St. Martin Evangelical Lutheran Church v. South Dakota

PETITIONER: St. Martin Evangelical Lutheran Church
RESPONDENT: South Dakota
LOCATION: Western District Court of Kentucky

DOCKET NO.: 80-120
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: South Dakota Supreme Court

CITATION: 451 US 772 (1981)
ARGUED: Mar 03, 1981
DECIDED: May 26, 1981

Allen R. Snyder - on behalf of Alabama and Nevada as amici curiae
Barry Sullivan - on behalf of the United States as amicus curiae
E. Thomas Schilling - for petitioners
Edward Thomas Schilling - on behalf of the Petitioners
Mark V. Meierhenry - on behalf of the Respondent

Facts of the case


Media for St. Martin Evangelical Lutheran Church v. South Dakota

Audio Transcription for Oral Argument - March 03, 1981 in St. Martin Evangelical Lutheran Church v. South Dakota

Warren E. Burger:

We'll hear arguments next in St. Martin's Evangelical Church v. South Dakota.

Mr. Schilling, I think you may now proceed whenever you're ready.

Edward Thomas Schilling:

Mr. Chief Justice, and may it please the Court:

We suggest that the primary question before the Court is whether churches that operate elementary and secondary schools are exempt from the Federal Unemployment Tax Act, which is known as FUTA, as that Act is applied by the States.

If the Court should find that these schools are not, these churches are not exempt, then we have a second question, and that is whether coverage under FUTA would violate either or both of the religion clauses of the First Amendment.

The petitioners are St. Martin Evangelical Lutheran Church, which is separately incorporated under South Dakota law, and it operates an elementary day school.

The other petitioner, Northwestern Lutheran Academy, is owned and operated by the Wisconsin Synod, and it is a four-year preparatory school for entrance into one of the Synod colleges in preparation for either the teaching or the preaching ministry.

It should be noted that all teachers are regarded as ministers of the Wisconsin Synod.

This was found by the appeals referee in the original administrative hearing.

They have equal status with their preaching minister counterparts and voting rights on doctrinal matters in the church.

Now, neither of these schools that we're talking about are separately incorporated.

Prior to 1970 the Federal Unemployment Tax Act did not cover nonprofit or tax-exempt organizations.

In 1970, however, Congress required the states to cover nonprofit corporations and when it did this it created a Section 3309(b) which specifically exempted from coverage certain nonprofit employers or services.

Now, the first section, 3309(b)(1) has two parts, the subsection (a) which exempts those in the employ of a church, convention, or association of churches; and subsection (b) exempts those in the employ of an organization which is operated primarily for religious purposes and, which is not an issue here, which organization is operated, supervised, controlled, or principally supported by a church, convention, or association of churches.

Subsection (2) deals with their ministers and members of religious orders.

Subsection (3) exempted those in the employ of elementary and secondary schools.

The other exemptions are not pertinent to our case.

In 1976 Congress again amended FUTA effective in 1978, requiring primarily coverage of state and local employees, agricultural workers, and domestic workers.

And when Congress did this it eliminated that elementary and secondary school exclusion, and this is where the controversy begins.

Byron R. White:

sSuppose there had never been that third exception?

Suppose there had never been that third exception?

Edward Thomas Schilling:

I think that third exception was--

Byron R. White:

Do you think it is just superfluous or not?

Edward Thomas Schilling:

--I think it had no effect on parochial schools.

Byron R. White:

It did on nonparochial?

Edward Thomas Schilling:

It did on other nonprofit schools, and perhaps it had an effect on public schools.

Byron R. White:

But it was never needed to exempt the kinds of schools involved in this case?

Edward Thomas Schilling:

That's our position, yes, Mr. Justice.

Byron R. White:

Although that was never the view of the Service, I guess?

Edward Thomas Schilling:

That was not the view of the Labor Department after repeal.