Department of Employment v. United States

PETITIONER: Department of Employment
RESPONDENT: United States
LOCATION: U.S. District Court for the Southern District of California, Central Division

DOCKET NO.: 78
DECIDED BY: Warren Court (1965-1967)
LOWER COURT:

CITATION: 385 US 355 (1966)
ARGUED: Nov 15, 1966
DECIDED: Dec 12, 1966

Facts of the case

Question

Media for Department of Employment v. United States

Audio Transcription for Oral Argument - November 15, 1966 in Department of Employment v. United States

Earl Warren:

No. 78, Department of Employment, et. al., appellants versus United States, et al.

McKevitt?

James D. McKevitt:

Mr. Chief Justice, may it please the Court?

This is a direct from a three-judge court sitting in the United Stated District Court in and for the District of Colorado.

There are three questions presented to this Court.

No. 1 is whether the District Court had jurisdiction over the parties in the subject matter to this action; the second question is whether the American National Red Cross is an instrumentality or agency, and I use the words interchangeably, of the United States Government; and the third question is if the Court finds that the American National Red Cross is an agency of the United States Government, has Congress waived its immunity from taxation by its 1960 Amendments to the Federal Unemployment Tax Act which became effective, January 1962.

This action arose, and I go on way of background, that because of the proviso of the Amendment to the Colorado Employment Security Act which is set forth in Chapter 82, 1963 CRS (Colorado Revised Statutes) which taxes all non-profit organizations in the State of Colorado.

For example, we tax hospitals, churches; there are clerical exemptions, etcetera but other organizations such as the Salvation Army, the Colorado Bar Association, etcetera, are covered under the Colorado Employment Security Act.

Colorado is one of three states which taxes non-profit corporations under its Colorado Employment Security Act.

The other two states are Alaska and Hawaii.

Now two of these states, namely: Colorado and Alaska elected to tax the American National Red Cross under the Employment Security Acts and as a result, this action was brought in the Colorado District Court, United Stated District Court, seeking a permanent injunction against the Colorado Department of Employment and its executive director, Bernardi Tist, from assessing further taxes against the American National Red Cross.

The Department of Employment appeared and moved to dismiss the action and moved to strike the United States of America as a party-plaintiff to this action and the appellee moved for a summary judgment.

These matters were argued to a three-judge court in the United States District Court and upon hearing of oral arguments, the United State District Court denied the Motion for Summary Judgment, denied our Motion to Dismiss and granted our Motion to Strike the United States Government on the grounds that they had failed to state an adequate claim for relief.

Then, the matter was heard on its merits and upon the conclusion of the trial, the United States District Court so ruled that the American National Red Cross is an instrumentality or agency of the United States Government.

They reinstated the United States as a party-plaintiff on this matter and this matter is now on appeal to this Court on a direct appeal.

Now, directing my argument to these three issues, I would like to direct my argument primarily first of all to the second question because it has near relation to question no. 1.

We submit that the American National Red Cross is not an instrumentality or an agency of the United States Government.

It is a creature of Congress under Title XXXVI and so is the Boy Scouts, there is the American Revolution, the American Historical Society, reference of foreign works, etcetera.

But Congress has manifested and expressed intent that the American National Red Cross is an agency or instrumentality of the United States Government.

In fact, looking at the Act itself in Title XXXVI and referring also to Title X, Congress conveys fact that this is a private organization rendering voluntary assistance to the United States Government when it is requested to do so.

Now, under Title X, for example, there are two provisos in there which I think are significant in construing the legal status of the American National Red Cross.

One is the fact that refers to the power of the President to accept the assistance of the American National Red Cross.

It never speaks about a duty for the American National Red Cross to comply with federal request.

In fact, all of these matters in which the Red Cross assists the United States Government are bilateral agreements and of a voluntary nature.

The second matter, which is of importance in Title X is the fact that Congress specifically provided in Section 2602 (e) that Red Cross employee should not be considered as Federal employee or employees of the United States Government.

Now, there are -- in other -- in actions in the past, some of which I do not submit as precedent, and I’m sure counsel for the other side would not as submit as precedent, there are ceremonies of proclamations by former Presidents of the United States which say that, “It is a quasi organization or an instrumentality or agency of the United States Government”.

On the other hand, the Secretary of Labor in 1944 passed a regulation stating that Red Cross and Salvation Army were not instrumentalities of the United States Government.

Internal Revenue Code has made rulings on this matter, but Congress has spoken once again in Title XLII under the National Disaster Act.

And, of course, one of the roles of the American National Red Cross, it has four-fold purposes: one, is to assist the Armed Forces; two, is to give disaster relief; three, is to conduct fund appeals and four, is to interpret the Red Cross to the local community and these are brought out by the testimony on page 100 of the record.

But one of their -- as their assistance to the Armed Forces or, excuse me, under the -- so far as the National Disaster is concerned under the Title XLII, under the National Disaster Act, it specifically provides in defining federal agencies that the American National Read Cross shall not be considered an agency of the United States Government.