UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WISCONSIN ANNIE LAURIE ...

53 Pages·2012·0.38 MB·English

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WISCONSIN
ANNIE LAURIE GAYLOR; DAN
BARKER; IAN GAYLOR, Personal Rep-
resentative of the estate of ANNE
NICOL GAYLOR; AND FREEDOM
FROM RELIGION FOUNDATION,
INC.,
Plaintiffs,
v.
JACOB LEW, Secretary of the United
States Department of Treasury; JOHN
KOSKINEN, Commissioner of the In-
ternal Revenue Service; and the
UNITED STATES OF AMERICA,
Case No. 16-CV-215
Defendants,
and
EDWARD PEECHER, CHICAGO
EMBASSY CHURCH, PATRICK
MALONE, HOLY CROSS ANGLICAN
CHURCH, AND THE DIOCESE OF
CHICAGO AND MID-AMERICA OF
THE RUSSIAN ORTHODOX CHURCH
OUTSIDE OF RUSSIA,
Intervenor-Defendants.

INTERVENOR-DEFENDANTS’ BRIEF IN SUPPPORT OF THEIR
MOTION FOR SUMMARY JUDGMENT
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TABLE OF CONTENTS
Page(s)
INTRODUCTION .....................................................................................1
PROCEDURAL HISTORY .......................................................................2
SUMMARY JUDGMENT STANDARD ...................................................3
ARGUMENT .............................................................................................4
I. Plaintiffs lack standing ....................................................................4
II. The parsonage allowance is not only permissible
under the Establishment Clause, but desirable ...........................7
A. The parsonage allowance is consistent with a
historical understanding of the Establishment
Clause ........................................................................................9
B. The parsonage allowance is consistent with
the controlling opinion in Texas Monthly .............................. 16
C. The parsonage allowance satisfies even the
more restrictive test of the Texas Monthly plurality ............. 20
1. Non-ministers receive a variety of
tax-exempt housing benefits under the
“convenience of the employer” doctrine ............................ 21
2. Ministers fit comfortably within the
“convenience of the employer” doctrine ............................ 30
3. To the extent that the parsonage allowance
provides special treatment to ministers,
it is justified by important First Amendment
principles ............................................................................ 36
a. The tax code routinely provides special
treatment to churches and ministers to
reduce entanglement and discrimination
among religions ............................................................ 36
b. The parsonage allowance reduces entanglement ....... 39
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c. The parsonage allowance reduces
discrimination............................................................... 43
D. The parsonage allowance also satisfies the
Lemon test and the Due Process Clause ................................ 47
E. Striking down the parsonage allowance
would endanger scores of tax provisions
throughout federal and state law ........................................... 48
CONCLUSION ............................................................................................. 49

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INTRODUCTION
For almost a century, Congress has excluded the value of a minister’s home or
housing allowance from federal income tax. 26 U.S.C. § 107. Plaintiffs now attack this
longstanding tax provision as a violation of the Establishment Clause. But their ar-
gument fails on multiple levels.
First, their argument is ahistorical. At the time of the founding, established
churches in the colonies received very specific forms of financial support—namely,
land grants, direct grants from the public treasury, and compulsory “tithes” from the
general public. But tax exemptions—including tax exemptions for parsonages—were
never viewed as a form of establishment. Such exemptions were widespread, and they
remained widespread even after colonial churches were disestablished. Instead, they
were viewed as furthering the separation of church and state. Given the Supreme
Court’s recent admonishment that “the Establishment Clause must be interpreted by
reference to historical practices and understandings,” this history carries great
weight. Town of Greece v. Galloway, 134 S. Ct. 1811, 1819 (2014) (emphasis added).
Second, Plaintiffs’ argument ignores the logic of the tax code. Section 107 is not
an odd, isolated provision that treats ministers’ housing unlike any other type of
housing. Rather, it is one small part of a broad scheme of housing-related exemptions,
all rooted in the “convenience of the employer doctrine”—which is as old as the federal
income tax itself. All of these exemptions, including § 107, serve the same secular
purpose: ensuring fair tax treatment of employee housing costs. Thus, § 107 is con-
sistent with even the most stringent interpretation of Texas Monthly, Inc. v. Bullock,
489 U.S. 1 (1989).
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Third, Plaintiffs’ argument contradicts core Establishment Clause values. If § 107
were eliminated, the taxation of ministers would no longer be governed by a bright-
line rule; instead, it would be governed by the notoriously fact-intensive standard of
26 U.S.C. § 119. The result would be deep, church–state entanglement—with IRS
officials forced to answer religious questions about the relationship between churches
and ministers and the way ministers use their homes. And if only § 107(2) were elim-
inated, the result would be pervasive discrimination among churches—with newer
and poorer churches bearing the brunt of the discrimination. This is the opposite of
what is required under the Lemon test. See Lemon v. Kurtzman, 403 U.S. 602 (1971).
Finally, Plaintiffs’ argument would produce widespread harm. Hardest hit would
be small churches like Intervenors’, which would be forced to curtail vital ministries
and, in some cases, shut down. But the harm would not be limited to small churches.
The (il)logic of Plaintiffs’ argument threatens scores of longstanding federal and state
tax provisions, all of which have been designed to protect the separation of church
and state.
Fortunately, none of this needs to happen. Plaintiffs lack standing to seek an in-
junction, because, despite any dispute over their 2012 taxes, the IRS has eliminated
any continuing harm by granting their request for a refund of 2013 taxes. But even
if the Court reaches the merits, it should hold that § 107 is not only permissible under
the Establishment Clause, but desirable. Accordingly, the Court should grant sum-
mary judgment to Defendants on all of Plaintiffs’ claims.
PROCEDURAL HISTORY
This is the second time that Plaintiffs’ have challenged the constitutionality of 26
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U.S.C. § 107 in this Court. Freedom From Religion Found., Inc. v. Lew, 983 F. Supp.
2d 1051 (W.D. Wis. 2013) (hereinafter “FFRF I”); Facts ¶ 176-77. The first case was
dismissed after the Seventh Circuit held that Plaintiffs lacked standing. Freedom
from Religion Found., Inc. v. Lew, 773 F.3d 815, 825 (7th Cir. 2014) (hereinafter
“FFRF II”); Facts ¶ 178. This Court has already dismissed Plaintiffs’ second challenge
to § 107(1) for lack of standing. Order Granting Mot. to Dismiss for Lack of Standing,
ECF No. 15.
On January 19, 2017, this Court allowed Intervenors to intervene as of right to
defend the constitutionality of § 107(2), explaining that “[n]o other group of people
has the potential to be more significantly affected by this case than ministers such as
the proposed intervenors and those they represent.” Opinion & Order, ECF No. 35.
Intervenors now move the Court for summary judgment on each of Plaintiffs’ claims.
SUMMARY JUDGMENT STANDARD
Summary judgment must be entered when the pleadings, affidavits, and other
summary judgment evidence show that “there is no genuine dispute as to any mate-
rial fact” and that the moving party “is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The burden rests
on the moving party to identify record evidence that shows the absence of a genuine
issue of material fact. Celotex, 477 U.S. at 322-25. After the moving party has met its
burden, the burden shifts to the nonmoving party to demonstrate that summary judg-
ment should not be granted by showing that there exists a genuine fact issue for trial.
Id. at 321-25. The court must view the evidence submitted and “all reasonable infer-
ences,” Van den Bosch v. Raemisch, 658 F.3d 778, 785 (7th Cir. 2011) (emphasis
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added), in the light most favorable to the nonmoving party, Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255 (1986), but “conclusory allegations . . . should be disre-
garded,” Drake v. 3M, 134 F.3d 878, 887 (7th Cir. 1998). Summary judgment must be
granted “against a party who fails to make a showing sufficient to establish the ex-
istence of an element essential to that party’s case, and on which that party will bear
the burden of proof at trial.” Celotex, 477 U.S. at 322.
ARGUMENT
I. Plaintiffs lack standing.
The Constitution limits the jurisdiction of the federal courts to “Cases” and “Con-
troversies.” U.S. Const. art III, § 2, cl. 1. “No ‘Case’ or ‘Controversy’ exists if the plain-
tiff lacks standing to challenge the defendant’s alleged misconduct.” FFRF II, 773
F.3d at 819 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). To estab-
lish standing, Plaintiffs bear the burden of demonstrating three elements: “(1) a con-
crete and particularized ‘injury in fact’ (2) that is fairly traceable to the challenged
action of the defendant, and that is (3) likely to be redressed by a favorable judicial
decision.” FFRF II, 773 F.3d at 819 (quoting Lujan, 504 U.S. at 560). Importantly,
the plaintiff “must demonstrate standing separately for each form of relief sought.”
Schirmer v. Nagode, 621 F.3d 581, 585 (7th Cir. 2010) (citing Friends of the Earth,
Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167 (2000)).
Here, Plaintiffs seek only prospective relief. See Compl. at 13, ¶ A-D. They do not
seek a refund of any taxes that they paid in the past; instead, they seek a nationwide
injunction striking down § 107(2) prospectively. Id. ¶ B. To obtain this relief, it is not
enough to show “[p]ast exposure to illegal conduct.” O’Shea v. Littleton, 414 U.S. 488,
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495–96 (1974). Instead, they must show “continuing, present adverse effects” that
would be remedied by an injunction. Id.; see also Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 108 (1998) (no standing to request injunctive relief when only past
harm is alleged); City of Los Angeles v. Lyons, 461 U.S. 95, 105 (1983) (no standing
unless plaintiffs are “likely to suffer future injury”); Gates v. Towery, 430 F.3d 429,
432 (7th Cir. 2005) (plaintiffs “lack standing to seek [prospective relief], because they
do not contend that they are likely to be arrested again”); Schirmer, 621 F.3d at 585
(no standing when an injunction “is unlikely to prevent any injury to these plain-
tiffs”).
Here, plaintiffs have failed to demonstrate any continuing harm that would be
remedied by an injunction. In fact, the available evidence suggests that they will not
suffer continuing harm. According to an FFRF press release, although Gaylor and
Barker were denied a refund in 2012, their request for a refund in 2013 was granted.
Facts ¶¶ 190-91. They have produced no evidence suggesting that they will again be
denied a refund in the future. Thus, “[a]bsent a sufficient likelihood that [Gaylor and
Barker] will again be wronged in a similar way, [they are] no more entitled to an
injunction than any other citizen of [the United States]; and a federal court may not
entertain a claim by any or all citizens who no more than assert that certain practices
of [the IRS] are unconstitutional.” Lyons, 461 U.S. at 111.
The remaining Plaintiffs fare no better on the issue of standing. Ian Gaylor lacks
standing to pursue injunctive relief on behalf of Anne Nicol Gaylor’s estate because
Ms. Gaylor is deceased. Facts ¶ 173. Because Ms. Gaylor cannot benefit from changes
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in the tax law that her estate seeks, an injunction cannot redress her alleged injuries.
Platcher v. Health Prof’ls, Ltd., No. 04-1442, 2006 WL 1980193, at *4 (C.D. Ill. July
12, 2006) (“Decedent, unfortunately, cannot benefit from the systemic prison changes
his estate seeks.”); Moulton v. Indiana, No. 209-CV-118-PPS, 2010 WL 2008986, at
*3 (N.D. Ind. May 19, 2010) (holding that representative of decedent’s estate lacked
standing to sue for injunctive relief “because the injunctive and declaratory relief she
requests will not affect [the decedent] in any way, and will certainly not redress the
alleged injuries”); see also Bowman v. Corrections Corp. of America, 350 F.3d 537, 550
(6th Cir. 2003) (same). “Federal courts have limited power to award equitable relief.”
Platcher, 2006 WL 1980193, at *4. And because Ms. Gaylor cannot seek to utilize
§ 107(2) again in the future, there is no “likelihood that [she] will again be wronged
in a similar way.” Lyons, 461 U.S. at 111. Absent ongoing harm, the estate’s repre-
sentative lacks standing.
FFRF likewise lacks standing because the individual Plaintiffs lack standing.
FFRF has not alleged any injury to itself, only to its members. Compl. ¶¶ 5-11, 14-18,
54-59 (alleging injuries to the “individual plaintiffs” only). Because no identified
member has standing, FFRF lacks standing to sue on its members’ behalf. See Hunt
v. Washington St. Apple Advert. Comm’n, 432 U.S. 333, 343 (1977) (associational
standing requires that an association’s “members would otherwise have standing to
sue in their own right”). Accordingly, all of Plaintiffs’ claims must be dismissed for
lack of subject-matter jurisdiction.
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II. The parsonage allowance is not only permissible under the Establish-
ment Clause, but desirable.
The Establishment Clause provides that “Congress shall make no law respecting
an establishment of religion.” U.S. Const. amend. I, cl. 1. To interpret this clause, the
Supreme Court has employed various “tests,” depending on the context of the dispute
and the inclinations of the Justices.
In some cases, the Court has applied the Lemon test, which asks whether the gov-
ernment’s action (1) has a religious “purpose,” (2) has the “primary effect” of “advanc-
ing” or “endorsing” religion; and (3) fosters “excessive government entanglement with
religion.” Lamb’s Chapel v. Ctr. Moriches Union Free Sch. Dist., 508 U.S. 384, 395
(1993) (describing Lemon test); Lynch v. Donnelly, 465 U.S. 668, 688-89 (1984)
(O’Connor, J. concurring) (first articulating “no endorsement” test). This test has been
heavily criticized by courts and commentators as malleable, self-contradictory, and
ahistorical.1 At least 7 current or recent Justices have called for its rejection.2 And in

1 See, e.g., Doe v. Elmbrook School District, 687 F.3d 840, 869-77 (Easterbook,
J. & Posner, J., dissenting from en banc decision) (calling Lemon and “no endorse-
ment” test “hopelessly open-ended”); Jesse H. Choper, The Establishment Clause
and Aid to Parochial Schools—An Update, 75 Calif. L. Rev. 5 (1987); Michael
McConnell, Accommodation of Religion, Sup. Ct. Rev., 1985, at 1.
2 See, e.g., Elmbrook Sch. Dist. v. Doe, 134 S. Ct. 2283, 2284 (2014) (Scalia, J.,
dissenting from denial of certiorari) (calling the endorsement test “antiquated”);
Mount Soledad Mem’l Ass’n v. Trunk, 132 S. Ct. 2535, 2536 (2012) (Alito, J., dis-
senting from denial of certiorari) (“Establishment Clause jurisprudence is un-
doubtedly in need of clarity”); Utah Highway Patrol Ass’n v. American Atheists,
Inc., 132 S. Ct. 12 (2011) (Thomas, J., dissenting from denial of certiorari) (“Es-
tablishment Clause jurisprudence [is] in shambles,” “nebulous,” “erratic,” “no
principled basis,” “Establishment Clause purgatory,” “impenetrable,” “ad hoc
patchwork,” “limbo,” “incapable of consistent application,” “our mess,” “little more
than intuition and a tape measure,”); Lamb’s Chapel, 508 U.S. at 398 (Scalia, J.,

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