Fulani v. League of Women Voters Educ. Fund

• Decision Date: 02 August 1989
• Docket Number: No. 728,D,728
• Citation: 882 F.2d 621
• Parties: -5400, 89-2 USTC P 9520 Dr. Lenora B. FULANI, Lenora B. Fulani's Committee for Fair Elections, and Virginia Sinclair, Plaintiffs-Appellants, v. LEAGUE OF WOMEN VOTERS EDUCATION FUND, League of Women Voters of the United States, League of Women Voters of the City of New York Education Fund, Inc., James Baker, III, Secretary of the Treasury, and Roscoe Egger, Jr., Commissioner of Internal Revenue, Defendants-Appellees. ocket 88-6243.
• Court: U.S. Court of Appeals — Second Circuit

Page 621

882 F.2d 621

64 A.F.T.R.2d 89-5400, 89-2 USTC P 9520

Dr. Lenora B. FULANI, Lenora B. Fulani's Committee for Fair

Elections, and Virginia Sinclair, Plaintiffs-Appellants, v. LEAGUE OF WOMEN VOTERS EDUCATION FUND, League of Women

Voters of the United States, League of Women Voters of the

City of New York Education Fund, Inc., James Baker, III,

Secretary of the Treasury, and Roscoe Egger, Jr.,

Commissioner of Internal Revenue, Defendants-Appellees.

No. 728, Docket 88-6243.

United States Court of Appeals, Second Circuit.

Argued Jan. 31, 1989.

Decided Aug. 2, 1989.

Arthur R. Block, New York City, for plaintiffs-appellants.

Brooksley Born, Washington, D.C. (Arnold & Porter, Washington, D.C., of counsel), for defendants-appellees League of Women Voters Educ. Fund; League of Women Voters of the U.S.; and League of Women Voters of the City of New York Educ. Fund, Inc.

Paul K. Milmed, Asst. U.S. Atty., New York City (Rudolph W. Giuliani, U.S. Atty. S.D.N.Y., Nancy Kilson, Asst. U.S. Atty., of counsel), for Federal defendants-appellees.

Before VAN GRAAFEILAND, CARDAMONE, and PIERCE, Circuit Judges.

PIERCE, Circuit Judge:

Appellants appeal from so much of a judgment of the United States District Court for the Southern District of New York (Sweet, J.) as denied their motion to compel the government to revoke appellees' tax-exempt status under 26 U.S.C. Sec. 501(c)(3). ¹ We hold that appellant Fulani did have standing to challenge the tax-exempt status of appellees. However, since we agree with the district court that appellant failed to prevail on the merits, the judgment of the district court is affirmed.

BACKGROUND

Appellant Dr. Lenora B. Fulani was an independent and minor party candidate for President of the United States during the 1988 national elections. ² Appellee League of Women Voters Education Fund ("the League") is a tax-exempt, not-for-profit charitable organization whose stated goals are to foster voter education and participation in the electoral process. In 1988, the League organized and sponsored three nationally-televised primary debates; two involved contenders for the Democratic Party's presidential nomination and one brought together contenders for the Republican Party's nomination. Each of these debates focused on these respective candidates' quest for state delegates' votes via local primary contests. Dr. Fulani attempted to procure an invitation to participate in these debates, however, the League did not invite her to take part in any of them. The League stated that its decision was based on the fact that Fulani was not seeking the nomination of either the Democratic or the Republican Party.

On March 14, 1988, before any of the debates had taken place, Fulani sued the League, ³ the Secretary of the Treasury, and the Commissioner of Internal Revenue in federal district court, seeking, inter alia, injunctive and declaratory relief. This appeal arises out of Dr. Fulani's unsuccessful attempt in that litigation to enjoin the League from holding any presidential primary debates without inviting her to participate therein on equal terms with the other candidates, and to compel the federal defendants to revoke the League's tax-exempt status under Internal Revenue Code ("I.R.C.") section 501(c)(3).

Section 501(c)(3) of the Internal Revenue Code provides for the exemption from federal income taxation of organizations operated exclusively for charitable or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual. See Association of the Bar of the City of New York v. Commissioner, 858 F.2d 876, 877 (2d Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 1768, 104 L.Ed.2d 204 (1989). Furthermore, charitable contributions to an organization which enjoys section 501(c)(3) status are tax-deductible to the donor for federal income, estate, and gift tax purposes. 26 U.S.C. Secs. 170(a)(1), 170(c)(2)(D), 2055(a)(2), 2106(a)(2)(A)(ii), and 2522(a)(2). To remain eligible for the tax benefits available to such organizations, however, the organization must not "participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office." I.R.C.

Sec. 501(c)(3), as amended by Omnibus Budget Reconciliation Act of 1987, Pub.L. No. 100-203, Sec. 10711, 101 Stat. 1330, 1330-464. In other words, the organization must remain strictly "nonpartisan" in its endeavors. See Rev.Rul. 78-248, 1978-1 C.B. 154; Rev.Rul. 86-95, 1986-2 C.B. 73; Association of the Bar of the City of New York, 858 F.2d at 880.

In connection with her attempt to compel the revocation of the League's tax-exempt status, appellant Fulani contended in the district court that the League had engaged in impermissible "partisan" activity when it denied her the right to participate in the Democratic and Republican primary debates. More specifically, Fulani claimed that the League had structured the debate phase of its primary election voter education program in such a way as to favor the two traditional major parties, and to exclude significant independent and minor party candidates such as herself.

After a hearing and upon considering the merits of plaintiffs' contentions, Judge Sweet denied the plaintiffs' motion for injunctive and declaratory relief, and dismissed all except one of the remaining ancillary claims, which was later voluntarily withdrawn by the plaintiffs. On appeal, Fulani reiterates her contention that the League engaged in "partisan" activity when it refused to allow her to participate in the 1988 Democratic and Republican primary debates, and urges that, consequently, the League's tax-exempt status under I.R.C. Sec. 501(c)(3) should be revoked. Appellees assert that Fulani's contentions are baseless, and that, in any event, appellants lack standing to challenge the government's tax treatment of the League. For the reasons stated herein, we affirm the district court's decision rejecting appellants' attempt to compel the revocation of the League's tax-exempt status.

DISCUSSION

A. Standing

As a threshold matter, we must determine whether Fulani has standing to maintain this action. Although the district court explicitly chose not to reach this issue, it is fundamental that "Article III of the Constitution confines the federal courts to adjudicating actual 'cases' and 'controversies.' " Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). If Fulani fails to satisfy the basic threshold standing requirements, then as a general principle, we are without jurisdiction to entertain this appeal. See Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975) (whether a plaintiff "has made out a 'case or controversy ... within the meaning of Article III ... is the threshold question in every federal case, determining the power of the court to entertain the suit.").

The Supreme Court instructs us that there are three "core component[s]" to apply in assessing Article III standing. A plaintiff must allege: (1) a "personal injury" that is (2) "fairly traceable to the defendant's allegedly unlawful conduct," and (3) which is "likely to be redressed by the requested relief." Allen, 468 U.S. at 751, 104 S.Ct. at 3324. Moreover, the injury must be " 'distinct and palpable,' " Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 100, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979) (quoting Warth, 422 U.S. at 501, 95 S.Ct. at 2206), and not " 'abstract' " or " 'conjectural' " or " 'hypothetical.' " Allen, 468 U.S. at 751, 104 S.Ct. at 3324 (citations omitted). Applying these concepts in determining whether there is standing in a given case often can be a difficult task. Typically, the examining court should conduct its standing inquiry with the following questions in mind: "Is the injury too abstract, or otherwise not appropriate, to be considered judicially cognizable? Is the line of causation between the illegal conduct and injury too attenuated? [And] [i]s the prospect of obtaining relief from the injury as a result of a favorable ruling too speculative?" Allen, 468 U.S. at 752, 104 S.Ct. at 3325. These are the principal questions which guide our inquiry in this case.

The League and the federal defendants have presented three basic arguments in support of their claim that Fulani lacks standing to maintain this action. First, the In arguing lack of standing, appellees point out that federal courts have frequently rejected attempts by litigants to challenge the tax-exempt status of third parties. See, e.g., Allen, 468 U.S. 737, 104 S.Ct. 3315; Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976); see also American Soc'y of Travel Agents v. Blumenthal, 566 F.2d 145 (D.C.Cir.1977), cert. denied, 435 U.S. 947, 98 S.Ct. 1533, 55 L.Ed.2d 546 (1978); Khalaf v. Regan, 85-1 U.S. Tax Cases (CCH) p 9269 (D.D.C.1985), aff'd, No. 85-5274 (D.C.Cir. Sept. 19, 1986). Appellees rely on these cases to support their contention that Fulani lacks standing to compel the federal defendants to revoke the League's tax-exempt status. However, we find this case to be distinguishable from the cited cases because Fulani's asserted injury is both "judicially cognizable" and "fairly traceable" to the conduct of appellees. ⁴

appellees contend that Fulani has not suffered a judicially cognizable injury. Second, the appellees assert that Fulani's alleged injury is too speculative and remote to be "fairly traceable" to either her exclusion from the League's debates or the tax-exempt status of the League. And, finally, the appellees claim that even if Fulani did suffer a " 'distinct and palpable' " injury, that injury is incapable of being redressed by the relief she seeks since the 1988 presidential elections are now past history. Although we ultimately agree with appellees that Fulani's section 501(c)(3) claims were...