Tuesday, September 11, 2007

Deconstructing Hein: Federal Government, Faith-Based Provider and ACLU Offer Different Readings in Laskowski v. Spellings

The Supreme Court strives to provide clear guidance to the lower federal and state courts through its opinions. When a case results in a fractured plurality, however, the Court can't be faulted for lack of trying. A recent case in point is Hein v. Freedom From Religion Foundation, 2007 WL 1803960 (June 25, 2007), a case widely viewed as offering the first definitive pronouncement on Establishment Clause taxpayer standing in twenty years. (See CLRF's blog post regarding the Hein decision here.) But the debate about the meaning of the case among the parties to a similar Seventh Circuit case that was GVR'd for Hein, Laskowski v. Spellings, 443 F.3d 930 (7th Cir. 2006), brings to mind the proverbial trio of blind men describing an elephant.

Laskowski is a taxpayer action brought against the Secretary of Education challenging a congressional earmark of $500,000 to the University of Notre Dame. The university intervened to defend the grant. The Seventh Circuit held the action moot with respect to the claim against the Secretary because the grant had expired, but ruled that the case could go forward as an equitable restitution action for recoupment against the university. This holding and the Seventh Circuit's holding in Hein that taxpayers could bring suit challenging purely discretionary Executive expenditures were a double-barrelled expansion of taxpayer standing that might have significantly broadened the availability of taxpayer claims if they had gone unaddressed by the Supreme Court. After the GVR, the Court of Appeals ordered the parties's counsel to brief the applicability of Hein to the case. Experienced counsel for the Justice Department, the ACLU of Indiana and Notre Dame (Michael Carvin of Jones Day) offered somewhat divergent views of the meaning of Hein to guide the court in their submissions in late July.

To the Justice Department (still participating in order to defend the Secretary from charges of acting unconstitutionally, a necessary predicate to establishing that the equitable remedy of recoupment was caled for), Hein requires dismissal because the question remaining before the court -- whether Notre Dame reasonably relied on the Secretary's authority - "[has] nothing to do with any exercise by Congress of its taxing and spending power." Moreover, Justice argues, Hein counsels that there can be no claim for recoupment that can be stated by a taxpayer, since "Establishment Clause taxpayer standing under Flast is not based on any notion that a taxpayer has an individual Article III stake in recovering money spent in violation of the Establishment Clause."

Notre Dame's argument is simpler and more direct. Carvin argues that Hein offers sufficient guidance for the Court of Appeals to simply affirm the District Court's original dismissal of the case. The recoupment remedy revived by the Seventh Circuit from hoaried dicta in Establishment Clause jurisprudence is a "dramatic expansion of taxpayer standing," the university argues, and hence goes well beyond the standing afforded by Flast v. Cohen. What's more, since the Secretary retained the discretion not to award the earmark to Notre Dame, "the plaintiffs do not challenge congressional action at all, but Notre Dame's alleged use of federal funds in violation of Executive regulations."

The plaintiffs are predictably dismissive of Hein's application. "The only relevance the decision in Hein has to this case is that Hein reaffirmed the validity of federal taxpayer standing, first noted in Flast v. Cohen, to challenge expenditures expressly authorized by a specific congressional enactment pursuant to Congress' power to tax and spend under Art. I, Sec. 8...." Because the taxpayers challenge a directed "teacher quality initiative" grant made pursuant to a specific appropriation under the Higher Education Act, Flast and Hein are satisfied, plaintiffs contend.

Notre Dame's argument on this point may end up carrying more weight than it might appear at first blush. The Supreme Court has strongly signaled that it is interested in Article III cases of late, having decided Hein in this past term and DaimlerChrysler Corp v. Cuno, 126 S.Ct. 1854 (2006), last year. If the Seventh Circuit disagrees with Notre Dame and holds that recoupment of unconstitutionally spent funds passes muster under Hein despite that it is not the congressional appropriation per se that is challenged, but how the money was actually spent by the grantee, it may be inviting further review.

Oral argument is set for November 5, 2007.