Friday, January 27, 2023

Wisconsin 3rd DCA Holds Catholic Charities Bureau is Not "operated primarily for religious purposes," must pay unemployment tax


The Catholic Charities Bureau, Superior Diocese, does not operate primarily for religious purposes, court rules.  There are about 60 nonprofit operating "under the CCB umbrella" and the ruling means the CCB must pay unemployment tax for all employees, despite a provision in Wisconsin law exempting nonprofits operating primarily for religious purpose.   


It is always dangerous for a court or tribunal to scrutinize an organizations' religious bona fides to determine whether it operates for a religious purpose.   But on a quick first read, I kinda think a Wisconsin Court of Appeals opinion's  counter-intuitive conclusion that CCB (which holds a group ruling from the IRS that it operates for religious purposes) does not operate primarily for a religious purpose under state law might actually be right!  Its a winding path to that conclusion so I won't even try to summarize it here.  I could be wrong though, considering that the first Wisconsin administrative agency to consider the matter ruled that CCB was not operated primarily for religious purposes, that decision was then reversed by an ALJ, the ALJ's decision was then reversed by another administrative tribunal, that decision was reversed by a circuit court opinion, and then the circuit court was reversed by Wisconsin's 3rd DCA.  CCB has petitioned the Wisconsin Supreme Court for review.  Clearly there is a difference of learned opinion here, and the case has national implications for the Catholic Church, unemployment and state and federal tax law, not to mention the Religious Freedom Restoration Act and the First Amendment (which the 3rd DCA said "ain't got nothing to do with it!").  If CCB loses before the Wisconsin Supreme, it will no doubt petition the U.S. Supremes.  I think CCB makes that last point in a veiled threat sort of way in its petition to the Wisconsin Supremes (see the last paragraph of the introduction below).  "Listen to me now, believe me later on!" CCB's petition, filed just this week, looks like a great read.  Pass me the popcorn because this oughta be good!  Here is how  CCB's Petition for Review begins:



The court of appeals’ published decision stands church-state relations on their head. At the heart of its decision is the astonishing conclusion that the Catholic Charities Bureau of the Diocese of Superior—one of Wisconsin’s largest religious charitable organizations—does not qualify for the religious exemption from the State’s unemployment compensation system because it is not “operated primarily for religious purposes.” Wis. Stat. § 108.02(15)(h). To reach that remarkable conclusion, the court of appeals relied on two equally remarkable—and false—premises of law.

First, the court of appeals decided that the purposes of the Diocese of Superior are irrelevant to determining whether CCB is operated for “religious purposes,” as described in Section 108.02(15)(h). But CCB and its sub-entities are entirely creatures of the Diocese, and of the broader Catholic Church. As the court of appeals acknowledged, the government does not dispute, and CCB’s name indicates, the Diocese specifically formed CCB to carry out its mandated social ministry in northern Wisconsin, and the bishop of the Diocese has complete control over CCB’s ministry. CCB’s purposes and the Diocese’s are thus one and the same. The court of appeals’ conclusion to the contrary is plain error and flies in the face of common sense and the typical treatment of parentsubsidiary relationships in Wisconsin.

Second, the court of appeals held that the word “operated” in the statutory phrase “operated primarily for religious purposes” means “actions” or “activities” rather than the more obvious mean ing of “managed” or “used.” The court of appeals’ attempt to shoehorn the word chosen by the Legislature into a subsidiary meaning found on is untenable when read in pari materia with the other provisions of Section 108.02(15)(h). Those errors of law, which run directly counter to the text, structure, and context of Section 108.02(15)(h), are reason enough for this Court’s review. But the court of appeals’ published decision does not just contort Wisconsin law. Uncorrected, it will also put a Wisconsin statute at odds with the First Amendment to the United States Constitution and Article I, Section 18 of the Wisconsin Constitution. The decision below runs afoul of both constitutional provisions in three ways.

First, it violates the church autonomy doctrine, which preserves a sphere of control over internal church affairs to religious bodies. Here, the court of appeals effectively severed CCB from the Diocese of Superior for purposes of Section 108.02(15)(h). That constitutes gross interference with the ability of the Church in this State to structure itself freely in accordance with its beliefs about religious polity.

Second, the decision violates the Free Exercise Clause by penalizing CCB for serving non-Catholics and for avoiding proselytism when engaging in ministry. The undisputed belief that the Church ought to help all who are in need is core to Catholic social teaching. Yet the lower court held that because of these beliefs, CCB could not invoke Section 108.02(15)(h). That burdens CCB’s religious exercise in violation of the Free Exercise Clause.

Third, the decision violates the Establishment Clause by entangling church and state. By forcing Wisconsin executive branch officials and Wisconsin courts to finely parse all the activities of religious bodies in the State and decide whether those activities are “inherently” or “primarily” religious, the court of appeals has thrust those officials and courts into a constitutional thicket. That is the opposite of church-state separation. * * *

Because the court of appeals’ decision was published, only this Court (or the United States Supreme Court) can repair what the decision below has broken. This Court should therefore grant review to put Wisconsin law back onto a sounder footing and eliminate the conflict with the First Amendment. 

darryll jones

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