In Re United States Catholic Conference

This appeal is before us for a second time. The Supreme Court has remanded the matter for a determination of whether the United States District Court for the Southern District of New York (Carter, J.) had subject matter jurisdiction over the instant lawsuit that challenged the tax-exempt status of the Roman Catholic Church in the United States. The specific issue is whether the plaintiffs, who initiated this litigation to force the government to revoke the Catholic Church's tax-exempt status, satisfy the standing requirements of Article III. For the reasons discussed below, we hold that they do not.

Plaintiffs in this appeal are united in their commitment to a woman's right to obtain a legal abortion. This suit was instituted originally by 20 individuals and nine organizations. We assume familiarity with their specific identities as set forth in the district court's opinion. See Abortion Rights Mobilization, Inc. v. Regan, 544 F.Supp. 471, 474 (S.D.N.Y.1982). Some are no longer parties. Of the nine original organizational plaintiffs, for example, the district court held that five abortion clinics lacked standing and dismissed their complaints. Id. at 479 nn. 5 & 6. The district court did grant standing to an organization called the Women's Center for Reproductive Health, because it is run by a Presbyterian minister who is also a plaintiff. We discuss the Women's Center with the clergy plaintiffs. The three remaining organizations are Abortions Rights Mobilization Inc. (ARM), the National Women's Health Network Inc. (NWHN) and the Long Island National Organization For Women-Nassau, Inc. (Nassau-NOW). The former two are pro-choice organizations that are non-profit, tax-exempt organizations as defined in Sec. 501(c)(3) of the Internal Revenue Code (Code). 26 U.S.C. Sec. 501(c)(3). Nassau-NOW shares ARM's and NWHN's objectives, but is exempt from taxes under Sec. 501(c)(4), rather than (c)(3).

Twenty individual plaintiffs also bring this suit. They include Protestant ministers and Jewish rabbis. In contrast to the views of the Catholic Church, they believe that abortion is morally permissible under some circumstances. Many of the individual plaintiffs donate money to or serve as directors of the organizational plaintiffs. The individual plaintiffs vote and pay taxes.

Before reciting the history of the prior legal proceedings, an understanding of two pertinent sections of the Code is necessary, as a preliminary matter, to appreciate what is at stake in this litigation. As noted, the Catholic Church and organizational plaintiffs ARM and NWHN are tax-exempt under Sec. 501(c)(3). That section states that qualifying religious or civic public interest organizations need not pay federal taxes. The trade-off for the benefit of this exemption is that no substantial part of the organization's activities may include "carrying on ... propaganda, or otherwise attempting, to influence legislation ... [nor may it] participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office." Thus, the quid pro quo for Sec. 501(c)(3) tax-exemption is a restraint on an organization's right to try to influence the political process. This limitation has been held constitutional. See Regan v. Taxation With Representation of Washington, 461 U.S. 540, 544, 103 S.Ct. 1997, 2000, 76 L.Ed.2d 129 (1983) (TWR ). Section 501(c)(3) status is advantageous to the supporters of an organization as well as the organization itself because Sec. 170 of the Code permits donors to Sec. 501(c)(3) entities to claim a deduction for their contributions. This deduction gives the donor an economic incentive to contribute. For example, a donor in a 28 percent tax bracket actually pays only 72 cents for every dollar contributed to the Catholic Church because of the deduction. Consequently, organizations like the Church and plaintiffs ARM and NWHN have enhanced fundraising abilities because they are able to offer donors the lure of the Sec. 170 deduction. See 461 U.S. at 546, 103 S.Ct. at 2001.

The plaintiffs object to the Internal Revenue Service's (IRS) enforcement--or, as they describe it, nonenforcement--of Sec. 501(c)(3)'s prohibition on lobbying and campaigning. Because this appeal arises from a motion to dismiss for want of standing, we must accept all of the plaintiffs' allegations as true and draw all inferences in their favor. See Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975).

Plaintiffs first allege that the Catholic Church is repeatedly violating Sec. 501(c)(3)'s prohibition on campaigning in order to promote the tenet that abortion is immoral and should therefore be made unlawful. For instance, plaintiffs point to the Church's "Pastoral Plan for Pro-Life Activities", which they claim is an organized effort to mobilize the entire Church in a "three-fold educational, pastoral and political effort to outlaw abortions in the United States." Complaint, p 22. The complaint also alleges that through its priests and officials, the Catholic Church has endorsed or supported pro-life political candidates and opposed pro-choice candidates by publishing articles in its bulletins, attacking or endorsing candidates from the pulpit, distributing partisan letters to parishioners, and urging its members to donate to and sign petitions of "right to life" committees and candidates. Complaint, p 26. Similarly, plaintiffs contend that the Church has contributed substantial sums of money to "right to life" and other political groups which have, directly or indirectly, supported the political candidacies for public office of persons favoring anti-abortion legislation. Complaint, p 27.

Plaintiffs' other major contention is that the IRS knows about the Catholic Church's alleged political activities and has ignored these activities rather than either revoking the Church's tax-exempt status under Sec. 501(c)(3), or not renewing the Church's annual exemption. They therefore assert that the government has "exempted the Roman Catholic Church from the strictures of the law and from the government's enforcement efforts," Complaint, p 33, and that the IRS treats the Catholic Church more favorably than those organizations that are pro-choice. Yet plaintiffs do not allege that the IRS has penalized them for violating the Code; in fact, they assert that they have not violated Sec. 501(c)(3) by electioneering, and do not intend to. Rather, they want the government to enforce the strictures of Sec. 501(c)(3) against the Catholic Church. Thus, plaintiffs do not complain about their own tax status--their challenge is directed solely against the Catholic Church's exemption.

The complaint and affidavits also spell out the asserted harms plaintiffs suffer as a result of the Church's and the IRS' acts. Because the nature of the claimed harm is an integral component in standing analysis, it will be fully analyzed in the later discussion of standing.

In the amended complaint of January 30, 1981 the plaintiffs sued then-Secretary of the Treasury Donald T. Regan, then-Commissioner of Internal Revenue Roscoe L. Egger, Jr., the United States Catholic Conference, Inc., and the National Conference of Catholic Bishops (the latter two collectively the Catholic Church or the Church). The Catholic Church is composed of approximately 30,000 parishes, schools and other entities in the United States whose tax-exemption is granted collectively in a group ruling. The plaintiffs sought declarations that the defendants had violated both Sec. 501(c)(3) of the Code and the Establishment Clause of the First Amendment to the United States Constitution. They also sought injunctive relief to compel the government to enforce the Code and Constitution by revoking the Church's group tax-exemption, to collect the resulting back taxes, and to notify contributors to the Catholic Church that they may no longer claim their donations as deductions on their income tax returns.

The defendants moved to dismiss the complaint on several grounds, including standing. In 1982 the district court held that the clergy and voter plaintiffs had standing, see Abortion Rights Mobilization, Inc. v. Regan, 544 F.Supp. at 491 (S.D.N.Y.1982) (ARM I ), and three years later--following a rehearing to consider the impact of the Supreme Court's subsequent decision in Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984)--reiterated this holding. See Abortion Rights Mobilization, Inc. v. Regan, 603 F.Supp. 970 (S.D.N.Y.1985) (ARM II ). The defendant Catholic Church's motion to dismiss it as a defendant in the suit was granted. See ARM I, 544 F.Supp. at 487. As the litigation progressed, plaintiffs requested substantial discovery from the Church as a non-party witness. Upon its refusal to comply, the Catholic Church was held in contempt in May, 1986. See 110 F.R.D. 337 (S.D.N.Y.1986).

On appeal, the Church argued that it was improperly held in contempt in the action because the district court lacked subject matter jurisdiction over the case before it due to plaintiffs' lack of standing. We held that, as a non-party contemnor, the Church itself lacked standing to challenge plaintiffs' standing in the main suit, and that as a non-party witness it could only challenge a contempt finding when the district court was without even colorable jurisdiction. Hence, we had no occasion to reach the underlying question now before us of plaintiffs' standing. See In re United States Catholic Conference, 824 F.2d 156 (2d Cir.1987). The Supreme Court reversed, holding that a non-party witness held in contempt had standing to challenge the district court's subject matter jurisdiction. United States Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72, 108 S.Ct. 2268, 101 L.Ed.2d 69 (1988). Upon remand from the Supreme Court, we now must analyze whether plaintiffs have standing to sue the government for conferring tax-exempt status to the Catholic Church.

In Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984), the Supreme Court made clear that standing is not merely a prudential inquiry into whether a court should exercise jurisdiction, but is rooted in Article III's "case" or "controversy" requirement and reflects separation of powers principles. See also Valley Forge Christian College v. Americans United For Separation of Church and State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 757-58, 70 L.Ed.2d 700 (1982). Thus, when a plaintiff lacks standing to bring suit, a court has no subject matter jurisdiction over the case. Deceptively simple to state, standing entails a complex three-pronged inquiry. First, plaintiffs must show that they have suffered an injury in fact that is both concrete in nature and particularized to them. Allen v. Wright, 468 U.S. at 755, 104 S.Ct. at 3326-27; Valley Forge, 454 U.S. at 482-87, 102 S.Ct. at 763-66; Warth v. Seldin, 422 U.S. at 502, 95 S.Ct. at 2207; Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 100, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979). Second, the injury must be fairly traceable to defendants' conduct. See Allen, 468 U.S. at 757, 104 S.Ct. at 3327-3328; Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758; Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 41-42, 96 S.Ct. 1917, 1925-26, 48 L.Ed.2d 450 (1976) (EKWRO ); Warth, 422 U.S. at 504-05, 95 S.Ct. at 2208; Linda R.S. v. Richard D., 410 U.S. 614, 617, 93 S.Ct. 1146, 1148, 35 L.Ed.2d 536 (1973). Third, the injury must be redressable by removal of defendants' conduct. See Allen, 468 U.S. at 758-59, 104 S.Ct. at 3328-29; EKWRO, 426 U.S. at 41-42, 96 S.Ct. at 1925-26; Warth, 422 U.S. at 504-05, 95 S.Ct. at 2208; Linda R.S., 410 U.S. at 617, 93 S.Ct. at 1148. The second and third prongs--traceability and redressability--often dovetail; essentially, both seek a causal nexus between the plaintiff's injury and the defendant's assertedly unlawful act. To establish standing, a plaintiff must plead all three elements.

Standing in the case at hand is alleged under a number of theories that require a general overview in order to match the category of plaintiff to the asserted basis for standing. The prior proceedings have distilled standing theories that view plaintiffs as clergy, voters, and taxpayers. We first address those theories relied upon by the district court in finding that plaintiffs had standing, and then consider a fourth theory--competitive advocate standing--not explicitly addressed below.

Clergy plaintiffs claim standing under the Establishment Clause of the First Amendment. That clause provides: "Congress shall make no law respecting an establishment of religion...." The amended complaint alleges that

The failure of the government defendants to apply the Code equally to the ... Church is in effect a subsidy of the Church's efforts to further its religious aims in the political sphere, a subsidy not granted to law-abiding ... plaintiffs, who hold contrary religious beliefs. This constitutes an unconstitutional establishment of religion.

Complaint, p 43. Without reaching the merits, the district court held that the clergy plaintiffs and the religiously affiliated Women's Center for Reproductive Health (collectively clergy plaintiffs) had standing under the Establishment Clause because they were "denigrated by government favoritism to a different theology." See ARM I, 544 F.Supp. at 479. Thus, it concluded that the IRS "hampers and frustrates these plaintiffs' ministries." Id. at 480. The appropriateness of this holding turns on whether the stigma plaintiffs allege is a cognizable injury in fact. We think the district court erred by translating plaintiffs' genuine motivation to sue into a personalized injury in fact.

It is true that an injury claimed to derive from a violation of the Establishment Clause can be spiritual in nature. See Valley Forge, 454 U.S. at 486-87 n. 22, 102 S.Ct. at 766 n. 22 (citing School Dist. of Abington v. Schempp, 374 U.S. 203, 224 n. 9, 83 S.Ct. 1560, 1572 n. 9, 10 L.Ed.2d 844 (1963)); Association of Data Processing Serv. Orgs. Inc. v. Camp, 397 U.S. 150, 154, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970) (Data Processing ). Nonetheless, the injury must be particularized to the individuals who sue. See Valley Forge, 454 U.S. at 486-87 n. 22, 102 S.Ct. at 766 n. 22 (suggesting that plaintiffs must have been " 'directly affected by the ... practices against which their complaints are directed.' " (quoting Schempp, 374 U.S. at 224 n. 9, 83 S.Ct. at 1572 n. 9)). The Establishment Clause does not exempt clergy or lay persons from Article III's standing requirements. See Valley Forge, 454 U.S. at 489, 102 S.Ct. at 767. Here, the clergy plaintiffs have not been injured in a sufficiently personal way to distinguish themselves from other citizens who are generally aggrieved by a claimed constitutional violation. For that reason, they lack standing.

Both Valley Forge and Allen v. Wright support this conclusion. In Valley Forge, an organization dedicated to ensuring separation of church and state sued the Secretary of Health, Education and Welfare for conveying, without consideration, surplus government property to a religiously affiliated college. The Valley Forge plaintiffs made the same argument as the instant clergy plaintiffs--that by conferring a benefit to a third party that was a religious entity, the government had violated the Establishment Clause. The Supreme Court considered whether plaintiffs had been injured as taxpayers--a subject we address below--and as "separationists" bent on policing the Establishment Clause. 454 U.S. at 482, 102 S.Ct. at 764. Accepting the sincerity of plaintiffs' ire at the alleged violation of the Establishment Clause, it held that such distress was not cognizable unless plaintiffs could "identify any personal injury suffered by them as a consequence of the alleged constitutional error...." Id. at 485, 102 S.Ct. at 765 (emphasis in original). It was not enough to point to an assertedly illegal benefit flowing to a third party that happened to be a religious entity. Absent a particularized injury, plaintiffs could not maintain suit.

In Allen v. Wright, the plaintiffs were parents of black children who attended public schools. They sued the IRS, asserting that it was duty-bound to deny tax-exempt status to racially discriminatory private schools, and its failure to do so impaired desegregation of the public school system. See 468 U.S. at 739-40, 104 S.Ct. at 3318-19. In Allen v. Wright, as here, plaintiffs' complaint centered on the tax-exempt status of a third party. The parents asserted two injuries, only one of which is pertinent to this case--harm from the fact that the government was giving financial assistance to private discriminatory schools. Id. at 752-53, 104 S.Ct. at 3325. The Supreme Court held that the parents did not have standing and made several points on the injury in fact requirement.1 See 468 U.S. at 756-57, 104 S.Ct. at 3327-28. Relying on Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974) (Reservists ), the Court stated that "an asserted right to have the Government act in accordance with law is not sufficient, standing alone, to confer jurisdiction on a federal court." Allen v. Wright, 468 U.S. at 754, 104 S.Ct. at 3326. Parents did not derive standing by claiming "stigmatizing injury" caused by racial discrimination because "such injury accords a basis for standing only to 'those persons who are personally denied equal treatment' by the challenged discriminatory conduct." 468 U.S. at 755, 104 S.Ct. at 3326 (quoting Heckler v. Mathews, 465 U.S. 728, 739-40, 104 S.Ct. 1387, 1395, 79 L.Ed.2d 646 (1984)) (emphasis added). The Supreme Court then emphasized that when the injury asserted is an "abstract stigmatic injury," the requirement that a plaintiff be personally injured takes on heightened importance. See 468 U.S. at 755-56, 104 S.Ct. at 3327.

The clergy plaintiffs' complaint in the instant case suffers from the same defects as the parents' complaint in Allen v. Wright and the separationists' complaint in Valley Forge: The primary injury of which they complain is their discomfiture at watching the government allegedly fail to enforce the law with respect to a third party. As in Valley Forge, the instant plaintiffs state that defendants have violated their "sincere and deeply held belief in the separation of church and state." See, e.g., Affidavit of plaintiff Rev. Beatrice Blair. Complaint, p 7. This injury can hardly be called personalized to the clergy plaintiffs. They can point to no illegal government conduct directly affecting their own ministries. Thus, the injury the clergy complain of could be asserted by any member of the public who disagrees with the views of the Catholic Church and the IRS in granting it a tax exemption. See Allen v. Wright, 468 U.S. at 755, 104 S.Ct. at 3326-27.

Similarly, because the clergy have neither been personally denied equal treatment under the law nor in any way prosecuted by the IRS, their self-perceived "stigma" does not amount to a particularized injury in fact. See id. To hold the clergy plaintiffs' injury cognizable would turn the federal court into " 'a forum in which to air ... generalized grievances about the conduct of government.' " Valley Forge, 454 U.S. at 483, 102 S.Ct. at 764 (quoting Flast v. Cohen, 392 U.S. 83, 106, 88 S.Ct. 1942, 1955-56, 20 L.Ed.2d 947 (1968)). Hence, the clergy's complaint collapses into that of an offended bystander, insufficient to meet Article III's standing requirements. A mere "claim that the Government has violated the Establishment Clause does not provide [plaintiffs] a special license to roam the country in search of governmental wrongdoing and to reveal their discoveries in federal court." Valley Forge, 454 U.S. at 487, 102 S.Ct. at 766.

This analysis is unchanged by the fact that the plaintiffs in this case are clergy. To rebut the argument that they have not suffered a particularized injury, these plaintiffs contend that what distinguishes them from the ordinary member of the public who takes issue with the Church and IRS is that they are members of the clergy. In our view, the holding in Valley Forge and its progeny would have been the same even had those plaintiffs been members of the clergy rather than Americans United For Separation of Church and State because "standing is not measured by the intensity of the litigant's interest or the fervor of his advocacy." Id. at 486, 102 S.Ct. at 766.

Moreover, granting standing to clergy qua clergy raises several troubling issues. Granting standing to the instant ministers and rabbis on the basis that they were directly and personally injured by the IRS' actions solely on account of their stature within their churches and synagogues would require us to give greater credence to the clergy's beliefs with the beliefs of their parishioners. Thus, to hold that a religious leader is more qualified to bring an Article III "case" or "controversy" than a member of his congregation seemingly entails an impermissible invasion into a church's or a synagogue's internal hierarchy and its autonomy. See Presbyterian Church in the United States v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, 393 U.S. 440, 450, 89 S.Ct. 601, 606-07, 21 L.Ed.2d 658 (1969) (holding that in church property dispute, the First Amendment prohibits civil courts from passing on questions of religious doctrine). And, as the district court correctly noted, the Establishment Clause protects religions from secular interference. See ARM I, 544 F.Supp. at 479 n. 5; see also Engel v. Vitale, 370 U.S. 421, 432, 82 S.Ct. 1261, 1267-68, 8 L.Ed.2d 601 (1962) (stating that religion is "too personal, too sacred, too holy, to permit its 'unhallowed perversion' by a civil magistrate").

Second, granting standing to enforce the Establishment Clause to clergy qua clergy might itself violate the same clause by constituting governmental favoritism of religion over non-religion. See Texas Monthly v. Bullock, --- U.S. ----, 109 S.Ct. 890, 899-900,