
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 96-2328                                   GUADALUPE ROJAS,                                Plaintiff - Appellant,                                          v.                               LAWRENCE FITCH, ET AL.,                               Defendants - Appellees.                                 ____________________          No. 97-1089                                   GUADALUPE ROJAS,                                Plaintiff - Appellee,                                          v.                              DR. LEE H. ARNOLD, ET AL.,                               Defendants - Appellants.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                 [Hon. Francis J. Boyle, Senior U.S. District Judge]                                         __________________________                                 ____________________                                        Before                               Torruella, Chief Judge,                                          ___________                           Campbell, Senior Circuit Judge,                                     ____________________                              and Boudin, Circuit Judge.                                          _____________                                _____________________               John W.  Dineen, with whom  Yesser, Glasson & Dineen  was on               _______________             ________________________          brief for appellant Guadalupe Rojas.               Scott Glabman, Attorney, with whom J. Davitt McAteer, Acting               _____________                      _________________          Solicitor of Labor,  Charles D. Raymond, Associate  Solicitor for                               __________________          Employment  and Training, Legal Services, and Harry L. Sheinfeld,                                                        __________________          Counsel for Litigation,  U.S. Department of Labor,  Office of the          Solicitor, were on brief for appellee Cynthia  A. Metzler, Acting          Secretary of Labor.               Rebecca Tedford Partington, Assistant Attorney General, for                __________________________          appellee Dr.  Lee Arnold,  Director, Rhode  Island Department  of          Labor and Training.               Michael G. Dolan,  with whom Cadwalader, Wickersham  & Taft,               ________________             ______________________________          and Gerard P. Cobleigh were on brief for appellee Salvation Army.              __________________                                 ____________________                                   October 9, 1997                                 ____________________                                         -2-                    TORRUELLA, Chief Judge.   Plaintiff-Appellant Guadalupe                    TORRUELLA, Chief Judge.                                 ___________          Rojas,  a  former  employee  of  the  Salvation  Army,  sought  a          declaratory  judgment  that  exemptions  for religious  employers          under  the Rhode Island  unemployment tax  statute and  under the          Federal  Unemployment Tax Act  ("FUTA"), 26 U.S.C.     3301-3311,          violate  the Establishment Clause and the Equal Protection Clause          of  the federal Constitution,  as well as  Article I,    3 of the          Rhode  Island  Constitution,  which   protects  the  Freedom   of          Religion.   She  named as  defendants the  director of  the Rhode          Island  Department of  Employment and  Training  ("DET") and  the          Secretary of the federal Department of Labor.  The Salvation Army          intervened as  a defendant.   The district court rejected  all of          Rojas's substantive  arguments for declaratory  relief, see Rojas                                                                  ___ _____          v. Fitch, 928  F. Supp. 155,  162-67 (D.R.I. 1996),  and now,  on             _____          appeal,  she reasserts her federal Establishment Clause and Equal          Protection claims.  We affirm.                                      BACKGROUND                                      BACKGROUND                    The following facts are not disputed.  Rojas was a paid          employee of the  Salvation Army, serving as a  social case worker          from  1988 to 1994, except  for a short  interruption in 1990 and          1991 when  she worked  for Catholic Social  Services.   Rojas was          not, and  was not  required to  be, a  soldier or  member of  the          Salvation Army  when employed  as a case  worker.   The Salvation          Army   terminated  her  employment  on  March  18,  1994,  citing          financial constraints.                                           -3-                    Approximately  one month  after her  termination, Rojas          applied for  unemployment insurance benefits  from the DET.   The          DET found that  Rojas was ineligible because her former employer,          the  Salvation  Army,  was  exempt  from  contributing  to  Rhode          Island's unemployment insurance scheme under sections  28-42-8(4)          and 28-44-11 of the Rhode Island General Laws.1  Pursuant to  the          exemption  for religious  employers under section  28-42-8(4), no          taxes were withheld from Rojas's wages by the Salvation Army, and          her income was  not reported  to the  DET.  The  DET's denial  of          benefits was upheld  by a DET referee after a  hearing, and later          the referee's  determination  was  upheld  by the  DET  Board  of          Review.                    On  September 9,  1994, Rojas  initiated  an action  in          federal district court against  the Director of the DET,  seeking          declaratory  invalidation  of  the  exemption  under  either  the          Establishment Clause,2  the Equal Protection Clause,3  or Article          I,     3 of  the  Rhode  Island  Constitution.4   In  an  amended                                        ____________________          1   In 1987,  the DET  determined that  the Salvation  Army is  a          "church" and thus entitled to  an exemption pursuant to R.I. Gen.          Laws   28-42-8(4).          2  U.S. Const. amend. I  ("Congress shall make no law  respecting          an  establishment of religion,  or prohibiting the  free exercise          thereof . . . .").          3  U.S. Const. amends. V, XIV.          4   Article I,   3 provides, in pertinent part:                    .  .  .  no  person  shall  be  compelled  to                    frequent or to support any religious worship,                    place,  or   ministry  whatever,   except  in                    fulfillment   of   such   person's  voluntary                    contract; nor enforced, restrained, molested,                                         -4-          complaint, Rojas added  the Secretary of the  Department of Labor          as  a defendant,  on the  theory that  FUTA's allowance  of state          exemptions   for   religious  employers   in   the  federal-state          unemployment  insurance system  was an  underlying  cause of  the          Rhode  Island exemption  she challenged.   See 26  U.S.C. 3309(b)                                                     ___          (FUTA   provision   listing  permissible   employer   exemptions,          including exemption for religious employers).  The Salvation Army          was allowed to intervene, without objection, as a defendant.                    FUTA establishes  a federal-state  unemployment benefit          scheme requiring  employers to pay  a federal excise tax,  see 26                                                                     ___          U.S.C.    3301 (computing the  tax as  a percentage  of wages  of          covered employees),  but  encouraging the  development  of  state          unemployment  insurance programs  in  the following  ways: first,          employers  paying into a  qualifying state unemployment  fund are          entitled to a  credit on the federal  tax, see 26 U.S.C.    3302,                                                     ___          and second,  a qualifying  state is entitled  to receive  federal          grants  toward the cost of administering the state's unemployment                                        ____________________                    or   burdened   in   body   or   goods;   nor                    disqualified  from  holding any  office;  nor                    otherwise suffer on  account of such person's                    religious belief; and that every person shall                    be  free  to  worship  God according  to  the                    dictates of such person's  conscience, and to                    profess  and  by  argument  to maintain  such                    person's opinion in matters of religion;  and                    that  the same  shall  in no  wise  diminish,                    enlarge, or affect the  civil capacity of any                    person.          R.I. Const. art. I,   3.  Rojas also appealed the decision of the          DET board in  state court, a suit  which has been  stayed pending          resolution of her federal civil action.                                          -5-          compensation  program,  see 42  U.S.C.     503.   Rhode  Island's                                  ___          unemployment fund qualified for participation in the FUTA system.                    FUTA  exempts   certain  classes   of  employees   from          mandatory  state coverage  by a  qualifying state  plan.   See 26                                                                     ___          U.S.C.    3309(b).    The current  scope  of  exemptions reflects          amendments made to FUTA by Congress in 1976.  The 1976 Amendments          narrowed  the set  of employees  who  were exempt  from mandatory          state  coverage,  by  requiring,  for  example,  that  previously          exempted school employees be covered.  In 1970 as well, the scope          of FUTA exemptions was narrowed significantly by Congress when it          repealed  a broad exemption previously available to all nonprofit          organizations.    See  generally  California  v.  Grace  Brethren                            ___  _________  __________      _______________          Church, 457  U.S. 393, 397  (1982) (describing the 1970  and 1976          ______          FUTA Amendments).                      Currently, the  segments of  the labor  force that  the          states are  not  required to  cover  under FUTA  section  3309(b)          include persons "in  the employ of (A) a  church or convention or          association of churches, or (B) an organization which is operated          primarily   for  religious  purposes   and  which   is  operated,          supervised, controlled, or  principally supported by a  church or          convention or association  of churches."  26 U.S.C.   3309(b)(1).          Also  exempt  are  employees  of  small  nonprofit  organizations          (having  fewer than  four  regular  employees),  see     3309(c),                                                           ___          elected  state employees, see    3309(b)(3), employees at certain                                    ___          rehabilitation  facilities,  see     3309(4)(A), and  inmates  of                                       ___          custodial or penal institutions, see   3309(b)(6).                                           ___                                         -6-                    The  Rhode Island  Employment  Security Act  ("RIESA"),          R.I.G.L.     28-42-1  et  seq.,  exempts a  variety  of kinds  of                                ________          employment from coverage.   See R.I. Gen. Laws    28-42-8 (1995).                                      ___          Apparently tracking the  language of FUTA, Section  28-42-8(4)(i)          exempts  service performed  "in the  employ of:  (A) A  church or          convention or  association of  churches, or  (B) an  organization          which  is   operated,  supervised,  controlled,   or  principally          supported by a church or  convention or association of churches."          Other exempted  employees under  RIESA include  certain insurance          brokers, golf  caddies, certain rehabilitation  center employees,          and  certain real estate brokers. R.I.  Gen. Laws    28-42-8(11),          (9), (4)(B)(iii), (10).                    The  defendants raised  a  number of  procedural claims          below, all of  which were rejected  by the district court.   Upon          reaching the merits of Rojas's suit,  the district court rejected          all of her claims.  On appeal, Rojas argues that the Rhode Island          and  FUTA  exemptions  for religions  violate  the  Establishment          Clause  and   the  Equal   Protection  Clause   of  the   federal          Constitution, while  the  appellees reassert  their  claims  that          jurisdiction is  lacking because of  the Tax  Injunction Act,  28          U.S.C.   1341 and that the appellant lacks standing.                                      DISCUSSION                                      DISCUSSION                    Because we find that the appellant's claims fail on the          merits, we  need not reach  either the  claim put forward  by the          federal defendant-appellee that Rojas lacks standing to challenge          FUTA or  the claim  put forward  by the  state defendant-appellee                                         -7-          that the  Tax Injunction Act  bars federal jurisdiction  over the          suit.   See  Norton v.  Matthews,  427 U.S.  524, 530-31  (1976);                  ___  ______     ________          Hachikian v. FDIC, 96 F.3d 502, 506  n.4 (1st Cir. 1996) ("'It is          _________    ____          a  familiar tenet that  when an appeal  presents a jurisdictional          quandary,  yet the  merits of  the underlying issue,  if reached,          will in any  event be resolved in favor  of the party challenging          the   court's  jurisdiction,  then  the  court  may  forsake  the          jurisdictional riddle  and simply  dispose of  the appeal  on the          merits.'")(quoting United  States v.  Stoller, 78  F.3d 710,  715                             ______________     _______          (1st Cir. 1996)).          I.  The Establishment Clause Claim          I.  The Establishment Clause Claim                    At the  core of  the Establishment  Clause is the  idea          that  government cannot  "favor  religion over  nonreligion,  nor          sponsor a  particular sect, nor try to encourage participation in          or abnegation of  religion."  Walz v.  Tax Comm'n, 397  U.S. 664,                                        ____     __________          694   (1970)  (Harlan,   J.,  concurring)   (noting  that   while          disagreements  over  applications  of  Establishment  Clause  are          common,  its  core ideal  is  well  established).   In  order  to          vindicate this  constitutional  guarantee, two  tests  have  long          guided  judicial review of any challenged legislation: first, the          law  must  have  a  purpose  other than  to  advance  or  inhibit          religion; second,  the primary effect  of the law must  not be to          advance or inhibit religion.  See, e.g., Abington School District                                        ___  ____  ________________________          v. Shempp, 347 U.S.  203, 222 (1963) ("The test may  be stated as             ______          follows:    what  are  the  purpose and  primary  effect  of  the          enactment? If either is the advancement or inhibition of religion                                         -8-          then  the enactment  exceeds the  scope of  legislative power  as          circumscribed  by the Constitution.").  A third practical concern          under  the  Establishment  Clause  is  that  the  net  effect  of          governmental programs avoid  "excessive governmental entanglement          with religion."  Walz, 397 U.S. at 674.                           ____                    These threads were united in the well-known  three-part          test in Lemon  v. Kurtzman, 403 U.S. 602  (1971), which provides:                  _____     ________          "First,  the statute  must have  a  secular legislative  purpose;          second, its principal or primary  effect must be one that neither          advances  or inhibits  religion; finally,  the  statute must  not          foster 'an excessive government entanglement with religion.'" Id.                                                                        ___          at 612-13 (quoting  Walz)(citation omitted).  The  district court                              ____          applied the Lemon test in the course of holding that FUTA and the                      _____          RIESA did not violate the Establishment Clause.  See 928 F. Supp.                                                           ___          at 163-66.  This approach was appropriate, for the Supreme Court,          despite  criticisms of previous  applications of the  Lemon test,                                                                _____          essentially  confirmed in  Agostini v.  Felton, 117  S. Ct.  1997                                     ________     ______          (1997), that the Lemon  criteria still apply.  See 117  S. Ct. at                           _____                         ___          2010, 2015.                    In Agostini,  the  Court  overruled  its  Establishment                       ________          Clause  decision in  Aguilar v.  Felton, 473  U.S. 402  (1985) --                               _______     ______          which  had barred  the  New  York City  Board  of Education  from          sending  public school teachers into sectarian private schools to          teach remedial classes  pursuant to Title  I -- but  nevertheless          stated  that the  general  tests  used  in  analyzing  challenged          legislation under the Establishment Clause  had not changed.  The                                                          ___                                         -9-          Agostini decision reaffirmed the need to ascertain that laws have          ________          a  secular purpose  and  a primary  effect  other than  advancing          religion, see 117 S. Ct. at 2010, and explicitly incorporated the                    ___          entanglement  prong into the effects calculus, thereby making the          third prong of Lemon a part of the second prong, see id. at 2016.                         _____                             ___ ___          The Court in  Agostini noted that what has  changed since Aguilar                        ________                                    _______          are  certain presumptions regarding  the effects of  neutral laws          that incidentally confer  benefits to religions.  See  117 S. Ct.                                                            ___          at  2010-13 (stating  that  the  Court  no longer  considers  the          presence  of public school employees on parochial school property          to  lead ineluctably to the impermissible  effect of advancing or          endorsing  religion where  their  presence  is  part  of  neutral          program).                    The district  court properly  found that  the FUTA  and          RIESA exemptions  had neither  an impermissible  purpose, nor  an          impermissible effect on  religion.  First, both the  FUTA and the          RIESA  exemption   provisions  serve   the  secular   purpose  of          facilitating the administration of the federal-state unemployment          insurance program by excluding from coverage a variety of workers          whose employment  patterns are irregular  or whose wages  are not          easily accountable.  With regard to FUTA, Rojas concedes that the          original  purpose of  the  coverage  exemptions  was  to  address          administrability  concerns.    She contends,  however,  that  the          current 26 U.S.C.   3309, viewed in the wake of the 1970 and 1976          Amendments, reflects the purpose of favoring religion rather than          the secular purpose  of providing ease of  administration.  Rojas                                         -10-          is unable  to direct  our  attention to,  nor  can we  find,  any          indications  in the  legislative  history of  the  1970 and  1976          Amendments  that suggest  an impermissible  purpose of  advancing          religion in  general  or any  particular  religion.   See,  e.g.,                                                                ___   ____          Wallace  v.  Jaffree,  472  U.S.  38,  56  (1985)  ("[T]he  First          _______      _______          Amendment requires  that a statute  must be invalidated if  it is          entirely   motivated  by   a  purpose  to   advance  religion.").          Moreover, the  current exemption  for religious employment,  even          after the amendments, still rests within the context of a variety          of  other exemptions,  all  of  which appear  to  share a  common          secular purpose.   Efficient administration  of the  unemployment          compensation  system   is  particularly   enhanced  through   the          exemptions  for religion because  it eliminates the  need for the          government to  review employment decisions  made on the  basis of          religious rationales.  These considerations are  also true of the          exemptions listed in R.I. Gen.  Laws   28-42-8(1).  The exemption          for  religions  contained  therein, when  viewed  in  context, is          innocuous.  It appears to  serve the interest in facilitating the          administration  of   federal  and  state   unemployment  benefits          programs,  and Rojas  can point  to  no other  evidence that  the          "purpose   that  animated  adoption"  was  to  advance  religion.          Edwards v.  Aguillard, 482 U.S.  578, 585 (1987).   In  Walz, the          _______     _________                                   ____          Supreme  Court  upheld  property  tax  exemptions  for  religious          institutions, arguing that such exemptions, although not required          by  the Free  Exercise Clause,  were  valid governmental  actions          "productive   of  a  benevolent   neutrality  which  will  permit                                         -11-          religious  exercise to  exist  without  sponsorship  and  without          interference."     397  U.S.   at  669.     Including   religious          institutions  within   a  set   of  unemployment   tax  exemption          recipients -- selected on the  basis of reducing difficulties  in          administering an unemployment insurance program --  reflects less          of  a desire  to sponsor  religion than  the direct  property tax          exemptions upheld in Walz.                               ____                    Rojas's brief  on appeal  places much  weight on  Texas                                                                      _____          Monthly v. Bullock, 489 U.S. 1 (1989), which struck down a narrow          _______    _______          Texas  sales and  use tax  exemption for  "'periodicals that  are          published or  distributed by a  religious faith and  that consist          wholly of  writings promulgating  the teaching  of the faith  and          books that  consist  wholly of  writings  sacred to  a  religious          faith.'"   Id.  at 5  (quoting  Texas statute).   Although  Texas                     ___                                              _____          Monthly stands for the proposition that a subsidy that is granted          _______          only  to  religious   publications  and  not  to   other  similar          publications "lacks sufficient breadth to pass scrutiny under the          Establishment Clause," it also stated that "[i]nsofar as [a  tax]          subsidy is conferred upon a wide array of non-sectarian groups as          well as  religious organizations  in pursuit  of some  legitimate          secular  end, the fact that religious groups benefit incidentally          does not deprive  the subsidy of the secular  purpose and primary          effect mandated by the Establishment Clause."  489 U.S. at 14-15.          The exemption provisions at issue in the instant case fall within          the latter category.  We decline Rojas's invitation to read Texas                                                                      _____          Monthly  as requiring that  a provision  incidentally benefitting          _______                                         -12-          religion must grant a like benefit to every group that could also                   ____          conceivably fall within  the secular rationale for  the exemption          provision.        Texas    Monthly    nowhere    requires    this                            ________________          underinclusiveness analysis, but  instead indicates  that when  a          "wide array" of groups are benefitted by a provision that pursues          a single, unifying,  secular end, one of these  groups may indeed          be religious  institutions.   In Texas Monthly,  the other  Texas                                           _____________          sales tax exemptions did not serve the same purpose as the narrow          exemption  for religious  periodicals, and  thus their  existence          could  not rescue  the  challenged exemption.    By contrast,  an          adequate array  of groups are  exempted under the FUTA  and RIESA          provisions,  reinforcing  our   conclusion  that  the   religious          exemptions  here   serve  the  legitimate   secular  purpose   of          facilitating  the administration  of  the unemployment  insurance          system.5                    The second  basic Establishment Clause concern  is that          of  avoiding the effective promotion or advancement of particular          religions or of religion in  general by the government.  Although                                        ____________________          5    We therefore  need not  address the  defendants' alternative          legal argument  in defense of  the exemptions,  namely that  even          were the  exemption provided  only to religions,  it would  still                                        ____          serve the legitimate  secular purpose of  decreasing governmental          entanglement with religion.  It is well established that "it is a          permissible   legislative   purpose  to   alleviate   significant          governmental   interference   with  the   ability   of  religious          organizations  to define and carry out their religious missions."          Corporation of the Presiding Bishop of the Church of Jesus Christ          _________________________________________________________________          of  the Latter-Day  Saints  v.  Amos, 483  U.S.  327, 335  (1987)          __________________________      ____          (upholding  exemption for religious institutions from Title VII's          prohibition  against religious  discrimination in  employment for          secular activities of a nonprofit).  But again, we do not need to          consider whether  the exemptions at  issue here are  supported on          this accommodation rationale.                                         -13-          favoritism toward any  particular sect is not an  issue raised by          this appeal, it is not  disputed that religious institutions as a          whole  benefit  from the  FUTA  and  RIESA  tax exemptions.    An          incidental  benefit to religion does not, however, render invalid          a  statutory scheme  with a  valid secular  purpose.   See, e.g.,                                                                 ___  ____          Agostini, 117 S. Ct. at  2014; Zobrest v. Catalina Foothills Sch.          ________                       _______    _______________________          Dist., 509 U.S. 1 (1993);  Witters v. Washington Dept. of Servs.,          _____                      _______    __________________________          474 U.S. 481, 488-89 (1986); Walz,  397 U.S. at 664.  It  is also                                       ____          worth  noting that while  religious employers may  be benefitted,          the  employees   of  exempted  religious  institutions,   as  the          appellant   has  discovered,  may  be  ineligible  to  enjoy  the          attendant  benefits  of  the  unemployment  compensation  scheme.          Thus, the  primary effect of the  exemptions is not to  force the          general  public to  subsidize  religion.    Rather,  the  primary          practical  effect of the exemptions for religious institutions is          to   exclude  former   employees   of   such  institutions   from          participating in the Rhode Island unemployment insurance system.                    Finally,  as  the  district  court correctly  reasoned,          entanglement concerns are in fact reduced through the adoption of          the exemptions in this case.  See 928 F. Supp. at 165.                                        ___          II.  Equal Protection          II.  Equal Protection                    With  regard to Rojas's  claim that the  FUTA and RIESA          tax  exemptions for  religious  employers violate  constitutional          equal protection  principles, we  affirm the  district court  for          substantially the grounds given in its opinion.  See 928 F. Supp.                                                           ___          at  166.   Although  Rojas  recasts  her equal  protection  claim                                         -14-          slightly  on appeal,  arguing that  the district  court erred  by          focusing on the difference in treatment of employers  rather than          on the  difference in treatment  of employees of exempt  and non-          exempt  entities,  the rationality  requirement  under  the equal          protection clause  is equally lenient  from either vantage.   The          same considerations that led the  district court to find no equal          protection violation with  regard to the difference  in treatment          of exempt  and non-exempt  employers applies  to exempt  and non-          exempt employees as well.                                      CONCLUSION                                      CONCLUSION                    For  the  reasons  stated above,  the  decision  of the          district court is affirmed.                             affirmed                            ________                                         -15-
