Thursday, October 16, 2008

Seventh Circuit Rejects Taxpayer Standing to Seek Repayment of Funds from Notre Dame

The Seventh Circuit Court of Appeals has issued an opinion holding that taxpayers have no standing to seek restitution from Notre Dame of funds provided to the school by the federal government for a teacher training program. The 3-0 decision is a reversal from the same panel's prior decision holding that the taxpayers had standing to seek repayment to the federal treasury from Notre Dame of a $500,000 grant for a secondary school teacher training program.

The new decision followed a remand by the Supreme Court for reconsideration in light of its decision last term in Hein v. Freedom From Religion Foundation that limited taxpayer standing. The 7th Circuit interprets Hein to limit the establishment clause exception to the general prohibition on taxpayer standing to the facts of the decision that created the exception, Flast v. Cohen. Thus, the 7th Circuit rejected taxpayer standing to seek restitution, a remedy not sought in Flast. The Court explained:

Accordingly, we read Hein to mean that taxpayers continue to have standing to
sue for injunctive relief against specific congressional appropriations alleged
to violate the Establishment Clause, but that is all. Permitting a taxpayer to
proceed against a private grant recipient for restitution to the Treasury as a remedy in an otherwise moot Establishment Clause case would extend the Flast exception beyond the limits of the result in Flast. After Hein, such an extension is unwarranted.

Judge Sykes wrote the decision for the unanimous panel. She dissented from the prior Laskowski panel decision by Judge Posner that found taxpayer standing to seek restitution from Notre Dame.