Baltimore Lutheran High School Ass'n, Inc. v. Employment Sec. Admin.

• Decision Date: 01 September 1984
• Docket Number: No. 111,111
• Citation: 490 A.2d 701,302 Md. 649
• Parties: , 24 Ed. Law Rep. 314 BALTIMORE LUTHERAN HIGH SCHOOL ASSOCIATION, INC. v. EMPLOYMENT SECURITY ADMINISTRATION. ,
• Court: Maryland Court of Appeals

Page 649

302 Md. 649

490 A.2d 701, 24 Ed. Law Rep. 314

BALTIMORE LUTHERAN HIGH SCHOOL ASSOCIATION, INC. v. EMPLOYMENT SECURITY ADMINISTRATION.

No. 111, Sept. Term, 1984.

Court of Appeals of Maryland.

April 10, 1985.

Paul J. Redmond, Towson, for appellant.

Amy S. Scherr, Asst. Atty. Gen., Baltimore (Stephen H. Sachs, Atty. Gen., Baltimore, on the brief), for appellee.

Argued before MURPHY, C.J., SMITH, ELDRIDGE, COLE and RODOWSKY, JJ., CHARLES E. ORTH, Jr., Associate Judge of the Court of Appeals (retired), Specially Assigned, and ALAN M. WILNER, Associate Judge of the Court of Special Appeals, Specially Assigned.

CHARLES E. ORTH, Jr., Associate Judge of the Court of Appeals (retired), Specially Assigned.

This case began almost eight years ago, prompted by the amendment of the Maryland Unemployment Insurance Law to conform to the Federal Unemployment Tax Act. See Acts 1977, Ch. 919. ¹ Compare Maryland Code (1957, 1979 Repl.Vol.) Art. 95A, § 20(g)(7)(v)B and C and 26 U.S.Code § 3309(b)(1)(A) and (B) and (2) (1982). Subparagraphs B and C of § 20(g)(7)(v) of the Maryland Law as amended designate two of the types of employment which are not included in the Law:

B. Service by an individual in the employ of ... 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;

C. Service by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by that order.

Baltimore Lutheran High School Association, Inc. (Lutheran) is composed of Lutheran Churches, each of which is a member of the Missouri Synod. Lutheran, separately incorporated, operates the Baltimore Lutheran High School (the School). Lutheran thought that the School was "operated primarily for religious purposes" and in November 1977 sought a ruling from the Employment Security Administration ² to that effect so that persons who performed services for the School would be exempt from the provisions of the Maryland Unemployment Insurance Law. Lutheran was partially successful in its effort. The Executive Director of the Employment Security Administration determined that those persons meeting the qualifications of subparagraph C who performed services for the School were exempt from unemployment insurance coverage. ³ But the Executive Director also determined that those persons who performed services for the School, other than those qualified under subparagraph C, were subject to unemployment coverage as not exempt under subparagraph B. He instructed the Division of Unemployment Insurance to take action accordingly. Lutheran was aggrieved by the latter determination. It took the issue to the Board of Appeals (Board I). The Board, however, reached the same determination as had the Executive Director. Lutheran looked to the Superior Court of Baltimore City; that court affirmed the Board. Lutheran was not assuaged. It noted an appeal to the Court of Special Appeals. ⁴ We issued a writ of certiorari before decision by that court and reported our decision in Employ. Sec. v. Balto. Lutheran H.S., 291 Md. 750, 436 A.2d 481 (1981) (Lutheran H.S. I ). We remanded the case to the Board of Appeals (Board II) ⁵ without affirmance or reversal.

Our decision in Lutheran H.S. I was rendered in the light of St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 101 S.Ct. 2142, 68 L.Ed.2d 612 (1981). St. Martin concerned the unemployment tax status under § 3309(b) of the Federal Act and under the complementary South Dakota statute of those schools which had no legal identity separate from a church, 451 U.S. at 782-83 n. 12, 101 S.Ct. at 2148-49 n. 12. We recognized that St. Martin is not dispositive of the claim here because Lutheran is separately incorporated and operates the School. Lutheran H.S. I, 291 Md. at 756, 436 A.2d 481. It was clear under St. Martin, however, that in order for Lutheran to establish an exemption, it must, as a separately incorporated organization,

satisfy the requirements of § 3309(b)(1)(B) [of the Federal Act and § 20(g)(7)(v)B of the complementary Maryland Law]: (1) that the organization "is operated primarily for religious purposes," and (2) that it is "operated, supervised, controlled or principally supported by a church or convention or association of churches." 451 U.S. at 782-783 n. 12, 101 S.Ct. at 2148-49 n. 12.

Therefore, the initial question before us was the first requirement of the statutes--whether Lutheran operates the School primarily for religious purposes. ⁶ Lutheran H.S. I, 291 Md. at 757, 436 A.2d 481.

St. Martin did not articulate the factors to be taken into account in determining whether a school run by an independently incorporated organization was operated primarily for religious purposes. We found in Lutheran H.S. I, however, that in applying standards in other contexts, the Supreme Court has identified appropriate factors. Id. at 757, 436 A.2d 481. We reviewed the relevant decisions of the Court, id. at 757-761, 436 A.2d 481, and set out those factors that appropriately may be taken into account, id. at 761, 436 A.2d 481. We applied them to the operation of the School. We set out in detail, as disclosed by the record, the composition of Lutheran, the supervision of the School and its funding, the purpose of the Association, the composition of the student body and the faculty of the School, the standards and the requirements of its educational process, and the part religion plays therein. Id. at 761-765, 436 A.2d 481. We observed:

There was much evidence intended to show that religious indoctrination permeates the educational process within Lutheran High. However, there was no evidence to show the nature of the mandatory chapel services. There was no evidence to show whether the religion courses taught at the school were devoted to deepening religious experiences in the particular faith rather than teaching a range of human religious experiences as an academic discipline. In addition, while there was testimony that religion is taught in every nontheological course, and that each faculty member is trained to teach all subjects from a Christian viewpoint according to the doctrine enunciated by the Synod, no details were provided as to the impact of religion on the instructional methods employed and the substantive content presented. More particularly, no teacher presented any evidence to show how teaching a nontheological course from a Christian viewpoint and according to the standards established by the Synod, differed from teaching such a course according to the academic requirements of the subject matter and the standards established by the State Department of Education. Finally, there was no evidence to show whether the school subscribes to and follows the principles of academic freedom. Id. at 765, 436 A.2d 481.

We declared:

[I]n order to determine whether a school is operated primarily for educational rather than religious purposes, it is necessary to consider whether courses are taught in "an 'atmosphere of intellectual freedom' ... 'without religious pressures,' " Roemer [v. Board of Public Works of Maryland ], 426 U.S. [736,] 756, 96 S.Ct. [2337, 2349, 49 L.Ed.2d 179 (1976) ], and according to the principles of academic freedom. In the absence of evidence to show the substantive content of both theological and nontheological courses, and the instructional methods employed in these courses, there is no basis upon which to make this determination. Id. at 766, 436 A.2d 481.

We concluded, "Manifestly, in reaching its conclusion, the Board did not take all of the appropriate factors into account." Id. Although to that point, Lutheran had failed to prove its claim that the School was operated primarily for religious purposes, we believed that, in the circumstances, the purposes of justice would be advanced by permitting further proceedings. We therefore remanded the case to the Board of Appeals without affirmance or reversal, giving Lutheran the opportunity to fill the gaps in the evidence we had noticed and affording the Board the opportunity to reassess Lutheran's claim by applying, in the light of the entire record, the standard and the appropriate factors we had set forth. Id.

Board II conducted a plenary hearing as directed. Whereupon it held:

Services performed for Baltimore Lutheran High School by persons who are not ministers of religious education are engaged in covered employment within the meaning of § 20(g)(7)(v)B of the Maryland Unemployment Insurance Law and 26 U.S.C. Section 3309(b)(1)(B).

Board II expressly affirmed the determinations of the Executive Director and of Board I. Lutheran appealed to the Circuit Court for Baltimore County. That court affirmed Board II. Lutheran appealed to the Court of Special Appeals and again we granted certiorari before decision by the intermediate court.

The key to the appeal now being considered is whether the School is operated primarily for religious purposes. ⁷ Three separate and distinct administrative bodies have answered this question in the negative. Their decisions have been affirmed by two circuit courts. We must decide initially, within the limits of our authority, whether the decision shall stand.

It is apparent from the decisions of Board II and the Circuit Court of Baltimore County that neither of them believed that Lutheran had adequately met its burden of filling the evidentiary gaps. ⁸ In reaching its decision Board II adopted, with two exceptions, the findings of fact made by Board I as set out in Lutheran H.S. I at 761-765, 436 A.2d 481. ⁹ The Board made additional factual findings which were supported by the evidence adduced before it. Board II then applied all the factual findings to the appropriate factors set out in Lutheran H.S. I. ¹⁰ Board II concluded that the School was...