Young, In re

• Citation: 141 F.3d 854
• Decision Date: 13 April 1998
• Docket Number: No. 93-2267,93-2267
• Parties: , Bankr. L. Rep. P 77,678 In re: Bruce YOUNG; In re: Nancy Young, Julia A. CHRISTIANS, Appellee, v. CRYSTAL EVANGELICAL FREE CHURCH, Appellant. United States of America, Intervenor on Appeal, Christian Legal Society; The National Association of Evangelicals; Americans United for Separation of Church and State; Concerned Women for America; The Baptist Joint Committee on Public Affairs; The Southern Baptist Convention; The General Conference of Seventh-Day Adventists; The Evangelical Lutheran Church in America, Amici Curiae. United States Senator Orrin G. Hatch; The Church of Jesus Christ of Latter-Day Saints; Catholic League for Religious and Civil Rights; Traditional Values Coalition; Worldwide Church of God, Amicus Curiae. Coalition for the Free Exercise of Religion, Amicus on Behalf of Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 854

141 F.3d 854

32 Bankr.Ct.Dec. 584, Bankr. L. Rep. P 77,678

In re: Bruce YOUNG; In re: Nancy Young,

Julia A. CHRISTIANS, Appellee, v. CRYSTAL EVANGELICAL FREE CHURCH, Appellant.

United States of America, Intervenor on Appeal,

Christian Legal Society; The National Association of

Evangelicals; Americans United for Separation of Church and

State; Concerned Women for America; The Baptist Joint

Committee on Public Affairs; The Southern Baptist

Convention; The General Conference of Seventh-Day

Adventists; The Evangelical Lutheran Church in America,

Amici Curiae.

United States Senator Orrin G. Hatch; The Church of Jesus

Christ of Latter-Day Saints; Catholic League for Religious

and Civil Rights; Traditional Values Coalition; Worldwide

Church of God, Amicus Curiae.

Coalition for the Free Exercise of Religion, Amicus on

Behalf of Appellant.

No. 93-2267.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 8, 1997.

Decided April 13, 1998.

Richard Thomas Thomson, argued, Minneapolis, MN, for Christians and Stephen W. Preston, Deputy Asst. Atty. Gen., argued, of Washington, DC, for intervenor United States (Frank W. Hunger, David Lee Lillenhaug, Michael Jay Singer, and Matthew M. Collette, on the brief).

Before McMILLIAN and MAGILL, Circuit Judges, and BOGUE, ^* District Judge.

MAGILL, Circuit Judge.

In our earlier opinion in this matter we reversed the district court and held that under the Religious Freedom Restoration Act (RFRA), 42 U.S.C. §§ 2000bb to 2000bb-4, bankruptcy debtors' religious tithes could not be recovered from a church as avoidable transactions in adversary proceedings. See Christians v. Crystal Evangelical Free Church (In re Young), 82 F.3d 1407, 1420 (8th Cir.1996). In City of Boerne v. Flores, --- U.S. ----, 117 S.Ct. 2157, 138 L.Ed.2d 624 (1997), the Supreme Court held that RFRA was unconstitutional as applied to state law because Congress had exceeded its enforcement powers under § 5 of the Fourteenth Amendment. The Supreme Court subsequently summarily vacated and remanded our decision in Christians for reconsideration in light of Flores. See Christians v. Crystal Evangelical Free Church, --- U.S. ----, ----, 117 S.Ct. 2502, 2502, 138 L.Ed.2d 1007 (1997). Upon reconsideration, we conclude that, under the Bankruptcy Clause and the Necessary and Proper Clause of Article I of the Constitution, RFRA is constitutional as applied to federal law. Accordingly, we reinstate our previous decision, and again reverse the district court.

I.

Bruce and Nancy Young are active members of the Crystal Evangelical Free Church (the Church). In accordance with their religious beliefs, the Youngs tithed ten percent of their annual income to the Church. While the Church teaches that its members should contribute to support the Church, it does not require payment for attendance or membership, and would provide all services to the Youngs regardless of the amount of their tithes. Between February 1991 and February 1992, the Youngs tithed $13,450.00 to the Church.

The Youngs filed a joint Chapter 7 bankruptcy petition in February 1992. Because the Youngs had been insolvent during the previous year, bankruptcy trustee Julia Christians (the Trustee) sought to avoid the Youngs' tithes to the Church as fraudulent transfers under 11 U.S.C. § 548(a)(2)(A). Both the bankruptcy court and the district court held that the tithes to the church were avoidable transactions, and allowed the Trustee to recover the tithes from the Church.

To avoid the Youngs' tithes under 11 U.S.C. § 548(a)(2)(A), the Trustee had the burden of proving that "(1) there was a transfer of the debtors' interest in property (2) made on or within a year preceding the filing of the petition (3) while the debtors were insolvent (4) in exchange for which the debtors received less than reasonably equivalent value." Christians, 82 F.3d at 1410. The parties stipulated that the first three factors were present. See id. We held that the Trustee had also proven the fourth factor, because the Church did not premise any of its services on the Youngs' tithes and therefore did not provide anything in exchange for the tithes. See id. at 1415. Accordingly, we held that the Youngs' tithes would ordinarily be avoidable transactions. See id. at 1416.

We also concluded, however, that allowing the Trustee "recovery of the contributions substantially burdens the debtors' free exercise of their religion and is not in furtherance of a compelling governmental interest and therefore violates the RFRA." Id. at 1417. Because "RFRA provides a defense against the order of the district court permitting the trustee to avoid the debtors' contributions to the church," we held that "[t]he trustee is not entitled to recover $13,450 from the church." Id. at 1420.

After this Court denied the Trustee's petition for rehearing en banc, see Christians v. Crystal Evangelical Free Church (In re Young), 89 F.3d 494, 494 (8th Cir.1996), the Supreme Court held that RFRA was unconstitutional as applied to state law. See Flores, --- U.S. at ----, 117 S.Ct. at 2172. Subsequently, the Supreme Court granted certiorari in the instant case, vacated our initial opinion, and remanded for reconsideration in light of Flores. See Christians, --- U.S. at ----, 117 S.Ct. at 2502. On remand, the Trustee argues that RFRA is unconstitutional as applied to federal law because Congress violated the separation of powers doctrine in enacting the statute and because RFRA violates the Establishment Clause of the First Amendment.

II.

A. RFRA and Flores

RFRA was enacted as a legislative response to the Supreme Court's decision in Employment Div., Dep't of Human Resources v. Smith, 494 U.S. 872, 110 S.Ct. 1595, 108 L.Ed.2d 876 (1990). In Smith, the Supreme Court held that the First Amendment "right of free exercise [of religion] does not relieve an individual of the obligation to comply with a valid and neutral law of general applicability on the ground that the law proscribes (or prescribes) conduct that his religion prescribes (or proscribes)." Id. at 879, 110 S.Ct. at 1600 (quotations omitted). In reaching this holding, the Supreme Court effectively overruled precedent that had provided greater protection to individuals whose religious practices were burdened by the operation of neutral laws. See id. at 883-85, 110 S.Ct. at 1602-04 (rejecting rule of Sherbert v. Verner, 374 U.S. 398, 83 S.Ct. 1790, 10 L.Ed.2d 965 (1963), that "governmental actions that substantially burden a religious practice must be justified by a compelling governmental interest").

Congress enacted RFRA to limit the Smith decision's impact on the practice of religious liberties. Congress found that "laws 'neutral' toward religion may burden religious exercise as surely as laws intended to interfere with religious exercise," and concluded that "governments should not substantially burden religious exercise without compelling justification." 42 U.S.C. § 2000bb(a)(2) & (3). Congress enacted RFRA "to restore the compelling interest test as set forth in Sherbert v. Verner, 374 U.S. 398, 83 S.Ct. 1790, 10 L.Ed.2d 965 (1963) and Wisconsin v. Yoder, 406 U.S. 205, 92 S.Ct. 1526, 32 L.Ed.2d 15 (1972) and to guarantee its application in all cases where free exercise of religion is substantially burdened [and] to provide a claim or defense to persons whose religious exercise is substantially burdened by government." 42 U.S.C. § 2000bb(b)(1) & (2).

RFRA codified the compelling interest test of Sherbert and Yoder, and provided that the government could "substantially burden a person's exercise of religion only if it demonstrates that application of the burden to the person (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest." 42 U.S.C. § 2000bb-1(b)(1) & (2). Congress intended RFRA to apply "to all Federal and State law." 42 U.S.C. § 2000bb-3(a); see also 42 U.S.C. § 2000bb-2(1) (defining "government" to include "a branch, department, agency, instrumentality, and official (or other person acting under color of law) of the United States, a State, or a subdivision of a State").

Whether Congress has the authority to impose RFRA on state law was soon questioned, see, e.g., Hamilton v. Schriro, 74 F.3d 1545, 1570 (8th Cir.) (McMillian, J., dissenting) ("Because Congress does not have the power under § 5 of the Fourteenth Amendment to enact RFRA, I would hold that the Religious Freedom Restoration Act is unconstitutional."), cert. denied, --- U.S. ----, 117 S.Ct. 193, 136 L.Ed.2d 130 (1996), and the Supreme Court ultimately declared that this part of RFRA was beyond Congress's power to enact. See Flores, --- U.S. at ----, 117 S.Ct. at 2172.

As the Flores Court noted, "Congress relied on its Fourteenth Amendment enforcement power in enacting the most far reaching and substantial of RFRA's provisions, those which impose its requirements on the States." Id. at ----, 117 S.Ct. at 2162. The enforcement power of § 5 of the Fourteenth Amendment is remedial and only allows Congress to preserve rights already protected by the Fourteenth Amendment. See id. at ----, 117 S.Ct. at 2164. However, the Fourteenth Amendment, incorporating the Free Exercise Clause of the First Amendment, does not protect individuals practicing their religious beliefs from the operation of neutral law. See Smith, 494 U.S. at 879, 110 S.Ct. at 1600. Because RFRA's protection went far beyond the protection offered by the Smith Court's authoritative interpretation of the First Amendment, as incorporated into the Fourteenth Amendment, Congress exceeded the authority provided in § 5 of the Fourteenth Amendment to enforce the Amendment. See Flores, --- U.S. at ----, 117 S.Ct. at 2164 ("Legislation which alters the meaning of the Free Exercise Clause cannot be said to be enforcing the Clause. Congress does not enforce a constitutional right by changing what the right is."); id. at ----,...