Freedom From Religion Found. Inc. v. Geithner

• Decision Date: 09 May 2011
• Docket Number: No. 09–17753.,09–17753.
• Citation: 79 Fed.R.Serv.3d 512,644 F.3d 836
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: FREEDOM FROM RELIGION FOUNDATION, INC.; Paul Storey; Billy Ferguson; Karen Buchanan; Joseph Morrow; Anthony Arlen; Elisabeth Steadman; William M. Shockley; Charles Crannell; Collette Crannell; Mike Osborne; Kristi Craven; Paul Ellcessor; Joseph Rittell; Wendy Corby; Pat Kelley; Carey Goldstein; Debora Smith; Kathy Fields; Richard Moore; Susan Robinson; Ken Nahigan, Plaintiffs–Appellees,v.Timothy GEITHNER, Secretary, U.S. Dept. of the Treasury; Douglas Shulman, Commissioner, IRS; Selvi Stanislaus, Executive Officer of the California Franchise Tax Board; United States of America, Defendants–Appellees,Michael Rodgers, Pastor, Defendant–Intervenor–Appellant.

644 F.3d 836

107 A.F.T.R.2d 2011-2118

2011-1 USTC P 50,393

79 Fed.R.Serv.3d 512

11 Cal. Daily Op. Serv. 5483

2011 Daily Journal D.A.R. 6576

FREEDOM FROM RELIGION FOUNDATION, INC.; Paul Storey; Billy Ferguson; Karen Buchanan; Joseph Morrow; Anthony Arlen; Elisabeth Steadman; William M. Shockley; Charles Crannell; Collette Crannell; Mike Osborne; Kristi Craven; Paul Ellcessor; Joseph Rittell; Wendy Corby; Pat Kelley; Carey Goldstein; Debora Smith; Kathy Fields; Richard Moore; Susan Robinson; Ken Nahigan, Plaintiffs–Appellees,

v.Timothy GEITHNER, Secretary, U.S. Dept. of the Treasury; Douglas Shulman, Commissioner, IRS; Selvi Stanislaus, Executive Officer of the California Franchise Tax Board; United States of America, Defendants–Appellees,Michael Rodgers, Pastor, Defendant–Intervenor–Appellant.

No. 09–17753.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 14, 2011.Filed May 9, 2011.

Kevin T. Snider, Pacific Justice Institute, Sacramento, CA, argued the cause and filed the briefs for the appellant. With him on the briefs was Matthew B. McReynolds, Sacramento, CA.Ivan C. Dale, Department of Justice, Tax Division, Washington, D.C., argued the cause and filed a brief for the appellees. With him on the briefs were John A. DiCicco, Acting Assistant Attorney General, Gilbert S. Rothenberg, Acting Deputy Assistant Attorney General, and Teresa E. McLaughlin, Department of Justice, Tax Division.Appeal from the United States District Court for the Eastern District of California, William B. Shubb, Senior District Judge, Presiding. D.C. No. 2:09–cv–02894–WBS–DAD.Before: DIARMUID F. O'SCANNLAIN and STEPHEN S. TROTT, Circuit Judges, and TENA CAMPBELL, District Judge.^*

OPINION

O'SCANNLAIN, Circuit Judge:

We must decide whether an individual who claims certain federal and state tax exemptions may intervene in an unrelated action challenging the constitutionality of those exemptions.

I

The Freedom from Religion Foundation, Inc. (“FFRF”) sued the Secretary of the Treasury and the Commissioner of the Internal Revenue Service in their official capacities under 28 U.S.C. § 2201, alleging that the so-called “parsonage exemption” violates the Establishment Clause of the United States Constitution. ¹ FFRF also sued the Executive Officer of the California Franchise Tax Board (“CFTB”) in his official capacity under 42 U.S.C. § 1983, alleging that California's parsonage exemption violates the Establishment Clause of both the United States and California Constitutions.² The challenged statutes allow “minister[s] of the gospel” to exclude their rental allowance, or the rental value of any home furnished to them as part of their compensation, from gross income. 26 U.S.C. § 107. FFRF seeks a declaration that the challenged statutes are unconstitutional and an injunction forbidding the defendants from “continuing to grant or allow tax benefits under sections 107 and 265(a)(6) of the Internal Revenue Code and the corresponding sections of the California Revenue and Taxation Code.”

Six days after FFRF filed its complaint, Pastor Michael Rodgers, a minister of the gospel in the Sacramento area who regularly claims both the federal and state parsonage exemptions, moved to intervene as a defendant on behalf of himself and Does 1–100—ministers within the jurisdiction of the Eastern District of California. Rodgers sought to intervene both as of right, pursuant to Federal Rule of Civil Procedure 24(a)(2), and permissively, pursuant to Rule 24(b)(1)(B). The federal defendants opposed the motion, and the district court denied Rodgers's motion both for intervention as of right and for permissive intervention.

Rodgers timely appeals.

II

We review a denial of a motion to intervene as of right de novo. Perry v. Prop. 8 Official Proponents, 587 F.3d 947, 950 (9th Cir.2009).

Federal Rule of Civil Procedure 24(a)(2) provides:

On timely motion, the court must permit anyone to intervene who ... claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.

We have summarized the requirements of intervention as of right under Rule 24(a)(2) as follows:

(1) [T]he [applicant's] motion must be timely; (2) the applicant must have a “significantly protectable” interest relating to the property or transaction which is the subject of the action; (3) the applicant must be so situated that the disposition of the action may as a practical matter impair or impede its ability to protect that interest; and (4) the applicant's interest must be inadequately represented by the parties to the action.

California ex rel. Lockyer v. United States, 450 F.3d 436, 440 (9th Cir.2006) (quoting Sierra Club v. EPA, 995 F.2d 1478, 1481 (9th Cir.1993)). Although Rule 24(a)(2) is construed broadly in favor of intervenors, Wilderness Soc'y v. U.S. Forest Serv., 630 F.3d 1173, 1179 (9th Cir.2011) (en banc), the applicant bears the burden of showing that each of the four elements is met, Prete v. Bradbury, 438 F.3d 949, 954(9th Cir.2006). “Failure to satisfy any one of the requirements is fatal to the application.” Perry, 587 F.3d at 950. Because we agree with the district court's conclusion that the government adequately represents Rodgers's interests, we need not discuss the first three requirements.³

A

“Where the party and the proposed intervenor share the same ‘ultimate objective,’ a presumption of adequacy of representation applies.” Perry, 587 F.3d at 951 (quoting Arakaki v. Cayetano, 324 F.3d 1078, 1086 (9th Cir.2003)). This presumption of adequacy is “nowhere more applicable than in a case where the Department of Justice deploys its formidable resources to defend the constitutionality of a congressional enactment.” Lockyer, 450 F.3d at 444. Here, the federal defendants have demonstrated that their ultimate objective is to uphold the constitutionality of the challenged statutes. In their motion to dismiss, the federal defendants argued, inter alia, that “[s]ections 107 and 265(a)(6) constitute constitutional accommodations of religious practice by eliminating discrimination between ministers and similarly situated tax-payers. Sections 107 and 265(a)(6) are part of a governmental policy of neutrality toward religion, and government neither advances nor inhibits religious practice through these provisions.” Rodgers has presented no evidence that would lead us to doubt that the federal defendants' ultimate objective is to uphold the challenged statutes. Accordingly, we are satisfied that Rodgers and the federal defendants have the same ultimate objective and that the “presumption of adequate representation applies.” Perry, 587 F.3d at 951.

B

Such presumption can be rebutted only by “a compelling showing to the contrary.” Id. (internal quotation marks and citation omitted). Rodgers first attempts to rebut the presumption by arguing that the federal defendants might urge a narrow interpretation of the statute because the Solicitor General, when defending acts of Congress, “lean[s] heavily on the Ashwander [ v. Tennessee Valley Authority, 297 U.S. 288, 56 S.Ct. 466, 80 L.Ed. 688 (1936) ] principle of construing a statute so as to avoid constitutional doubt.” Lockyer, 450 F.3d at 444 (internal quotation marks and citation omitted). Rodgers fears that the federal defendants might, in an attempt to save the parsonage exemption from being declared unconstitutional, urge the court to construe the statutes in a narrow way that would reduce the value of the exemption. But Rodgers has presented no evidence that the federal defendants actually have urged a narrow interpretation of the challenged statutes in the district court. And, in any event, it is unclear whether there is a narrow construction of sections 107 and 265(a)(6) that would be responsive to FFRF's constitutional challenge. Furthermore, even if we agreed with Rodgers's contention, we have previously held that “just because the government theoretically may offer a limiting construction of a statute that is narrower than that of a party proposing intervention does not mean that the party has overcome the presumption of adequacy of representation.” Lockyer, 450 F.3d at 444.

Rodgers next argues that the presumption should be rebutted because the federal defendants are tasked both with upholding the constitutionality of the challenged statutes and with protecting the public treasury. He suggests that their interest in maximizing federal tax revenues might lead the federal defendants to abandon key arguments that could be marshaled in defense of the challenged statutes. Rodgers points to the IRS's litigation behavior in Warren v. Commissioner to show that the IRS cannot be trusted to mount a robust defense of the parsonage exemption. 114 T.C. 343 (2000). In Warren, the IRS proffered an interpretation of a prior version of section 107 that would have reduced the value of the exemption to some ministers. Id. at 346–47. But the IRS's position in Warren does not support Rodgers's argument in favor of intervention because in Warren the IRS explicitly conceded the constitutionality of section 107. See Warren v. Comm'r (Warren I), 282 F.3d 1119, 1123–24 (9th Cir.2002) (Tallman, J., dissenting) (noting that both parties “clearly stated that ... they believe the parsonage exclusion is constitutional”). Contrary to Rodgers's assertions, the IRS's behavior in Warren does not indicate that the federal defendants in this case will fail to “make all of [Rodgers's] proposed arguments,” or that they are not “willing to make such arguments.” Perry, 587 F.3d at 952(internal quotation marks and citation omitted).

Rodgers also argues that he should be allowed to intervene because the federal defendants might not appeal an adverse ruling. He correctly notes that the government may not appeal an adverse...