Decker v. O'Donnell

• Decision Date: 02 March 1981
• Docket Number: No. 80-1230,80-1231 and 80-1264,80-1230
• Citation: 661 F.2d 598
• Parties: Alice DECKER, Patricia Hayes, and Marilyn Z. Hempstead, Plaintiffs-Appellees, v. William F. O'DONNELL, Defendant-Appellant. Alice DECKER, Patricia Hayes and Marilyn Z. Hempstead, Plaintiffs-Appellees, v. UNITED STATES DEPARTMENT OF LABOR and Ray Marshall, Secretary of Labor, Defendants-Appellants. Alice DECKER, Patricia Hayes and Marilyn Z. Hempstead, Plaintiffs-Appellees, v. UNITED STATES DEPARTMENT OF LABOR et al., Defendants, Candice Warlin et al., Intervening Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 598

661 F.2d 598

Alice DECKER, Patricia Hayes, and Marilyn Z. Hempstead, Plaintiffs-Appellees, v. William F. O'DONNELL, Defendant-Appellant.

Alice DECKER, Patricia Hayes and Marilyn Z. Hempstead, Plaintiffs-Appellees, v. UNITED STATES DEPARTMENT OF LABOR and Ray Marshall, Secretary of Labor, Defendants-Appellants.

Alice DECKER, Patricia Hayes and Marilyn Z. Hempstead, Plaintiffs-Appellees, v. UNITED STATES DEPARTMENT OF LABOR et al., Defendants, Candice Warlin et al., Intervening Defendants-Appellants.

No. 80-1230, 80-1231 and 80-1264.

United States Court of Appeals Seventh Circuit.

Argued June 11, 1980.

Decided Sept. 9, 1980.

Rehearing and Rehearing En Banc Denied March 2, 1981.

Keith M. Werhan, Civ. Div., Dept. of Justice, Washington, D. C., for defendants-appellants.

T. Michael Bolger, Quarles & Brady, Milwaukee, Wis., for intervening defendants-appellants.

Raymond M. Dall'Osto, Milwaukee, Wis., Michael A. Campbell, Winter Haven, Fla., Mary Jo Schiavoni, Wis. Civil Liberties Union Foundation Inc., Milwaukee, Wis., for plaintiffs-appellees.

Before SWYGERT and WOOD, Circuit Judges, and LARSON, ^* Senior District Judge.

SWYGERT, Circuit Judge.

In this suit under 42 U.S.C. § 1983 by three federal taxpayers from Wisconsin, the district court issued a nationwide preliminary injunction prohibiting the payment of federal funds for public service employment positions under Title II, Part D of the recently amended Comprehensive Employment Training Act of 1973 ("CETA"), 29 U.S.C.A. §§ 853-59 (1980), ¹ in elementary or secondary schools operated by religious or sectarian organizations. The substantive basis for the injunction was that such payment violated the Establishment Clause of the First Amendment to the United States Constitution. On appeal we not only affirm the district court but direct it to make the injunction permanent. ²

Congress re-enacted the public service employment portion of the Comprehensive Employment Training Act of 1973, Pub.L.93-203, 87 Stat. 839 (1973), as amended, 29 U.S.C.A. §§ 801-999 (1980), in 1978 for the purpose of providing economically disadvantaged persons who are unemployed with transitional employment in areas of public service so that those persons can develop job skills and techniques that will enable them to become gainfully employed in the private sector. See 29 U.S.C.A. § 853 (1980); see also 29 U.S.C.A. §§ 801, 841 (1980); 29 C.F.R. § 677.51 (1980). Under this program CETA funds are allocated by the United States Department of Labor among various "prime sponsors," which are primarily state or local governmental units or consortia of local governmental units. See 29 U.S.C.A. §§ 811, 855(a) (1980). The prime sponsors in turn may either hire the CETA participants themselves or subgrant the monies to other governmental entities or eligible private, nonprofit organizations, which then provide employment to the CETA participants. See 29 U.S.C.A. §§ 802(20) & 856 (1980). The only CETA statutory provision regulating placement of CETA recipients in sectarian schools reads as follows:

Participants shall not be employed on the construction, operation, or maintenance of so much of any facility as is used or to be used for sectarian instruction or as a place for religious worship.

29 U.S.C.A. § 823(a)(2) (1980) (formerly 29 U.S.C. § 848(h)).

This action began on October 3, 1978 when plaintiffs filed suit in federal district court against the United States Department of Labor, the Secretary of Labor, and various state and local officials in Wisconsin who were prime sponsors under CETA. The complaint alleged that the defendants' funding of CETA participants as employees of sectarian schools during fiscal year 1978 violated the statutory limitation quoted above, the Establishment Clause, and the Fourteenth Amendment to the United States Constitution. The plaintiffs requested an order requiring the immediate termination of existing CETA grants for recipients employed at sectarian schools, prohibiting future grants, and requiring the defendants to try to recover federal funds already paid to sectarian schools. ³ During the course of the proceedings, all state and local prime sponsors were dismissed from the suit except William O'Donnell, the Milwaukee County Executive; ⁴ two CETA participants, the Archdiocese of Milwaukee, and four other dioceses in Wisconsin intervened as defendants. ⁵ In general, factfinding focused on Milwaukee County as a prime sponsor and the Archdiocese of Milwaukee as a subgrantee.

In summary, the Archdiocese of Milwaukee first applied to Milwaukee County, the local prime sponsor, for CETA funding for its sectarian schools in 1977. That application and subsequent ones were approved by William O'Donnell, Milwaukee County Executive. In fiscal year 1978 the Archdiocese funded thirty-nine CETA recipients with approximately $329,000 in federal monies. After applying for funding for sixty-two CETA positions in fiscal year 1979, the Archdiocese received approximately $143,000. ⁶

On July 31, 1979, after consideration of written submissions, the district court entered an order granting plaintiffs' request for a preliminary injunction. On August 17, 1979 the district court stayed the injunction pending appeal, retaining jurisdiction to modify the terms of the injunction. See Fed.R.Civ.P. 62(c). That same day, the Department of Labor published a final, detailed regulation, which took effect September 17, 1979, concerning the use of CETA funds to pay participants working at sectarian schools. 44 Fed.Reg. 48, 185-86 (1979) (to be codified in 20 C.F.R. § 676.71). ⁷ The district court held an evidentiary hearing and allowed additional written submissions, and on February 12, 1980 issued an order denying the motions of the Department of Labor, its Secretary, and the Archdiocese for amendment and reconsideration of the July 31, 1979 order and dissolving the stay ordered on August 17, 1979.

Although the district court dealt with actual past practices in the employment of CETA workers by the Archdiocese in its order of July 31, 1979 and focused on the validity of the September 17, 1979 regulation in its order of February 12, 1980, its analyses on the Establishment Clause issue in its two orders are complementary. First, the court determined that, under current Supreme Court case law, some of the positions funded in the past and some permitted under the regulation would lead by their very nature to excessive entanglement between church and state and unlawful state subsidization of church-related activities. For instance, the Archdiocese had employed CETA workers as reading, mathematics, music, and art teachers. Similarly, the regulation would allow the outstationing of CETA workers as remedial education teachers, their use in connection with speech and hearing therapy performed on school premises, and their use in adult education and recreation programs on school premises operated by sectarian employees. See 20 C.F.R. §§ 676.71(c), (d), & (e)(2), as printed at 44 Fed.Reg. 48, 185 (1979).

With respect to other positions involving face-to-face contacts by CETA workers with students in at least a quasi-educational setting, the district court concluded that the potential for abuse would require a monitoring system to ensure that public funds are not used to support religious activities. That system would, however, necessarily entangle the government in the operation of the sectarian schools to an impermissible extent. In connection with this analysis the court noted that the monitoring actually used by Milwaukee County in the past had proved inadequate to prevent the use of CETA funds for religious purposes and that the future monitoring currently planned by Milwaukee County and the Department of Labor would be too entangling.

With respect to positions, such as cafeteria workers, which would present little or no opportunity for prohibited religious activity and thus do not require excessive state monitoring, the district court gave two bases for their constitutional infirmity. First, the court found that CETA workers are in essence employees of the Archdiocese. Under the CETA program the Archdiocese hires and fires CETA employees, exercises daily supervision over them, and writes their pay checks. Although CETA workers are thus not government employees, the government is ultimately responsible for paying them. Such direct subsidization of workers providing direct and tangible benefits to religious organizations violates the First Amendment. ⁸ Alternatively, the district court concluded that the statutory method by which a prime sponsor allocates funds to subgrantees involves a prohibited political entanglement. The public policy decisions will unavoidably become entangled with sectarian and antisectarian concerns, because the process is a competitive one with more groups applying for funds than there are funds available, a single elected public official has the discretion to award funds, and religious organizations are among the possible recipients. According to the court, such impermissible political entanglement renders the whole CETA program unconstitutional.

Finally, the district court decided that the preliminary injunction should not be limited to Milwaukee County's CETA programs because "the CETA program, to the extent that it funds employment positions in sectarian schools, is invalid on its face."

On appeal the Department of Labor, its Secretary, Milwaukee County Executive William O'Donnell, defendants-intervenors and amici curiae ⁹ have presented various arguments for the reversal of the preliminary injunction. The federal defendants have challenged only the portions of the district court's order requiring termination of instructional positions in adult education programs and all noninstructional positions. ¹⁰ The federal regulation has been amended accordingly to prohibit the outstationing of CETA workers employed by public entities to provide...