Catholic Charities Bureau Files Cert Petition Seeking "Church" Status

We have been following Catholic Charities Bureau, Inc. v. Wisconsin Labor and Industry Review Commission for the last 18 months, give or take.  That's the case where the state denied a religious exemption to the Wisconsin Catholic Charities Bureau and its charitable sub-agents (independent organizations operating under the CCB umbrella) because they were not operated "primarily for religious purposes." CCB sought exemption from Wisconsin's unemployment tax but so far the courts have ruled that CCB is not churchy enough.  This, even though the Diocese controls and operates the CCB, and all separate organizations under CCB's general supervision are required to comply with CCB guidelines.  Those guidelines don't require adherence to or preaching of Catholic doctrine but merely that sub-agents practice good altruism, such as serving all comers without discrimination.  None of the guidelines require the separate CCB-approved and loosely controlled agents to proselytize.

The lower courts ruled that neither the CCB nor the subagents were operated for religious purposes because they didn't preach or otherwise attempt to save souls.  In effect, the Wisconsin Supreme Court limited "religious purposes" to what federal law considers churches.  Plain old "religious organizations" don't get "church" status for purposes of Wisconsin's unemployment tax exemption.  At best, CCB and the organizations might be considered "religious organizations" under federal law.  But Wisconsin is defining religious organizations narrowly to mean churches, proper.  The case went all the way to the Wisconsin Supreme Court, which affirmed in a 4-3 decision.  I thought the Court got it right at least with regard to the sub-agent organizations.  I am not so sure about CCB, itself.    

Catholic Charities filed a petition for certiorari last week.  Here is part of the Question Presented:

QUESTIONS PRESENTED

Wisconsin exempts from its state unemployment tax system certain religious organizations that are “operated, supervised, controlled, or principally supported by a church or convention or association of churches” and that are also “operated primarily for religious purposes.” Petitioners are Catholic Charities of the Diocese of Superior and several sub-entities. Although all agree Catholic Charities is controlled by a church—the Diocese of Superior—the Wisconsin Supreme Court held that Catholic Charities is not “operated primarily for religious purposes” and thus does not qualify for the tax exemption. Specifically, the court held that Catholic Charities’ activities are not “typical” religious activities because Catholic Charities serves and employs non-Catholics, Catholic Charities does not “attempt to imbue program participants with the Catholic faith,” and its services to the poor and needy could also be provided by secular organizations.

The questions presented are:

1. Does a state violate the First Amendment’s Religion Clauses by denying a religious organization an otherwise-available tax exemption because the organization does not meet the state's criteria for religious behavior

 . . . 

Here's the thing. Walz can be cited for the proposition that a state need not exempt an organized worship group from taxation at all.  If a state is not required to exempt churches from tax, can't it define a subset of organizations considered churches by popular meaning and grant tax concessions to those organizations? Can't it do so using neutral criteria -- like the requirement that there be some proselytizing? As long as the state does not dictate the substance of proselytizing, it should be ok.  That is what federal law purports to do.

On the other hand, the proselytizing requirement might invariably favor one religion over another, as is argued in the petition. The petition sets out an attractive argument on that point, but what does it mean if a government cannot distinguish between religious activities, reserving to organized worshipers the most tax concessions -- as the Tax Code does for churches -- and giving religious organizations that do not meet the government's definition of "church" lesser concessions or no concession at all?  Petitioner's argument seems to mean that once an organization is religious, the government can make no further distinctions.  And by the way, any attempt to limit special benefits to "churches" invariably necessitates line drawing between religious activities.  The Tax Code does it via a set of amorphous factors that necessarily favor some organized worshippers over others.  But the federal line drawing has fortunately never been strictly enforced.  You can be atheist or tongue-in-cheek Satan worshippers and be classified a church under federal law.  It's a real head scratcher.  Here is the argument from the petition:

1. The decision below favors some religions over others.

Wisconsin’s rule expressly discriminates among religious groups, violating both Religion Clauses. “At a minimum, the protections of the Free Exercise Clause pertain if the law at issue discriminates against some or all religious beliefs[.]” Church of Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 532 (1993). Thus “a municipal ordinance was applied in an  unconstitutional manner when interpreted to prohibit preaching in a public park by a Jehovah’s Witness but to permit preaching during the course of a Catholic mass or Protestant church service.” Id. at 533 (citing Fowler v. Rhode Island, 345 U.S. 67, 69-70 (1953)); see also Niemotko v. Maryland, 340 U.S. 268, 272-273 (1951) (Jehovah’s Witnesses denied use of public park while other religious organizations were given access). 

This free exercise inquiry looks not just to the “[f]acial neutrality” of a statute or regulation but also to “the effect of a law in its real operation.” Lukumi, 508 U.S. at 534-536. See also Carson v. Makin, 596 U.S. 767, 787 (2022) (citing Larson v. Valente,  456 U.S. 228, 244 (1982)) (in free exercise case, citing “serious concerns” about “denominational favoritism”).

Wisconsin’s discrimination among religions also violates the Establishment Clause. See Larson, 456 U.S. at 253. There, by “impos[ing]” certain registration and reporting requirements “on some religious organizations but not on others” Minnesota ran afoul of the Establishment Clause. The mere “capacity” of the law “to burden or favor selected religious denominations” triggered scrutiny. Id. at 255. The decision below discriminates among religions in two ways. First, it penalizes Catholic Charities for its Catholic beliefs regarding how it must engage in its ministry. The court concluded that Catholic Charities’ activities were not religious because:

• “[Catholic Charities] and the sub-entities,   . . . neither attempt to imbue program participants with the Catholic faith nor supply any religious materials to program participants or employees.”
• “Both employment with the organizations and services offered by the organizations are open to all participants regardless of religion.”
• Catholic Charities and its sub-entities do not engage “in worship services, religious outreach, ceremony, or religious education.”

Indeed, after assessing the “nature” of Catholic Charities’ activities, the Wisconsin Supreme Court concluded they were “primarily charitable and secular,” even though Catholic Charities views them as religious.

By penalizing Catholic Charities for engaging in critical parts of its ministry (like serving those in need without proselytizing), Wisconsin did not treat Catholic Charities with religious neutrality. Instead, the state denied Catholic Charities an exemption precisely because its religious beliefs and exercise differed from what the Wisconsin Supreme Court thought were “typical” religious activities. (Grassl Bradley, J., dissenting) (“The majority actually inquires whether Catholic Charities’ activities are stereotypically religious.”). That wrongly disfavors those religious traditions that ask believers to care for the poor without strings attached.

Second, Wisconsin’s rule also violates the bedrock principle of neutrality among religions by discriminating against religious groups with more complex polities. The Diocese of Superior operates Petitioners as separately incorporated ministries that carry out Christ’s command to help the needy. But if Catholic Charities were not separately incorporated, it would be exempt. App.166a (“the result in this case would likely be different if [Catholic Charities] and its sub-entities were actually run by the church”). Thus Wisconsin penalizes the Catholic Church for organizing itself as a group of separate corporate bodies in accordance with Catholic teaching on subsidiarity, while other religious entities that include a variety of ministries as part of a single body are unaffected. That penalty on the Church’s religiously determined polity violates the Religion Clauses’ rule against discrimination among religions. Cf. Fulton v. City of Philadelphia, 593 U.S. 522, 528-531 (2021) (treating separately incorporated Catholic Social Services as part of Archdiocese). And that makes LIRC’s determination to cut off Catholic Charities from the Diocese of Superior all the more baffling.

darryll k. jones