California v. Grace Brethren Church

RESPONDENT:Grace Brethren Church

DOCKET NO.: 81-31
DECIDED BY: Burger Court (1981-1986)

CITATION: 457 US 393 (1982)
ARGUED: Mar 30, 1982
DECIDED: Jun 18, 1982

Harriet S. Shapiro – on behalf of the United States
Jeffrey M. Vesely – on behalf of the State of California
William B. Ball – on behalf of Grace Brethren Church

Facts of the case


Audio Transcription for Oral Argument – March 30, 1982 in California v. Grace Brethren Church

Warren E. Burger:

Mrs. Shapiro, you may proceed whenever you’re ready.

Harriet S. Shapiro:

Mr. Chief Justice and may it please the Court:

This case is here by the United States and the State of California from a decision of the District Court for the Central District of California holding that the Federal Unemployment Tax Act and its state counterpart may not constitutionally protect the employees of certain religiously oriented schools.

Last term this Court decided in St. Martin Evangelical Lutheran Church versus South Dakota that 26 U.S.C. 3309(b) exempted the employees of schools operated by a church or organization of churches from coverage under the federal-state unemployment tax system.

The district court decided this case before St. Martin was handed down.

Our case originally involved three kinds of schools.

The district court identified them as: category one schools, those operated directly by a church or organization of churches… and category one schools are the only kind that were involved in St. Martin; category two schools are separately incorporated, but controlled or operated by a church or organization of churches, primarily for religious purposes; category three schools are religiously oriented schools that are independent of any specific church or organization of churches.

The district court found that Section 3309(b) and the counterpart state statute exempted category one and category two schools, but not category three schools.

None of the parties here contest that ruling, so there’s no statutory issue before this Court.

Although the Missouri Synod Lutherans are here, with a brief, anyway, aren’t they?

Harriet S. Shapiro:

They filed a brief, yes.

The district court also held that the category three schools have a First Amendment right to exemption from the Act, because the state could not make benefit determinations for employees of these statements without becoming unconstitutionally entangled in matters of religious doctrine.

The schools also make a free exercise claim in their cross-appeal.

The First Amendment claims of the category three schools, that is those not associated with any church, are the only issues before this Court in this case.

This Court’s recent–

Was the free exercise claim presented below?

Harriet S. Shapiro:

–Yes, it was.

Not ruled on?

Harriet S. Shapiro:

Yes, it was ruled on and the district court rejected it.

Rejected it?

Harriet S. Shapiro:


Well, there is a cross-appeal on that issue?

Harriet S. Shapiro:

There is a cross-appeal, yes.

This Court’s recent decision in United States v. Lee substantially answers the First Amendment claim.

Indeed, this case follows a fortiori from Lee, because in Lee payment of the tax was itself a sin.

There’s no such claim here.

Do we get to this issue until we decide whether the Tax Injunction Act bars jurisdiction?

Harriet S. Shapiro:

That’s a Jurisdictional question.

Well, shouldn’t we address that before we get to the merits?

Harriet S. Shapiro:

Well, yes, there is that question in the case, and we’ve certainly discussed it in our brief, and also–

Well, aren’t you going to discuss it here?

Harriet S. Shapiro:

–I hadn’t planned to unless–

Well, let me ask you a question.

Harriet S. Shapiro:


As I understand your position, and I guess that of the State as well, it is that the declaratory judgment action was barred by the Tax Injunction Act, and yet for some reason we can nevertheless reach the merits of the religious clause question.

How do we do that?

How do we get that jump?

Harriet S. Shapiro:

Well, the argument basically is–

First of all, am I right that you do say the Tax Injunction Act bars a declaratory judgment action?

Harriet S. Shapiro:


That is the Government’s position?

Harriet S. Shapiro:

Yes, that’s the Government’s position.

And yet we should reach the–

Harriet S. Shapiro:

That’s right.


Harriet S. Shapiro:

Our argument is that this Court’s… this Court’s jurisdiction does not depend on the district court having had jurisdiction.

We rely on cases like McLucas and Weinberger versus Salfi, in which this Court said, although there is questions, there may be questions about the district court’s jurisdiction, they don’t have to reach those questions because under Section 1252 this Court has direct appeal jurisdiction whenever a statute… whenever there’s a constitutional question about a federal statute.

Even though the district court had no jurisdiction?

Harriet S. Shapiro:

Even though the district court had no jurisdiction.

Even if we have jurisdiction, doesn’t the Tax Injunction Act apply to us as well as to the district court, and we would in effect be giving a declaratory judgment, which is prohibited by that statute?

Harriet S. Shapiro:

The Tax Injunction Act prohibits the district court from enjoining or suspending or restraining.

So I don’t believe that it applies to this Court.

Do you think this Court could freely exercise its equitable powers and grant injunctions as if the Tax Injunction Act didn’t exist, on a review of a district court proceeding?

Harriet S. Shapiro:

Well, this is… we’re not asking that you grant an injunction.

All we’re asking is that under Section 1252 you remove the cloud that the district court’s opinion here has placed on the–

Yes, but Mrs. Shapiro, I gather the district court certainly is barred from granting any kind of relief, is it not, by the Tax Injunction Act?

Harriet S. Shapiro:

–That’s our–

Well then, how can we grant any?

Harriet S. Shapiro:


And we can’t send it back to them to grant it, because they have no jurisdiction to grant it.

Harriet S. Shapiro:

–Well, we’re not… we don’t think that you should grant an injunction.

But in McLucas–

Well, even a declaratory judgment, since you do agree that the Tax Injunction Act bars a declaratory judgment.

Harriet S. Shapiro:

–By the district court.


Well, we might have jurisdiction on the appeal, that’s right.

But what is open on the appeal?

The first question that’s open on the appeal is whether the district court had jurisdiction, and if it did… and if it did, why, we get to the merits; if it didn’t, I don’t know why you wouldn’t just vacate the district court’s judgment.

Harriet S. Shapiro:


That’ll get rid of what worries you, anyway.

Harriet S. Shapiro:

–Well, in one sense it will, meaning that this, the opinion of the district court, is not a precedent.

On the other hand, this issue has been raised and it’s going to be here on review of the state court decision, as in St. Martin’s.

Well, but if the district court had no jurisdiction then there isn’t any injunction.

Harriet S. Shapiro:

Well, but the issue has been raised and it’s–

Well, that sounds to me… really, Mrs. Shapiro, so often we get lawyers standing where you are who tell us, well, maybe there isn’t any jurisdiction, but we really want to have you decide it anyway.

And that sounds like the same kind of argument to me, if I may say so.

Harriet S. Shapiro:

–Well, except that in McLucas and in Salfi, both cases which came here under Section 1252, on a direct appeal because a statute of the United States has been drawn in question as contrary to the Constitution, this Court said that there was substantial question about the jurisdiction of the district court.

On what basis was that?

Harriet S. Shapiro:

Well, in Salfi the question was whether or not the district court had jurisdiction to issue in injunction under Section 405(g).

And the Court said, regardless of that we have direct appeal jurisdiction under 1252 and so we don’t have to decide that.

In McLucas the question was whether the decision below was properly decided by a single court… single judge instead of a three-judge court.

And similarly, the Court said, we don’t have to decide whether there was jurisdiction in the single-judge district court–

Well, there certainly was jurisdiction in one district court or the other there, one kind of a district court or the other.

There wasn’t any question.

But here the question is whether district courts in general have any authority to do what this court did.

Harriet S. Shapiro:

–But it was also… well, similarly in Weinberger versus Salfi, the question was whether any district court had jurisdiction to issue an injunction.

And in McLucas it was whether that single judge had jurisdiction to do what he had done.

What particularly do you want us to do?

What order do you want us to give?

Harriet S. Shapiro:

To vacate the decision below.

And you don’t reach the merits?

To reverse the incorrect judgment.

Harriet S. Shapiro:

Yes, certainly, we want you to just reverse the judgment–

And tell the district court to do what?

Harriet S. Shapiro:

–To dismiss.

Tell them to dismiss?

Harriet S. Shapiro:

Yes, yes.

On the merits?

Harriet S. Shapiro:

On the merits, absolutely, yes.

On the merits?

Harriet S. Shapiro:


Even though it has no jurisdiction to decide the merits?

Harriet S. Shapiro:

The principle, the reason for the Tax Injunction Act is to–

We tell the district court, you don’t have jurisdiction, but dismiss?

Harriet S. Shapiro:


Is that right?

Harriet S. Shapiro:


It wouldn’t satisfy your purposes if we directed them to dismiss on the grounds that they had no jurisdiction?

Harriet S. Shapiro:

No, because that would not resolve the cloud that’s cast on–

Well, you don’t always resolve every question as soon as it arises, as you know.

Sometimes we wait until we have jurisdiction.

Harriet S. Shapiro:

–That’s right.

But the question is not whether you have jurisdiction; it’s whether the district court had jurisdiction.

And it’s not a situation in which there was any Article III problem with the district court’s jurisdiction.

There’s no question that there’s a case or controversy here.

There’s no question that we’re not asking you for an advisory opinion.

Well, shouldn’t we decide both questions, though, or at least… I don’t know.

Would you say it would be all right with you if we said, well, they were wrong on the merits, but also they didn’t have jurisdiction?

Harriet S. Shapiro:

Well, you can certainly do what you did in McLucas and Salfi and say, passing the question of jurisdiction, on the merits–

Do you suppose, would you make the same argument if the question was case or controversy?

Harriet S. Shapiro:


Why not?

Harriet S. Shapiro:

Because there there is a jurisdictional bar… I mean, a constitutional bar not only to the district court but to this Court, too.

Well, but that would be one thing if we hadn’t construed the Tax Injunction Act to extend to declaratory judgments as well as injunctions.

But here the district court had… the only thing the district court could do was issue one or the other.

It couldn’t get away from home base, under the Tax Injunction Act.

It just couldn’t, couldn’t do a thing, the way we’ve construed the Tax Injunction Act; right or not?

Harriet S. Shapiro:

That’s correct as far as the district court’s concerned, but not as far as this Court’s concerned.

All right.

Harriet S. Shapiro:

Well, my argument on the merits basically is that this case really follows from Lee and that Lee stands for the principle that once you enter the marketplace and hire employees to provide goods or services, you cannot deny those employees the benefit of generally applicable statutory protections.

There’s no First Amendment right to deny one’s employees the economic security of social security and unemployment insurance coverage, any more than there is a First Amendment right to deny them a safe workplace or the protection of child labor laws.

The further question is whether or not there is a reasonable basis for distinguishing between category one and two schools and category three schools.

And we submit that this is a reasonable, bright-line test, and once you… if that bright-line test does not apply, then that the question of determining when… what schools are so religious in orientation that they should be treated as category two schools involves very serious problems of distinguishing between schools that are going to be of various types.

You really can’t make a distinction based on the degree of the school’s religious orientation, because religious orientation is not a readily identifiable characteristic by which various schools can be compared.

In sum, we don’t believe there’s any constitutional reason to deny the employees of these independent schools of the unemployment benefits that Congress decided they should enjoy.

Congress properly determined that they should be treated the same as their counterparts in private sector schools and this Court should not overturn that determination.

I’d like to reserve the remainder of my time.

Warren E. Burger:

Mr. Vesely.

Jeffrey M. Vesely:

Mr. Chief Justice and may it please the Court:

I wish to clarify first the State of California’s position with respect to the 1341 issue that was raised by the Court here.

What must be kept in mind is that a plain, speedy and adequate remedy must be available at state law and state court before the Tax Injunction Act arises here.

Now, the State’s position is very simply this, is that the Federal Government… there was relief sought against the Federal Government directly in this case.

There was injunctive relief sought, declaratory relief sought.

A federal statute was being challenged.

The Federal Government could not be compelled to litigate any kind of these issues in state court if it didn’t wish to.

In fact, the Federal Government did remove one of these two cases, the Lutheran case, from state court to federal court.

So basically what it comes down to is that, like was noted in your Java decision of, I think, 402 U.S., where in a footnote towards the end of the decision at page 135 it was noted that to accord complete relief to the plaintiffs in that particular case the question was raised whether or not the Federal Government should have been a party in the action as well.

And the State would submit that as a, for better use of a term, as an exception to this case so that the Court could reach the merits, which everybody wishes–

An exception to the Tax Injunction Act?

Jeffrey M. Vesely:

–To the Tax Injunction Act.

Jeffrey M. Vesely:

Is basically on the terms of the Tax Inunction Act–

Well now, would you say an exception or that there is no adequate state–

Jeffrey M. Vesely:

–Well, I would say that the exception–

–Within the meaning of the statute.

Jeffrey M. Vesely:

–is probably an improper word.

I think, Justice Brennan, that it’s probably that it just doesn’t meet the terms of the statute.

And this I gather… well, which?

Because what’s available in the state courts is not an adequate remedy?

Jeffrey M. Vesely:

In this particular case.

This case was unique for a number of reasons.

Well, I gather primarily it’s because what’s being challenged here as violative of the federal Constitution is not a state statute, but it’s a federal statute.

Jeffrey M. Vesely:

Both the federal and state statutes were challenged.

I know, but basically it’s the FUTA, isn’t it, the federal statute?

Jeffrey M. Vesely:

This is true.

And I gather your argument is that it’s rather strange that you be remitted, litigants be remitted, to a state court to decide the federal question of the constitutionality of a federal statute under the statute Constitution, is that it?

Jeffrey M. Vesely:

This is the position we’re taking, and especially in this particular case.

In the position… excuse me… that the State of California took in this case, the conformity process that’s inherent in FUTA came into play–

Is there anything unique about a state court deciding a federal constitutional question?

Jeffrey M. Vesely:

–Well, I don’t think there’s anything unique about that, other than the fact when you have the Federal Government having to be a party in the action, because there was relief sought against them.

I believe at that point there, that’s when the Tax Injunction Act becomes inapplicable.

And I think that as a… to maintain the integrity of the Tax Injunction Act, I think that’s the only reasonable way to look at this case.

I think an exception, because of the importance of the case–

I want to get this clear.

You’re not asking really for an exception?

Jeffrey M. Vesely:

–No, I am not.

You want to say that it’s not an adequate remedy in the circumstances.

Jeffrey M. Vesely:

That’s right.

Was there any… was there a jurisdictional issue raised below?

Jeffrey M. Vesely:

Yes, it was raised.

The Federal Government filed a motion to dismiss.

I know, and now it supports it… no, it doesn’t.

No, it doesn’t.

But what did the district court say, though?

Jeffrey M. Vesely:

The district court found a–

It didn’t go on your grounds?

Jeffrey M. Vesely:


What we argued below, we asked–

They disagreed with your ground.

Jeffrey M. Vesely:

–Well, our ground was actually raised that we wished for them to reach the merits of the case as well.

I think the ground that we’re raising right now is just looking at the statute, and actually xx–

So you never presented that to the district court?

Jeffrey M. Vesely:

–Not exactly this ground, that’s true.

But you’re… excuse me.

I was going to say, you cite the St. Martin’s case in your brief.

Jeffrey M. Vesely:

Yes, Your Honor.

Was the Government a party there?

Jeffrey M. Vesely:

The Government was not a party in the St. Martin’s case, and I think that the point raised by the Federal Government in their reply brief of speaking of why St. Martin’s was quite appropriate to go up and have federal questions decided in that case is quite distinguishable from our case, because of the relief that was sought, as I said, against the Federal Government.

The Federal Government was not a party in St. Martin’s.

Strictly a tax issue was not exactly the point of St. Martin’s.

It is the question of, to accord complete relief to the plaintiffs, if it’s proper, the only way the plaintiffs could have gotten complete relief would have been to stay in federal court.

We submit that they should not get the relief.

We make it very clear, though, but on the merits.

Are you taking the position that the St. Martin’s decision is a nullity, then, because the Government was not a party?

Jeffrey M. Vesely:

No, I do not.

The state statute was being challenged there, South Dakota statute, Your Honor.

Well, the plaintiffs in this case were the church related schools.

Jeffrey M. Vesely:

In our case here?


Jeffrey M. Vesely:

Church related and also just merely religiously related.

Well, so far as determining the constitutionality of the California statute, which I take it is what you’re interested in, why was the Federal Government a necessary party?

Jeffrey M. Vesely:

Because the federal statute was being challenged as well, and the state, because of the conformity process that the federal unemployment tax program has, where the state has to comply with what the Federal Government says or be held out of conformity and therefore forfeit millions of dollars per year, perhaps, in various moneys that they get from the Federal Government.

The State initial position in this case… and it actually is not really different, except that part of the case has been resolved, the category one and category two schools… the State was aligned essentially with the church related schools in that instance.

And we filed a motion for a cross-claim against the Federal Government seeking declaratory relief on that particular issue, saying we disagree with your interpretation, the statutory interpretation that this Court has resolved in St. Martin’s, yet on the constitutional issues of whether we get to a category three situation here, we agree with the Federal Government.

And that’s where we are before the Court right now, with just the category three.

So the uniqueness of this case was that the Federal Government had to be a party of this.

You say it had to be, but I still don’t see why an action by the plaintiffs to enjoin enforcement of the California statute required anybody but California and the plaintiffs.

It would have been more convenient, certainly, for the state to have the Federal Government a party.

Jeffrey M. Vesely:

It was also sought to–

I don’t see why they’ re indispensable.

Jeffrey M. Vesely:

–Justice Rehnquist, if I may, they also did seek relief against the Federal Government, though.

Well, they may have to be tossed out.

Jeffrey M. Vesely:

Tossed out of what, federal court?

Part of the case was removed from–

The Anti-Injunction Act, as I understand, applies to injunction against a federal statute as well as a state tax statute.

Jeffrey M. Vesely:

–I don’t think it does, Your Honor.

I wish to disagree.

Isn’t there a provision in some of the–

Jeffrey M. Vesely:

I think that any injunction against federal taxes would be handled under 7421 of the Internal revenue Code.

This is having to do with state taxes only.

So therefore, because of the posture of this case, I think that the only really relief that would accord… possible for the plaintiffs in this matter was to be in federal court, have the Federal Government in there, because the state was stuck in a position of having to try to figure out whether they should comply with what the Federal Government was mandating… excuse me… or decide to follow what the court was telling them to do.

Now, the court enjoined the state and the state was stuck into a position of either… of doing exactly that.

In fact, there is evidence in our case about how conformity proceedings were taken, were begun with respect to the state.

And so the situation of this case, the Federal Government was absolutely essential to be in the case.

If I may get to some of the merits of this, I believe that we’ve handled basically all of the issues that we wish to raise in our main brief and also our redly brief.

But I wish to put the case in proper perspective, is that if we get to the merits in this matter… and we wish you do… the employees are basically the forgotten people in this whole system.

There’s evidence, there are discussions completely throughout, about the employer’s rights, the employer’s religious beliefs, the employer’s burdens, alleged burdens or whatever they may be.

Yet what it comes down to, if the tax exemption here is extended to cover these non-church affiliated religious employers, what will happen directly is that these employees then are denied benefits.

They cannot get any unemployment benefits.

So quite consistent with your decision in U.S. versus Lee is that the employer’s beliefs will be basically being imposed upon these employees.

And we have a situation here that we don’t have church affiliated schools involved, we have independent religious schools.

Jeffrey M. Vesely:

And these independent religious schools, one of the main reasons they’re independent is they don’t want to be church affiliated.

They want to draw from as broad a base of students as possible.

And although they may have a requirement of born-again Christians for their teachers or whatever the case may be, there’s nothing in the record that says that every one of their employees agrees with their position about the unemployment compensation program.

So to basically deny these employees the right to get unemployment benefits would be a denial of their own beliefs, in fact, if you will.

I think that the situation here is actually closely analogous, if not virtually identical, to what Sherbert, Sherbert versus Verner and the Thomas case discussed.

We’re talking about a situation there where there was the state action prohibiting the… well, the state action in denial of an employee’s benefits was prohibited because of the employee’s lack of faith or because of their own faith.

You, this Court, held that that was just not permissible.

By the same token here, we have those same benefits being denied to the employees if the exemption is extended, and this time it’s because of the employer’s beliefs.

And I would submit that it’s no more permissible in the second instance than it was in the first instance.

–Well, what if an employer in a type three or category three school says, we want only teachers who will speak with enthusiasm and sincerity about our, the employer’s, religious beliefs.

Certainly the employer has a right to do that?

Jeffrey M. Vesely:

Well, I think the employer has the right to put down however they wish whatever work rules they wish.

Suppose that’s a work rule.

Now, if the employee doesn’t measure up to it he would be discharged for misconduct, I presume, under California law.

Jeffrey M. Vesely:

Well, the employer, if the… under California law, the employer must show in a benefit eligibility hearing that there was an established work rule and that work rule was knowingly violated.

Well, assume that the employer had done that.

Jeffrey M. Vesely:

If the employer does do that, then that employee will be denied any kind of unemployment benefits.

And that’s contrary to his beliefs, isn’t it?

Jeffrey M. Vesely:

Pardon, Your Honor?

That’s contrary to the employee’s beliefs, isn’t it?

Jeffrey M. Vesely:

Well, I think that the point of it is is that this whole system is a balancing.

I mean, the employer obviously has certain beliefs, and this has been an accommodation all throughout the entire program, that the employer has certain beliefs, has certain interests that have been accommodated in three fashions: it’s been accommodated by extension of the FUTA exemption for all religious employers, the extension of the California exemption to church related employers, and finally, that the employer itself has the reimbursable method of contribution.

So there has been an accommodation of the religious employer’s beliefs.

There is an accommodation of the religious employee’s beliefs as well, but it’s under a situation that if the employer changes the work rules after the fact, like a Thomas or a Sherbert case, the employee if that is then against his religious beliefs and he wishes not… that he just cannot comply with this, well then that employee cannot be denied benefits.

So basically what we come to is really a balancing.

I mean, it’s an attempt to take in everybody’s beliefs as possible, but still maintain a comprehensive nationwide program, which is the public’s interest in this entire thing, as well, as the point of protection against wage loss for the employees.

There’s… yes, Your Honor?

Do you make any point of the distinction here?

Church affiliated schools, as I understand, get the exemption–

Jeffrey M. Vesely:

That’s right, Your Honor.

–that’s right, isn’t it?

But a group that’s not so affiliated is denied the exemption?

Jeffrey M. Vesely:

That’s true, Your Honor.

What’s your position about that difference in classification?

Jeffrey M. Vesely:

Well, I believe that it follows very directly from U.S. versus Lee.

What has happened here is that there is a narrow, readily identifiable category that has been drawn.

I think that if you don’t draw the line there with respect to church schools or organization that are operated by churches, we have a problem of potentially getting into, as Judge Stevens said ia his concurrence in Lee, of evaluating the merits of each religious belief.

I think that the problem that arises there is that you are getting right involved with potential entanglement.

Well, nevertheless, what level of scrutiny do you apply to that distinction?

Rationality or–

Jeffrey M. Vesely:

I believe it should be a rational basis on this matter, your Honor.

The point of it is is that under the unemployment tax there has been classification done since the program began.

The Carmichael case, the initial case on this matter, talked about classification between seven and eight employers; what was the rational basis there?

–Well, we didn’t have a religious classification.

Jeffrey M. Vesely:

that’s true.

But we’re talking about here trying to stay out of evaluating the merits of each religious belief.

It does not matter that that church that is exempt opposes, is neutral, or is unopposed to unemployment.

Unlike the 1402(g) statute in Lee, which talks about being opposed to social security benefits, this is a very neutral statute that says… it doesn’t say a recognized religious sect, like in 1402(g).

It talks about a church.

So what we have here is a very easily identifiable category–

Nevertheless, it does grant benefits to certain kinds of religious organizations and deny them to others, doesn’t it?

Jeffrey M. Vesely:

–This is true.

You cannot accommodate–

Well, isn’t that sort of abuse the kind of thing that has led us to suggest strict scrutiny?

Jeffrey M. Vesely:

–Well, I think, Mr. Justice Brennan, I think the situation is very analogous to the Lee case again.

What difference under the First Amendment does it make whether you have a self-employed Amish or a non-self-employed Amish?

They have got to have the same beliefs, you would have to come to the conclusion.

So why can you draw a line there and not draw a line there?

I think there may be a question of whether there’s a wiser line or a better line or whatever.

That’s not for this Court to decide.

Jeffrey M. Vesely:

The same thing like in the Braunfeld case.

You said that it didn’t have to decide that there was a better solution than having a one day off.

I think that it’s completely proper here and I would ask you to reverse insofar as we challenge.

Thank you.

Warren E. Burger:

Mr. Ball.

William B. Ball:

Mr. Chief Justice and may it please the Court:

To the Redwood Christian Schools and Christian Unified Schools of San Diego, this litigation poses the following question: May a pervasively religious school which in no wise differs from the characteristics of the religious schools examined by this Court in Lemon, in Catholic Bishop of Chicago, except for the matter of legal connection with a church, which is in no sense a commercial enterprise, and which virtually accepts no kind of direct or indirect public subsidy, may such a school be compelled to be involved in a governmental program of which excessive entanglement between government and religion is absolutely a necessary part?

May I ask, Mr. Ball, are you going to address the 1341 jurisdictional argument?

William B. Ball:

I am indeed, Mr. Justice Brennan.

I thought that my division of argument would necessarily deal with the entanglement problem as a precedent to discussing the jurisdictional problem, and then I would go on to free exercise, and finally, if time permitted, the equal protection question.

This Act involves two kinds of entanglements.

First of all, in the benefit eligibility determination process–

Well, of course, if there is no jurisdiction, if there was no jurisdiction in the district court you don’t get to entanglements, do you?

William B. Ball:

–Well, I tell you, Mr. Chief Justice, I think we get to the jurisdictional problem through the entanglement problem.

May I explain that to the Court?

The second kind of an entanglement is entanglement relating to the ordinary administration of the Act apart from the benefit eligibility determination process.

Now, to come to that.

In the benefit determination process, a process which can arise at the very outset of employment, because the employee may already have picked up four quarters of work through another employer, the governmental parties, as Mr. Vesely just made clear, they say that religious ministries can avoid any entanglement problem simply by establishing work rules, requiring a teacher to conform to, as the reply brief of the Government said, the principal’s interpretation of doctrinal and moral matters.

At the trial, the United States through its own expert witnesses attempted then to provide a showcase demonstration of how the work rule works.

But as the testimony turned out, it became crystal-clear that whether the kind of blank check a agreement was used which the Government had recommended in its reply brief, namely the employee agrees that whatever the employer says is doctrine and a proper code of conduct, that the employee agrees to conform to, or whether it’s a long, spelled-out statement of faith with all manner of rules of conduct and all the essential doctrines of faith spelled out, either way, as Justice… Judge Mariana Feltzer below said so accurately, the complexities of religious faith are not reducible to work rules.

Note here that it’s perfectly clear that the Government witnesses were completely correct in saying, this is how a benefit eligibility determination process has to work in any kind of employment, in any kind of institution.

But these witnesses also conclusively demonstrated that when that process is applied to a religious ministry, it veritably explodes with potential for entanglement.

We had example after example where Government expert Ernest Carter, for example, was called to the stand by the Government and he was asked, suppose this teacher entered into an understanding with the school that he or she was to observe a document called a statement of faith, and that school discharges her on the ground that she breached the statement of faith, taught something contrary to it.

Would the hearing examiner examine what that agreement was?

Answer: He would.

Well, the questioning pursued, what if they disagree about what the doctrine was?

The employer says, you breached it, and the employee says, no, I didn’t.

What does the hearing examiner do in that case, the Government was asked?

Answer: Well, he, the state, has to weigh the evidence from both parties and decide in favor of one or the other, weigh the doctrine.

Government experts were asked about cases where an employee is discharged for a decline in religious fervor relating to the students, a very important element in a religious school.

William B. Ball:

The witness said; I would have great difficulty in measuring zeal and what that meant.

But I would ask what harm that does, what harm that loss of zeal does to the employer.

Then the witness was asked, well, who would judge that, the claims examiner?

Answer: Yes.

The implied work rule also same very much into scope through the testimony of the Government witnesses.

They were asked, does the hearing examiner ever get into the question of whether a particular implied work rule, a doctrine, a piece of the statement of faith; for example, is reasonable or unreasonable?

Answer: Yes, and whether it’s enforced or not, thus taking the state examiner into the whole life of the institution in order to find out what is enforced, and with whom, and when, and how often, and to what degree, into the faith community with that kind of examination.

Claims examiners will determine whether a particular doctrine or rule of the religious body is a major one or a minor one, as the testimony–

That’s a very skillful argument about entanglement, but–

William B. Ball:

–Yes, all right.

–you’re… sooner or later you can get around to jurisdiction.

William B. Ball:

That’s the foundation that I hope that I have laid.

And now, Justice White, let me relate this to the question that you’re asking about district court jurisdiction.

California courts cannot provide a plain, speedy or efficient remedy.

They can’t provide any remedy in this case.

The entanglement will already have occurred in the benefit determination process, the very process of inquiry, to pick up this Court’s words in Catholic Bishop.

And by the way, the very–

Well, if the case turned on that, turned on that, wouldn’t the district judge really be the place to present that?

The district court knows more about local law and the adequacy of remedies than we do.

William B. Ball:

–We presented this case in the district court, if that’s what you’re referring to.

We’re saying–

There was a challenge to the district court’s jurisdiction there.

William B. Ball:

–We did not.

I know.

There was one, though.

William B. Ball:

There was one.

And this argument was never presented.

William B. Ball:

Well, this argument was presented in detail.

I mean this argument about the adequacy of remedy.

William B. Ball:

Oh, no, we presented that argument in detail, I beg your pardon, Justice White.

Well, then the district court must have rejected it.

William B. Ball:

No, the district court agreed that it did have jurisdiction.

Well, I know.

I know.

But I thought there was a… I thought I heard from one of the people speaking before that this particular reason for sustaining jurisdiction was never presented to the district court, that there was no adequacy remedy under state law?

William B. Ball:

We alleged that in our complaint.

We argued it in the district court.

We said that we would not have a plain, speedy and efficient remedy under state law.

Did he agree with that?

William B. Ball:

Judge Feltzer agreed with that, yes.

She agreed with that position.

She said you would not have a plain, speedy and adequate remedy under state law.

And therefore the Injunction Act’s no bar.

William B. Ball:

Therefore the district court assumed jurisdiction.

Mr. Ball, you could have, I suppose, obtained some form of relief in California, for instance paying some portion of the tax and suing to recover it, or following administrative remedies, could you not, seeking a declaratory judgment?

William B. Ball:

Judge O’Connor–

At least paying the tax and then litigating the validity?

William B. Ball:

–Well, the reason that we did not was because the schools in California… and there are about 700 of them all told, of Christian schools of this kind… were promptly set upon by the… by the California unemployment compensation authorities in 1978 and they were told, you must now come under this program and comply with it, a program to which they had not been subject.

They had vigorous constitutional objections to this on free exercise grounds and on entanglement grounds, which they very strongly raised.

And the question became then one of whether they must go under the program and start to pay under protest for something that they had very little money to pay for to begin with, use stewardship funds on a program that they believed was flatly unconstitutional, or whether they could go into a federal district court and have federal constitutional claims aired under the First Amendment against the State of California and the Federal Government.

And they chose that route.

Yes, but you do concede there was a way to get the California courts to rule upon the question?

William B. Ball:

No, I don’t, Justice O’Connor, and the reason that I don’t is partially the reason I have stated here, that the potential of entanglement was immediate, that the benefit determination eligibility process could be promptly upon the school.

They could be thrust into that almost immediately.

There was another reason that was back of the move into federal court, and that was the fact that the Secretary of Labor had laid down a rule that only those schools which were totally religious, in his view, would be considered exempt under the statute, whose plain wording was that church schools were exempt.

He said that if they were not strictly religious then they would not be exempt, and therefore investigators from the State of California went to religious schools throughout the state with a tabular list, trying to figure out which of their functions were secular and which were religious.

And this occurred to these religious schools we represent here today on this appeal, as well as the church schools.

So for all these reasons, the very imminence–

I can’t see how that inquiry would be relevant in the category three schools.

William B. Ball:

–How the inquiry with respect–

Whether you’re totally religious or only partially religious, under the state and Federal Government’s view, you have to pay the tax.

William B. Ball:


The inquiry is relevant for this reason, Justice Stevens: The… under Secretary… if you’re referring now to Secretary Marshall’s initial pronouncement that his people were to determine what was strictly religious and what was not in all schools which claimed to be religious–

That included category one and category two schools?

William B. Ball:

–It would definitely include category three schools.

Yes, but the only problem, as I can see it anyway, would be with respect to category one and category two schools.

If you’re in category three, you must pay the tax whether you’re entirely religious or only partially religious.

William B. Ball:

You would be, except for the fact… that’s correct, in determining whether you come under the statute.

But the category three schools were especially interested in all of the problem of religious entanglement and imposition on free exercise that they felt the program embraced.

And so, when I was referring to why all the plaintiffs went into court to seek the declaratory and injunctive relief, I was referring to all of them, and the category three schools, not with respect to the–

But as of now we’re only concerned with category three.

William B. Ball:

–That’s correct, Your Honor.

Mr. Ball, may I get back just a moment to this jurisdictional question.

I gather you and the Government have a different position about that.

As I understood Mrs. Shapiro, the Federal Government’s position is that, no, the district court had no jurisdiction, it was barred by 1341, but that this Court had jurisdiction under 1252.

Your position, I gather, is that, no, 1341 was inapplicable because there was no plain, speedy, and efficient remedy under state law; is that it?

William B. Ball:


You have that difference with th Federal Government?

William B. Ball:

We have that–


William B. Ball:

–absolutely difference with the Federal Government.

Could you tell me where in the district court’s several opinions the matter of jurisdiction is addressed?

William B. Ball:

Justice White, page 65 of the jurisdictional statement.

I’ve got it, I’ve got it.


Actually, I suppose it’s the top of 67 applies to your particular argument.

But I still don’t quite understand, in the response to the question of Justice O’Connor, why you could not have done what the Amish did in the Lee case, have paid a small amount of tax and then gone into a California court and said, we want a refund of that.

I don’t know why you had to fight out any particular discharge issue in a refund suit.

William B. Ball:

The reason was that we felt our constitutional liberties were being violated at the very outset.

But don’t you think the Amish felt the same way in their case, Mr. Ball?

William B. Ball:

I don’t know, Justice O’Connor, how the Amish felt in their case.

Oh, but you’ve read the opinion.

William B. Ball:

I indeed have.

You know that the argument was based on constitutional grounds.

And that’s often true of statutes involving taxes that are attacked on constitutional grounds.

How is your problem any different?

William B. Ball:

Our problem is simply this: We don’t dispute the fact that Mr. Lee could have gone the administrative route, paid the tax, and eventually gone through the state court system, and then come here.

He went actually through the federal courts.

In our own case, we believed that the federal courts were open to this kind of case.

Here is a case in which the federal courts plainly have jurisdiction, unless, unless the Tax Injunction Act should bar that.

That Tax Injunction Act said if you have a plain, speedy and adequate remedy, then you’re not barred.

You’re free, you’re home free if you have… if you do not have a plain, speedy and adequate remedy.

And it’s clear that our clients did not have a plain, speedy and adequate remedy.

I think Judge Feltzer was correct also in view of the fact that she was aware of the California constitution, which bars an injunction action, and the fact that the administrative body, under the California statute also, an administrative body cannot declare a state statute unconstitutional.

And here was the very thing they were trying to do–

But a state court could.

Could you have sought declaratory relief in California?

William B. Ball:

–I did not hear.

Could you have sought declaratory relief in the California state courts?

William B. Ball:

We could have sought declaratory relief in the California state courts.

And ask them to declare it unconstitutional?

William B. Ball:

Yes, this could have been done.

Why isn’t that as plain and speedy and adequate as having the federal court–

William B. Ball:

Because we needed we needed injunctive relief.

–Pardon me?

William B. Ball:

Because we needed injunctive relief.

Well, that’s contrary to Rosewell last year, Rosewell versus LaSalle National Bank, that you may not be entitled to injunctive relief if there’s an otherwise adequate state remedy that will ultimately determine the claims you want to make?

William B. Ball:

I distinguish Rosewell very, very greatly from the case that we’re involved in, because here we have substantial First Amendment claims under the religion clauses.

Well, in Rosewell they thought they had substantial constitutional claims.

William B. Ball:

Constitutional claims of a different sort, Mr. Justice–

Is there some gradation of constitutional claims?

William B. Ball:

–Well, I had thought there was.

I thought there were fundamental freedoms and preferred freedoms under the First Amendment.

What’s your authority for that?

William B. Ball:

Oh, Cantwell versus Connecticut, virtually every free exercise case speaks of fundamental liberties protected by the First Amendment which are not in the same class as property rights or business rights or commercial rights, et cetera.

Well, you think that due process of law guaranteed by the Fourteenth Amendment is subordinate to these rights you’re talking about?

William B. Ball:

Not subordinate.

I think these rights are a part of due process, but they’re a part of due process in its most vital and sensitive area, namely freedom of the mind, freedom of religion, freedom of speech and press.

Those liberties I had thought the Court had long since said were preferred freedoms and not at all to be classified with property rights.

Well, do you think, then, that for some constitutional claims the 1341 does not require anything more than the usual statement state remedy, but for others it does?

William B. Ball:

I think that Section 1341, where religious liberty is actively threatened, yes, I think that it–

Or speech, or speech.

William B. Ball:

–Or speech, indeed, indeed.

Do you have any authority for that, cases from this Court construing 1341?

William B. Ball:

No, and I think that argues in our behalf, that the Court has not said that a case under the religion clauses of the First Amendment is barred, that district court jurisdiction is barred, where such liberties are advanced and where there are substantial and bona fide claims, where there can be no doubt about the reality of those claims.

Counsel, if First Amendment rights have priorities, what is number two?

Which one of the amendments is number two?

William B. Ball:

I can’t make any such distinction, Mr. Justice Marshall.

Well, how can you make one if you can’t make two?

William B. Ball:

I think–

I mean, if you’re grading them, how can you grade one when you can’t grade the others?

William B. Ball:

–The grading, Justice Marshall, was not of my own.

The grading was the grading that the Court has long since given to First Amendment freedoms.

Well, read me where this Court said that First Amendment rights have priority over everything else.

William B. Ball:

Well, I think the… if we take Cantwell versus Connecticut–

What in Cantwell versus Connecticut said that?

William B. Ball:

–That they had priority over the action of the local commissioner who was going to issue a license for exercising rights of speech.

You said over everything.

Well, that’s true of all constitutional provisions.

William B. Ball:

If the question is whether the… whether there is a constitutional liberty that is prior to the Tax Injunction Act, if that’s the question, then I think that the… our only position is that we don’t believe that a plain, speedy and adequate remedy under the Tax Injunction Act is found in recourse to a declaratory judgment action in the state court or the paying of taxes while one awaits disposition in the state court.

Mr. Ball, I think your view that the establishment clause is entitled to special value in the hierarchy of constitutional values was strongly supported by the dissent in the Valley Forge case, but unfortunately the majority went the other way.

William B. Ball:

I thought that this view was strongly supported by the majority in a great number of cases–

I did, too.

William B. Ball:

–such as Wisconsin versus Yoder, ever so many cases in which the Court has declared for religious liberty.

We took quite literally what the Court had had to say about the enormous dangers of the potential for entanglement between religious activity and Government, and we think that here the record is very clear that in the administrative proceedings which are inevitable in this case, in those administrative proceedings, in the benefit eligibility determination process, serious constitutional damage would result to the religious institution which we represent.

And this would be continued if the administrative proceeding were continued.

You say you have an appeal process.

Well, you go through the appeal process and these same inquiries, the whole religious issues we’ve been talking about, the statement of faith, et cetera, are recycled in the administrative level.

And then when you get to the state court level finally, you really get a sort of posthumous result.

The state court can simply say, well, yes, the administrative body was wrong, the hearing examiner was wrong, he ought not to have gone into those issues.

So you really have suffered constitutional damage in the meantime, only to be told at the end that it’s too bad, it shouldn’t have happened.

You’ve suffered major needless surgery and then told, well, at least you don’t have to pay for it.

This constitutional damage goes far beyond entanglement.

If an employee knows that he can take a case of discharge for religious reasons, he can take that into an administrative body which will then entertain the religious question, and he knows then that they will do that and that he can get compensated, this certainly must have an effect within the religious institution itself.

And again, the same thing applies to the administrators of the religious institution, who know that their employees know this.

An argument much like yours was made in Henderson against Wallace and someone else, that is, that the very inquiry in the pretrial discovery as to what information the media had which they didn’t disclose was a “entanglement” type of thing, which couldn’t be made.

But this Court rejected that argument.

The courts must always make the initial inquiry, even if it involves some entanglement.

Otherwise, the claim of entanglement would be a barrier to any inquiry under the true facts.

William B. Ball:

The kind of entanglement, Mr. Chief Justice, that we’re speaking of here is the entanglement by a claims examiner who is not empowered to deal with constitutional issues and who, as the record so abundantly shows, will be taking upon himself examination into matters of doctrine, faith, moral conduct, religious fervor, and all of those things.

That I think is quite different from the situation that you pose.

Not so different from Henderson against Landow and Wallace… is the title of the case.

William B. Ball:

Then I’m puzzled where we are, say, in Catholic Bishop, where the Court said that the very process of inquiry bring us into the area of–

It’s in quite a different setting.

That’s in labor relations.

William B. Ball:

–It is with respect to labor relations, and there, is not the problem the same?

It seems to me the Court in Catholic Bishop attached an appendix to its opinion in which it showed that a certain Monsignor O’Donnell had been discussing liturgy and asking questions about Catholic liturgy.

And these were, I thought, shown by the Court to be an example of an area into which the state ought not be going, irrespective of whether it is in a labor situation or whatever situation it might be.

We also dealt with the problem of free exercise, and I’ll touch briefly upon that, only to say that we believe that there is a marked contrast here to Lee, to Braunfeld, and to Murdoch and Fallett.

In contrast to Lee, here a religious activity is being taxed, and indeed a prime religious activity, namely a ministry of teaching.

William B. Ball:

Mr. Lee never claimed that making a profit by hiring six or seven employees to produce rough lumber for commercial housing was a religious activity.

In contrast to Braunfeld, we have here a tax.

In contrast to inferences in Murdoch and Fallett that a preacher is not entitled to be free from taxes, here the tax is not on anybody’s personal income, but on the most sensitive aspect, the most sensitive aspect of a school ministry, namely the employment relationship between teachers and the school administration itself.

The Government has put squarely to the Court, it seems to me, the proposition that religious activity may be taxed.

And no Aesopian language about relatively small amounts or indirect burdens changes that very stark reality, and no compelling state interest certainly exists for imposing this tax on Redwood Christian Schools and the Christian Schools of San Diego.

A broad exception already substantially exists in the statutes as they are, a very, very broad exception, not a narrow exception, to which the exception of the church… of the non-church schools adds but very, very slightly.

All schools until 1978 were exempt, and therefore one must inquire, what’s the compelling state interest now in saying that these non-church schools are subject to the tax.

Mr. Ball, is this an equal protection argument?

William B. Ball:

It is in part an equal protection argument.

And you suggest the level of scrutiny is compelling, not rationality?

William B. Ball:

Yes, indeed, indeed, Justice Brennan.

Similar… this case I think in this respect is very similar to Sherbert, where the exact same arguments were made, that the unemployment compensation program was threatened if Adele Sherbert was let out from under.

The Court in Sherbert said that the state must demonstrate that no alternative will protect the integrity of the unemployment compensation program without infringing First Amendment rights.

As to equal protection, perhaps I should mention here just briefly the statements that have been made about employees by the California Attorney General.

First of all, no employee is a party to this case.

No beliefs here have been imposed upon anybody’s rights that were not, for example, imposed on rights of employees in Catholic Bishop.

The churches have not… the churches there, in cases such as Catholic Bishop, were not thought to be denying their employees’ rights.

Here the testimony of Mr. Enderland at page 89, to which I commend the Court, is very, very clear that all personnel, whether it’s a bus driver, a janitor, an accountant or whomever, are felt to be and believe themselves to be part of the religious mission of the school.

We come then down finally to the equal protection considerations, and feel that Redwood Christian Schools ought not to be treated differently from the church schools.

There are three bases for that statement:

One is the argument of the court below, the rationale of the court below, on the issue of entanglement itself.

We have raised an equal protection claim with strict scrutiny basis, as Justice Brennan had mentioned.

And then I refer you to the American Jewish Congress’ brief, which simply says that disparate treatment of church versus non-church schools violates the very core of the unitary protection of the religion clauses.

I think that too is a most significant consideration in connection with this case.

I thank the Court.

Warren E. Burger:

Thank you.

Do you have anything further?

You have three minutes remaining, Mrs. Shapiro.

Do you want to address the jurisdictional question any more?

Harriet S. Shapiro:

Well, only to state that the adequacy of the state remedy issue is essentially the argument that you can’t trust a state court to pass on federal constitutional issues, which we think is quite incorrect.

Well, isn’t there another problem, just to get your view on it.

What about when the Government is made a party and then removes the case to the federal court?

How can the state remedy be adequate then?

Harriet S. Shapiro:

Well, the state remedy is certainly entirely adequate as far as the plaintiffs here, the schools, are concerned, because they can get… I mean, the, only tax that’s involved in this case, because in this particular–

But unless you take the view that the court necessarily decided the federal constitutional question, which would make you a proper party, we don’t have jurisdiction as a matter of statutory law.

Harriet S. Shapiro:

–They decided the federal constitutional question, because the state statute tracks the federal statute.

Then wasn’t the United States an appropriate party and unable to remove?

Harriet S. Shapiro:

They certainly were an appropriate party, but they were not a necessary party, because there’s no federal tax here, because there isn’t any federal tax on these non-profit schools.

There’s only a state tax here, and in the state courts you could get… the schools could get a complete remedy as far as that issue is concerned.

The only other point I wanted to make is on the entanglement issue.

The record does indicate that the state… the federal witnesses were asked a lot of hypotheticals.

But the point is that in those hypotheticals the question assumed that there was not an appropriate work rule.

What we’re talking about is not a discharge for religious reasons, but a discharge for a violation of the work rule, and the work rule… you don’t have to have any inquiry into the religious doctrine of the school, of the church.

What the work rule would require would be that the teacher would follow the directions of the principal or whoever was in charge in teaching, similar to any secular schools.

The teachers are supposed to follow the directions of those in charge of the curriculum.

And if they did not, then that would be misconduct.

You don’t get into questions of what’s the correct doctrine or any real religious questions.

I suppose, however, Mrs. Shapiro, there may be some state requirement that work rules be reasonable, and to that extent might not you have to get into–

Harriet S. Shapiro:

Well, the state requirement that the work rules be reasonable means reasonable on the context of the employment.

The witness explained that it wouldn’t be reasonable to have a work rule that required, the example was a mechanic who was required not to drink off the Job.

–Yes, but to the extent that they dealt with religious requirements, to that limited extent, it seems to me that it might put the thing in the posture of an examination of doctrine.

Harriet S. Shapiro:

I believe that, given a secondary, a primary or secondary school with a strong religious orientation, if the schools says our work rules require you to lead a Christian life as that is defined by the principal, and the teacher accepted the job on that understanding, then that would be a reasonable work rule.

Warren E. Burger:

Thank you, counsel.

The case is submitted.