending the outcome of the

federal lawsuit. /bid.

5 The district court also rejected petitioner’s equal pro-

tection and state constitutional claims. Pet. App. 37-40. Peti-

tioner does not raise either of those arguments in her petition

to this Court.

4. The court of appeals affirmed. The court averted

the defendants’ jurisdictional arguments and proceed-

ed directly to petitioner's Establishment Clause

challenge. Pet. App. 6-7. The court of appeals noted

that neither the Rhode Island nor the federal relig-

ious exemptions stand alone; rather, they are grouped

with a number of other, secular exemptions that all

serve the common secular purpose of facilitating the

government’s administration of the unemployment

compensation program. /d. at 9-10. In particular, the

court noted, the religious exemption enhances pro-

gram administration and protects church autonomy

by obviating government review of employment

decisions that might have been made, in whole or in

part, on religious grounds. /d. at 10.

ARGUMENT

Because the court of appeals’ decision is correct

and consistent with the decisions of this Court and of

other courts of appeals, the petition for a writ of cer-

tiorari should be denied.

1. Petitioner does not dispute that the court of

appeals applied the correct legal test to determine

whether FUTA and the Rhode Island unemployment

compensation program violate the Establishment

Clause. See Pet. 23. The court of appeals applied the

three factors identified in Lemon v. Kurtzman, 403

U.S. 602, 612-613 (1971), and adhered to this Court’s

clarification of the factors’ operation last term in

Agostini v. Felton, 117 S. Ct. 1997, 2010, 2015-2016

(1997). See Pet. App. 8-12. Indeed, the decisions of this

Court that petitioner relies upon in arguing that the

court of appeals erred—Walz v. Tax Commission, 397

U.S. 664 (1970); Texas Monthly, Inc. v. Bullock, 489

U.S. 1 (1989) (plurality opinion); California v. Grace

Brethren Church, 457 U.S. 393 (1982); and Agostini,

supra (Pet. 23; see also Pet. 11-18)—were all dis-

cussed and applied by the court of appeals. See Pet.

App. 7-12.° Petitioner disagrees only with the out-

come of the court of appeals’ application of the correct

legal test to the specific circumstances of this case.

See, e.g., Pet. 8-9. That disagreement, however,

presents no issue of broad importance warranting an

exercise of this Court’s discretionary certiorari

jurisdiction. See Sup. Ct. R. 10 (“A petition for a writ

of certiorari is rarely granted when the asserted

error consists of * * * the misapplication of a prop-

erly stated rule of law.”).

2. The decision of the court of appeals is, in any

event, correct and consistent with this Court’s Estab-

lishment Clause precedents. The court of appeals

correctly concluded (Pet. App. 9-13) that FUTA’s

exemption for religious organizations has a secular

purpose and a primary effect that neither inhibits nor

advances religion. See Agostini, 117 S. Ct. at 2010,

2015-2016; Lemon, 403 U.S. at 612-613.

a. FUTA’s authorization of exemptions for em-

ployees of religious institutions has a secular pur-

pose. It is but one of seven exemptions permitted

for non-profit organizations—five of which are un-

related to religion. 26 U.S.C. 3309(b)-(c). All of those

exemptions share the common secular purpose of

facilitating the government’s administration of the

6 Petitioner’s reliance on Grace Brethren is particularly

puzzling, because the only issue decided in that case was that

the Tax Injunction Act barred the schools’ action, precluding

the Court from addressing the Free Exercise and Establish-

ment Clause challenges to FUTA and its state counterpart.

457 U.S. at 407-419.

unemployment insurance system by excluding em-

ployees whose work would create inordinate admin-

istrative or accounting difficulties.’ For example,

FUTA permits the exclusion of nonprofit organiza-

tions that do not employ at least four persons for

twenty days a year, because the additional tax and

bookkeeping costs would not be justified. Persons

working solely on commission may be excluded be-

cause of the accounting difficulties entailed in track-

ing such wages. See 26 U.S.C. 3306(c) and (i); R.I.

Gen. Laws § 28-42-8 (Supp. 1997). The exclusion of

employees of religious organizations likewise pro-

motes administrative manageability by eliminating

the need for government employees to review employ-

ment decisions that could be made on the basis of

religious rationales. See Pet. App. 10; see also 26

U.S.C. 3304(a)(10); R.I. Gen. Laws §§ 28-44-i7, 28-44-

18 (1995) (limiting benefits if employee is “discharged

for proved misconduct connected with his or her

work,” or if employee “leaves work voluntarily

without good cause”). The ability to exclude religious

organizations allows States to avoid judging whether

departures, discharges, or firings based in whole or in

part on religious considerations either constitute

“oood cause” or reflect employee “misconduct.” ®

7 Rhode Island law also treats religious employees as just

one of fourteen categories of employees the inclusion of which

would create administrative burdens for the program. R.1.

Gen. Laws § 28-42-8 (Supp. 1997).

8 Petitioner’s complaint (Pet. 22) that FUTA impermissi-

bly distinguishes between religious and secular private schools

as a means of advancing religion is thus misplaced. The two

are treated differently because only the former presents the

administrative difficulty of reviewing religious employment

decisions. Likewise, confining FUTA to criteria that focus

9

Thus, while commission-based insurance brokers,

rehabilitation programs, and religious employers all

present different types of administrative burdens,

their eligibility for exemption serves the common

secular purpose of facilitating the smooth operation

and administration of unemployment compensation

programs. See Texas Monthly, 489 U.S. at 14 (sub-

sidy permissible insofar as it “is conferred upon a

wide array of nonsectarian groups as well as religious

organizations in pursuit of some legitimate secular

end”) (footnote omitted). In this regard, FUTA is

analogous to Title VII of the Civil Rights Act of 1964,

42 U.S.C. 2000e et seg., which excludes certain em-

ployers from its coverage, 42 U.S.C. 2000e(b), 2000e-1,

and, in addition, exempts religious organizations from

Title VII’s prohibition on religious discrimination in

employment, 42 U.S.C. 2000e-1(a). In Corporation of

the Presiding Bishop of the Church of Jesus Christ

of Latter-Day Saints v. Amos, 483 U.S. 327 (1987),

this Court held, without dissent, that the statutory

amendment creating that religious exemption com-

ported with the Establishment Clause. Contrary to

petitioner’s contention that governmental exemptions

must be formulated without reference to religion

(Pet. 18, 22), Amos held that Lemon’s secular purpose

requirement does not mean that “the law’s purpose

must be unrelated to religion.” Amos, 483 U.S. at 335;

see also Texas Monthly, 489 U.S. at 10. Rather,

Amos held that “it is a permissible legislative pur-

on the size of the employer, irregular work patterns, or the

difficulty of accounting for wages, as petitioner proposes (Pet.

18), would do nothing to address FUTA’s concern over having

government employees review and evaluate religiously based

discharges.

10

pose to alleviate significant governmental interfer-

ence with the ability of religious organizations to

define and carry out their religious missions.” Ibid.

FUTA’s religious exemption, like Title VII’s, “mini-

mize[s] governmental interference with the [employ-

ment] decision-making process in religions.” Jd. at

336. Here, as in Amos, “this purpose does not violate

the Establishment Clause.” Jbid.°

b. The FUTA exemption likewise does not have

the “principal or primary effect,” 403 U.S. at 612, of

advancing religion. As this Court recognized in

Amos, “[a] law is not unconstitutional simply because

it allows churches to advance religion, which is their

very purpose. For a law to have forbidden ‘effects’

under Lemon, it must be fair to say that the govern-

ment itself has advanced religion through its own

activities and influence.” 483 U.S. at 337. The

availability of an exemption for religious employers

under FUTA in no way advances religion. It pro-

motes the interests of government in program admin-

istrability and avoiding entanglement in religious

doctrine. See Agostini, 1178S. Ct. at 2015 (entangle-

ment concerns are an appropriate component of the

effects inquiry). Indeed, a State’s adoption of the

® Even assuming, contrary to our argument above, that

Congress had some religious purpose in permitting the exemp-

tion of religious organizations, it is important to remember that

“{a] religious purpose alone is not enough to invalidate an act of

a * * * Jjegislature.” Edwards v. Aguillard, 482 U.S. 578, 599

(1987) (Powell, J., concurring) (citing additional cases). “ The

religious purpose must predominate.” Jbid.; see also Wallace v.

Jaffree, 472 U.S. 38, 56 (1985). The predominance of secular

exemptions in FUTA forecloses any argument that Congress’s

primary purpose in authorizing the exemptions was to advance

religion.

11

exemption may well make it harder for religious

entities to attract quality employees because no

unemployment benefits will be available to cushion a

discharge. Pet. App. 35 n.5. Furthermore, petitioner

does not contend that the exclusion provides religious

employers an unfair economic advantage in the

commercial, profit-making arena. Cf. Amos, 483 U.S.

at 349 (O’Connor, J., concurring).

Petitioner makes no argument that the exemption

promotes religious indoctrination. See Agostini, 117

S. Ct. at 2016. Nor has petitioner presented any evi-

dence that religious organizations have a greater

ability now to propagate religious doctrine than they

did when FUTA or any of its amendments was

enacted. Amos, 483 U.S. at 337. Rather, FUTA’s

religious exemption simply ensures that neither the

unemployment compensation programs nor the relig-

ious entities are made worse off by the coverage of

such entities. See Walz, 397 U.S. at 675.

Finally, this case concerns an exemption, not an

affirmative government benefit. A statute that

classifies benefit recipients on the basis of religion

may receive greater Establishment Clause scrutiny

than an exemption of religious practitioners that

accommodates a secular governmental purpose and

protects the autonomy of the religious organization.

Compare Agostini, 117 S. Ct. at 2014, with Board of

Education of Kiryas Joel Village Sch. Dist. v.

Grumet, 512 U.S. 687, 705-707 (1994); id. at 715-716

(O’Connor, J., concurring); Amos, 483 U.S. at 335-337;

and Zorach v. Clauson, 343 U.S. 306, 314 (1952); see

also Camps Newfound/Owatonna, Inc. v. Town of

Harrison, 117 S. Ct. 1590, 1605 (1997) (“[TJhere is a

constitutionally significant difference between sub-

sidies and tax exemptions.”); accord Walz, 397 U.S. at

12

675. Such heightened scrutiny is applied because

conditioning the receipt of a benefit on the basis of

religion could create an impermissible economic

incentive to undertake religious activity. Exemp-

tions, on the other hand, withhold or withdraw a

governmental program from the religious sphere and

thus are less likely to influence individual religious

decisionmaking.

In any event, recipients of exemptions under FUTA

and state programs are not defined exclusively by

reference to religion: as noted, the exemptions—both

secular and religious—are identified by their impact

on administration of the program. Petitioner’s argu-

ment (Pet. 12, 16, 18) that Congress’s process of

amending FUTA is suspect because it has expanded

the workforce covered by FUTA while retaining the

religious exemption is misplaced. The changes that

have occurred in the national economy, the com-

position of the workforce, the role of non-profit or-

ganizations in the national economy, and in admini-

strative technology have made it possible to expand

FUTA’s coverage. See Pet. App. 34. None of

those developments, however, eliminates the concern

about governmental review of religious employment

decisions. Congress’s legislative judgment in that

regard “is a decision entitled to deference, not suspi-

cion.” Amos, 483 U.S. at 338; see also Bowen v.

Kendrick, 487 U.S. 589, 607 n.11 (1988) (amendment’s

specific addition of religious organizations as eligible

participants in program does not impermissibly ad-

vance religion when Congress had a secular purpose

for including religious entities).

c. Petitioner is mistaken in arguing (Pet. 8-9, 12-

17) tuat this Court’s decisions in Texas Monthly and

Walz mandate that religious exemptions be made

13

available to a full range of non-religious groups as

well as religious organizations. First, the tax exemp-

tion at issue in Texas Monthly was not grounded “in

some secular legislative policy that motivated similar

tax breaks for nonreligious activities.” 489 U.S. at 14

n.4. FUTA, like the property tax exemption in Walz,

does authorize exemptions for a variety of secular

entities that raise comparable administrability prob-

lems for unemployment compensation programs. See

Walz, 397 U.S. at 673, 674; see also Texas Monthly,

489 U.S. at 14 & n.4; Pet. App. 10.

Second, the tax exemption at issue in Texas

Monthly was confined to the particular religious

activity of “promulgating the teaching of the faith”

and publishing “writings sacred to a religious faith.”

489 U.S. at 5. FUTA does not condition the exemp-

tion on any particular speech content or religious

activity.

Third, the inquiries into religious doctrine that

assessments of employment “misconduct” and “good

cause” would entail were FUTA to apply are a far cry

from the “routine and factual inquiries” associated

with the sales and use taxes at issue in Texas

Monthly. 489 U.S. at 21; see also Jimmy Swaggart

Ministries v. Board of Equalization, 493 U.S. 378,

396 (1990) (finding it “significant[]” that the routine

administrative and recordkeeping requirements of

a sales and use tax “do[{] not require the State to

inquire into the religious content of the items sold or

the religious motivation for selling or purchasing

the items”); Hernandez v. Commissioner, 490 U.S.

680, 696-697 (1989) (rejecting argument under which

government regulators would be required to distin-

guish between “secular” and “religious” benefits or

services because the regulatory scheme would “be

14

fraught with the sort of entanglement that the Con-

stitution forbids”) (internal quotation marks and

citation omitted).

Fourth, Amos makes clear that exemptions that

“effectuate[] a more complete separation of” religious

organizations and the government and that avoid

“intrusive inquir[ies] into religious belief,” 483 U.S.

at 339, need not necessarily “come packaged with

benefits to secular entities,” id. at 338.”

3. The court of appeals’ decision does not conflict

with the ruling of any other court. To the contrary,

the court’s ruling is the first federal appellate

decision to address whether FUTA’s authorization

of a religious exemption comports with the Establish-

ment Clause." We are, moreover, unaware of any

other Establishment Clause challenge to FUTA’s

religious exemptions currently pending.

© Petitioner’s contention (Pet. 10, 17), relying on United

States v. Lee, 455 U.S. 252 (1982), that FUTA impermissibly

excludes employees of religious entities from the unemploy-

ment compensation program is incorrect. First, Lee was a free

exercise case, not an Establishment Clause case. Jd. at 254.

Second, the Court specifically noted that some measure of ac-

commodation of religious employers was permissible. /d. at 261

(“[A] tax must be uniformly applicable to all, except as Con-

gress provides explicitly otherwise.”) (emphasis added). Third,

petitioner’s argument was already rejected in Amos. See 483

U.S. at 338-339.

4 In St. Martin, the South Dakota Supreme Court ad-

dressed the Department of Labor’s determination that paro-

chial schools were subject to unemployment compensation

coverage. In re Northwestern Lutheran Academy, 290 N.W.2d

845 (1980), rev’d, 451 U.S. 772 (1981). In Grace Brethren, a

federal district court addressed the constitutionality of apply-

ing the unemployment tax scheme to certain religious schools.

See 457 U.S. at 399-403.

15

Petitioner is mistaken in asserting (Pet. 19-20)

that the court of appeals’ decision conflicts with the

Seventh Circuit’s opinion in Metzl v. Leininger, 57

F.3d 618 (1995). In Metzl, the Seventh Circuit held

that a statute making Good Friday a public school

holiday violated the Establishment Clause because

there was no secular purpose justifying the legisla-

tion. Jd. at 621-623. In the course of its decision, the

court held that the State bore the burden of proving

the existence of a secular purpose justifying the

statute. Id. at 622.

In the present case, the court of appeals observed

that “[petitioner] is unable to direct our attention to,

nor can we find, any indications in the legislative

history of [the FUTA amendments] that suggest

an impermissible purpose of advancing religion in

general or any particular religion.” Pet. App. 9.

Petitioner claims that this aspect of the court of

appeals’ decision conflicts with Metzl’s assignment to

the State of the burden of production of evidence of

a secular purpose. Pet. 19. Petitioner’s contention,

however, overlooks two significant differences be-

tween Metzl and the present case.

First, Metzl involved a statute that, on its face and

in its public interpretation by the governor, embodied

an explicit sectarian preference. See Metzl, 57 F.3d

at 619 (governor proclaims that Good Friday “is a

day charged with special meaning to multitudes

throughout the Christian world”), 621 (“The state has

accorded special recognition to Christianity.”), 622

(“On its face, and even without regard to the gover-

nor’s proclamation, the challenged statute, given the

unambiguously sectarian character of Good Friday,

promotes one religion over others.”). When a statute

contains such a facial sectarian preference, the gov-

16

ernment may bear the duty of producing evidence of a

secular purpose. See Wallace v. Jaffree, 472 U.S. 38,

57-58 (1985) (where statutory text, legislative record,

and testimony of sponsor made the “wholly religious

character” of the bill “plainly evident,” Court noted

failure of State to “present evidence of any secular

purpose”); cf. Church of the Lukumi Babalu Aye, Inc.

v. City of Hialeah, 508 U.S. 520, 546 (1993) (where law

burdening free exercise is not neutral or of general

application, burden is on government to demonstrate

that its interests are compelling); Amos, 483 U.S. at

339 (laws discriminating among religions are subject

to stricter scrutiny than those benefiting all relig-

ions uniformly).

FUTA, however, contains no sectarian pref-

erence “on its face,” or in “its legislative history” or

“its interpretation by a responsible administrative

agency.” Hdwards v. Aguillard, 482 U.S. 578, 594

(1987). Nor, given the statute’s authorization of nu-

merous secular exemptions, can FUTA be said to

have a “wholly religious character.” Wallace, 472

U.S. at 58. Accordingly, the court of appeals correct-

ly adhered to this Court’s ordinary rule that the

challenger in an Establishment Clause case “must be

able to show the absence of a neutral, secular basis”

for the statute. Gillette v. United States, 401 U.S.

437, 452 (1971); Walz, 397 U.S. at 676 (burden on per-

son attacking tax exemption); see also Mueller v.

Allen, 463 U.S. 388, 394-395 (1983) (noting courts’

ordinary “reluctance to attribute unconstitutional

motives to the States, particularly when a plausible

17

secular purpose for the State’s program may be

discerned from the face of the statute”).”

Second, Metzl involved the unusual situation where

the State chose to hinge its defense on empirical facts

about the operation of the school system that were,

for the most part, provable only by the State. 57 F.3d

at 622. Other courts have subsequently commented

upon the uniquely fact-specific and narrow scope of

the Metzl decision. See Koenick v. Felton, 973 F.

Supp. 522, 529 (D. Md. 1997); Granzeier v. Middleton,

955 F. Supp. 741, 749-750 (E.D. Ky. 1997). The present

case, by contrast, involves the traditional considera-

tion of legislative facts concerning the operation of

a statutory program and its administrability in the

religious arena. Metz! acknowledged that such

“legislative facts” are not ordinarily “subject to rules

of evidence developed largely for the control of lay

juries,” but rather “can be settled as a matter of first

or general principles.” 57 F.3d at 622.

In short, Metzl is legally and factually distinct

from—not in conflict with—the decision of the court

of appeals in the present case.”

2 In any event, petitioner makes no effort to demonstrate

that a different allocation of the burden of production would

have changed the outcome of the case.

8 In addition, the district court addressed, but the court of

appeals left unresolved, jurisdictional objections to petitioner’s

suit based on Article III standing limitations, the Tax Injunc-

tion Act, 28 U.S.C. 1341, and the doctrine of abstention. Pet.

App. 6-7, 20-28.

18

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

MARVIN KRISLOV

Deputy Solicitor of Labor

for National Operations

ALLEN H. FELDMAN

Associate Solicitor

NATHANIEL I. SPILLER

Deputy Associate Solicitor

ScoTT GLABMAN

Attorney

Department of Labor

MAY 1998

SETH P. WAXMAN

Solicitor General