Court Says Philly's Anti-Discrimination Contract Provision Violates Free Exercise, but Keeps Smith on Books

Steven D. Schwinn, University of Illinois Chicago School of Law

The Supreme Court ruled today that the city of Philadelphia violated Catholic Social Service's free exercise rights when it terminated CSS's foster-care contract pursuant to a clause that prohibits discrimination against same-sex adopting couples, but also allows exceptions at the "sole discretion" of the Commissioner.

At the same time, the Court declined to reconsider Employment Div., Dep't of Human Resources of Oregon v. Smith, which holds that religiously neutral and generally applicable laws that have an incidental burden on religion must only satisfy rational basis review.

As a result, the ruling is a short-term victory for CSS (which the city will likely quickly undo--see below). But it puts off the Big Issue--whether Smith is still valid law--for another day. (This issue will certainly come back to the Court, and the Court will almost certainly change the rational-basis test in Smith, raising the standard of review and thus making it easier for religious groups or individuals to challenge neutral, generally applicable laws. It's just a matter of when.)

The case, Fulton v. City of Philadelphia, arose when the city informed CSS that the city could no longer contract with CSS for foster-care services so long as CSS refused to certify same-sex couples as foster-care parents. (Instead, CSS said it would refer such a certification to another social-services agency.) The city claimed that CSS's refusal to certify same-sex couples violated a non-discrimination provision in its contract with the city and the city's Fair Practices Ordinance. CSS sued, arguing that the City violated its free exercise rights, and urging the Court to overturn Smith.

The Supreme Court agreed. Chief Justice Roberts wrote the opinion, joined by Justices Breyer, Sotomayor, Kagan, Kavanaugh, and Barrett. The Court held that the anti-discrimination contract provision was not generally applicable, because it allows the Commissioner to grant an exception in the Commissioner's sole discretion. Moreover, the Court held a second contractual provision, which categorically barred discrimination (with no exceptions), had to be read in harmony with the exception in the first provision--in other words, that the exception still applied. Finally, the Court held that the city's Fair Practices Ordinance didn't apply, because foster care isn't a "public accommodation" under the Ordinance.

Because no generally applicable law applied, the Court said that Smith was the wrong test. Instead, the Court applied strict scrutiny (under Church of Lukumi Bablu Aye, Inc. v. Hialeah). The Court held that the city lacked a sufficiently compelling interest to exclude CSS, and ruled that the city's action violated the Free Exercise Clause.

The ruling is narrow--it hangs on the exception in the non-discrimination clause in the city's contract with CSS. As a result, the city can easily dodge a free exercise problem by simply omitting the exception from the clause in its contract with CSS. (The city says it never used the exception, anyway.)

Moreover, the ruling doesn't do anything to Smith or the rational-basis test for religiously neutral, generally applicable laws that incidentally burden religion. This question will surely come back to the Court, though (maybe even in a next round in this very case, if the city omits the exception from its contract and holds CSS in violation). And when it does, the Court will almost certainly change the test, making it easier for religious groups or individuals to challenge neutral, generally applicable laws as violating free exercise.

Justice Barrett concurred, joined by Justice Kavanaugh and (in part) Justice Breyer. She noted that the Court would need to work through a number of questions before it overruled Smith, and that the best approach might not be to categorically apply strict scrutiny to these kinds of claims.

Justice Alito wrote a sharp and lengthy concurrence, joined by Justices Thomas and Gorsuch. He argued that the Court should overrule Smith and replace it with the test that preceded Smith (in Sherbert) and that Congress later adopted in the Religious Freedom Restoration Act and the Religious Land Use and Institutionalized Persons Act: "A law that imposes a substantial burden on religious exercise can be sustained only if it is narrowly tailored to serve a compelling government interest."

Justice Gorsuch wrote his own concurrence, joined by Justices Thomas and Alito. He argued that the Court likely got it wrong on the applicability of the Fair Practices Ordinance--that in fact, the Ordinance "is both generally applicable and applicable to CSS"--and on the separate contract provision that categorically prohibited discrimination. Justice Gorsuch argued that the Court's attempts to maneuver around Smith thus failed, that the Court should've addressed Smith, and that it should've overturned it.