Wright v. Regan
| Citation | 211 U.S.App.D.C. 231,656 F.2d 820 |
| Decision Date | 18 June 1981 |
| Docket Number | No. 80-1124,80-1124 |
| Parties | , 81-2 USTC P 9504 Inez WRIGHT, Individually and on Behalf of Her Minor Children, Oscar Clay Renfro, Anthony Lee Renfro, Lisa Marie Wright, and Ephron Antoni Wright, Jr., et al., Appellants, v. Donald T. REGAN, Secretary of the Treasury, et al. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Appeal from the United States District Court for the District of Columbia (Civil Action No. 76-1426).
Robert H. Kapp, Washington, D. C., with whom Arthur J. Rothkopf, Sara-Ann Determan, Paul L. Joffe, Washington, D. C., Richard S. Kohn, Philadelphia, Pa., William L. Robinson, Norman J. Chachkin, New York City, William E. Caldwell, Richard Fields, Memphis, Tenn., James M. Nabrit, III, Bill Lann Lee, New York City and Armand G. Derfner, Charleston, S. C., were on the brief for appellants. Frank R. Parker, Jackson, Miss., for appellants.
Robert S. Pomerance, Atty., Dept. of Justice, Washington, D. C., with whom M. Carr Ferguson, Asst. Atty. Gen., Washington, D. C. (at the time the brief was filed), John F. Murray, Acting Asst. Atty. Gen., Charles F. C. Ruff, U. S. Atty., Michael L. Paup and Ernest J. Brown, Attys., Dept. of Justice, Washington, D. C., were on the brief, for federal appellees. William A. Friedlander, Atty., Dept. of Justice, Washington, D. C., for federal appellees.
George E. Morrow, Memphis, Tenn., for appellee Allen.
Before WRIGHT, TAMM and GINSBURG, Circuit Judges.
Opinion for the court filed by Circuit Judge GINSBURG.
This action charges the Internal Revenue Service with failure to fulfill its obligation to confine tax exemption under section 501(c)(3) of the Internal Revenue Code to private schools that operate on a racially nondiscriminatory basis. 1 It was initiated in 1976 by parents of black children attending public schools in desegregating districts in several states. Nationwide relief is sought. The case is companion to Green v. Miller, No. 1355-69 (D.D.C.). Green was instituted in 1969 and reopened in 1976; relief requested in Green is limited to schools in Mississippi. In April 1977 the district court ordered the two actions consolidated. Green v. Miller, No. 1355-69 (D.D.C. Apr. 5, 1977), Joint Appendix (J.A.) 48-50. In November 1979 that court dismissed the Wright component of the consolidated action as nonjusticiable. Wright v. Miller, 480 F.Supp. 790 (D.D.C.1979). Six months later, the district court issued an order and permanent injunction in Green granting in significant part the relief requested in that action. Green v. Miller, No. 1355-69 (clarified and amended June 2, 1980).
In this appeal plaintiffs' standing to sue is the dominant issue. In addition to concluding that plaintiffs lacked standing, the district court also determined that deference to the Internal Revenue Service and to Congress portended against judicial review. We conclude that the district court erred in dismissing the case on the grounds asserted; we therefore remand for further proceedings. 2 To place the issues before us in
context, we describe at the outset the course of proceedings, first in Green, then in this case. Thereafter, we discuss in turn the three reasons the district court supplied for dismissing the complaint.
In 1969, when the Green litigation commenced, the IRS accorded tax-exempt status to racially discriminatory private schools so long as the schools were not receiving state aid. See Green v. Kennedy, 309 F.Supp. 1127, 1130 (D.D.C) (three-judge court), appeal dismissed sub nom. Cannon v. Green, 398 U.S. 956, 90 S.Ct. 2169, 26 L.Ed.2d 539 (1970); Hearings, supra note 1, at 3 (statement of Jerome Kurtz, Commissioner of Internal Revenue). The Green plaintiffs, black parents and their minor children attending public schools in Mississippi, sought to enjoin the Secretary of the Treasury and the Commissioner of Internal Revenue from according tax exemption to private schools in Mississippi "from which Negro students are excluded on the basis of color." 309 F.Supp. at 1130. In response to the plaintiffs' motion for a preliminary injunction, the three-judge district court empaneled to hear Green 3 restrained the defendants "from issuing further ruling letters under sections 170(c) and 501(c) of the Internal Revenue Code to private schools in Mississippi unless they have affirmatively determined on the basis of adequate investigation that the applicant school does not discriminate against Negroes in its admissions policy." 309 F.Supp. at 1131. Before setting out the considerations that warranted pendente lite injunctive relief, the court dealt summarily with the defendants' assertion that the plaintiffs lacked standing to maintain the suit:
We take note of defendants' contention that plaintiffs have no standing to bring this action in their capacity as taxpayers. We need not consider that issue at this juncture. This case is properly maintained as a class action, pursuant to Rule 23 of the Federal Rules of Civil Procedure, by Negro school children in Mississippi and the parents of those children on behalf of themselves and all persons similarly situated. They have standing to attack the constitutionality of statutory provisions which they claim provides (sic ) an unconstitutional system of benefits and matching grants that fosters and supports a system of segregated private schools as an alternative available to white students seeking to avoid desegregated public schools.
Prior to further disposition by the court, the Service changed its position. It announced that racially discriminatory private schools are not entitled to tax exemption. 4 A sharp adversary contest remained, however, between plaintiffs and intervenors, a class of parents and children who supported or attended private schools in Mississippi with an enrollment limited to members of the white race. See Green v. Connally, 330 F.Supp. 1150, 1155 (D.D.C.) (three-judge court), aff'd mem. sub nom. Coit v. Green, 404 U.S. 997, 92 S.Ct. 564, 30 L.Ed.2d 550 (1971).
In June 1971, the court decided Green on the merits; granting plaintiffs both declaratory relief and a permanent injunction, the court held that "the Code requires the denial and elimination of Federal tax exemptions for racially discriminatory private schools and of Federal income tax deductions for contributions to such schools." Green v. Connally, 330 F.Supp. at 1156. The court noted that section 501(c)(3) does not expressly so mandate. It then discussed evolving case law governing charitable and educational trusts. Ultimately Clearly the Federal Government could not under the Constitution give direct financial aid to schools practicing racial discrimination. But tax exemptions and deductions certainly constitute a Federal Government benefit and support. While that support is indirect, and is in the nature of a matching grant rather than an unconditional grant, it would be difficult indeed to establish that such support can be provided consistently with the Constitution.
however, the court did not rest upon common-law developments. Instead, it determined that the Internal Revenue Code exemption provisions must be read in a manner harmonious with federal civil rights legislation and the overriding national policy against racial discrimination in educational facilities. A contrary reading, the court emphasized, would raise "serious constitutional questions":
The injunction ordered in Green in June 1971 barred the Service from granting tax exemption to any private school in Mississippi unless the school adopted a racially nondiscriminatory policy as to students and gave meaningful notice to the community concerning that policy. Further, the injunction required schools seeking exemption to supply the Service with information as to (1) the racial composition of students, faculty, staff, and applicants for admission; (2) recipients of scholarship and loan funds; and (3) the school's organizers, board members, and donors of land and buildings. 330 F.Supp. at 1179-80. The nature of the class action, the court noted, accounted for a decree limited to schools in Mississippi. The court added, however, that "(t)he Service would be within its authority in including similar requirements for all schools of the nation." Id. at 1176. More particularly, the court stated:
To obviate any possible confusion the court is not to be misunderstood as laying down a special rule for schools located in Mississippi. The underlying principle is broader, and is applicable to schools outside Mississippi with the same or similar badge of doubt. Our decree is limited to schools in Mississippi because this is an action in behalf of black children and parents in Mississippi ....
After the Supreme Court summarily affirmed the three-judge district court decision in Green v. Connally, 6 the Service adopted guidelines, applicable nationwide, to assist it in determining whether schools seeking or holding exempt status are in fact discriminatory. 7 The IRS guidelines, as On July 23, 1976, the Green plaintiffs reopened that case, asserting that the Service was not complying with the court's continuing injunction against tax exemption for racially discriminatory private schools in Mississippi. In particular, the plaintiffs sought to compel the Service to withdraw tax-exempt status from, and refuse to grant it to,
published in 1975, were criticized by the U.S. Commission on Civil Rights as inadequate to identify racially discriminatory schools. 8 Ultimately, the Service acknowledged that the procedures in place since 1975 were "ineffective in identifying schools which in actual operation discriminate against minority students, even though the schools may profess an open enrollment policy and comply with...
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