Valente v. Larson

• Decision Date: 07 January 1981
• Docket Number: Nos. 80-1131,80-1159,s. 80-1131
• Citation: 637 F.2d 562
• Parties: Pamela VALENTE, Larry Barber, Larry Heft, Kimberly Korman, and Holy Spirit Association for the Unification of World Christianity, Appellees/Cross- Appellants, v. John R. LARSON, Commissioner of Securities, Minnesota Department of Commerce; Warren Spannaus, Minnesota Attorney General; Individually and in Their Official Capacities, Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 562

637 F.2d 562

Pamela VALENTE, Larry Barber, Larry Heft, Kimberly Korman and Holy Spirit Association for the Unification of World Christianity, Appellees/Cross- Appellants, v. John R. LARSON, Commissioner of Securities, Minnesota Department of Commerce; Warren Spannaus, Minnesota Attorney General; Individually and in Their Official Capacities Appellants/Cross-Appellees.

Nos. 80-1131, 80-1159.

United States Court of Appeals Eighth Circuit.

Submitted Oct. 13, 1980.

Decided Jan. 7, 1981.

Larry Salustro, Sp. Asst. Atty. Gen., Saint Paul, Minn., for appellants/cross-appellees.

Barry A. Fischer (Robert C. Moest, David Grosz, Larry J. Roberts, on brief), Barry A. Fisher Law Offices, Los Angeles, Cal., for plaintiffs-appellees and cross-appellants.

Before ROSS, Circuit Judge, GIBSON, Senior Circuit Judge, and SACHS, ^* District Judge.

SACHS, District Judge.

This is an appeal from an order of the district court for the district of Minnesota ¹ permanently enjoining the enforcement of the Minnesota Charitable Solicitations Act, Minn.Stat. §§ 309.50-309.61, "as to any and all religious organizations" and also permanently enjoining utilization of certain sections of the Act "against plaintiffs and other persons claiming to be religious organizations or members thereof." In the same order the district court declared the Act to be unconstitutional as applied to religious organizations and members thereof but constitutional as applied to non-religious organizations and members thereof. The court also ruled certain enforcement sections of the Act unconstitutional as applied to persons "claiming" to be religious organizations or members thereof.

Plaintiffs are the Holy Spirit Association for the Unification of World Christianity (Unification Church) and four persons asserting membership therein and claiming the right to solicit funds for the organization. Defendants are the two state officials charged with enforcement of the Act.

Notice of appeal was filed by the defendant attorney general and the defendant commissioner of securities, department of commerce. A cross-appeal was filed by plaintiffs, complaining of the ruling that the Act was valid as to non-religious organizations. Because plaintiffs were wholly successful in obtaining an injunction prohibiting enforcement of the Act against them, the cross-appeal will be considered only insofar as the issues decided may be pertinent to ruling on the appeal.

We are in general agreement with most of the basic conclusions of Judges Lord and Renner, and affirm those rulings. We disagree, however, with some aspects of the disposition of the case, and remand for further proceedings.

All parties agree that the major legal issue in this case is whether the classification made in a religious exemption contained in the Act is invalid because of its unequal application to different religious organizations. We agree with the judges below that the classification is invalid and that the exemption should be expanded to cover all religious organizations.

Contained in the Act is an exemption from certain registration and disclosure requirements for

(a) religious society or organization which received more than half of the contributions it received in the accounting year last ended (1) from persons who are members of the organization; or (2) from a parent organization or affiliated organization; or (3) from a combination of the sources listed in clauses (1) and (2). Minn.Stat. § 309.515(1)(b).

Subject to exceptions not material at this time, ² religious organizations qualifying for the exemption need file neither a registration statement, § 309.52, nor an annual report-financial statement, § 309.53, with the securities division of the department of commerce. All other provisions of the Act apply irrespective of any exemption from registration and filing annual statements.

The court below initially granted plaintiffs' motion for a preliminary injunction and denied defendants' motion to dismiss. Plaintiffs then moved for summary judgment, seeking final ruling that the Act was unconstitutional. Plaintiffs assert that the Act is unconstitutional on its face and as applied to the solicitation of funds by members of a religious or non-religious organization. ³ Defendants resisted the motion and filed a cross-motion for partial summary judgment, contending that certain of plaintiffs' challenges were not justiciable.

We affirm the district court's ruling that the plaintiffs have standing to assert the facial invalidity of the Act, including the classification made in the religious organization exemption. Given a case or controversy, a litigant whose own activities are unprotected may nevertheless challenge a statute by showing that it substantially abridges the First Amendment rights of other parties not before the court (citations omitted). In these First Amendment contexts, the courts are inclined to disregard the normal rule against permitting one whose conduct may validly be prohibited to challenge the proscription as it applies to others because of the possibility that protected speech or associative activities may be inhibited by the overly broad reach of the statute. Village of Schaumburg v. Citizens for a Better Environment, 444 U.S. 620, 634, 100 S.Ct. 826, 834, 63 L.Ed.2d 73 (1980).

In Schaumburg, as in the case at bar, there was "an unresolved factual dispute concerning the true character of (plaintiff) organization." l.c. 633, 100 S.Ct. l.c. 834. Thus, regardless of the ultimate determination of plaintiffs' status (religious or non-religious), the nature of the statute called into question by plaintiffs and the nature of their challenge gives them standing to maintain suit.

We need not in this case decide whether it would be valid to divide religious organizations, like fraternal, patriotic, social, educational, alumni, professional, trade, or learned societies, § 309.515(1)(d), into two classifications: groups funded solely from internal sources and groups funded partly or wholly from public solicitations. Membership funding may have built-in safeguards and opportunities for informing contributors whereas solicitation from the public, lacking such safeguards, arguably needs greater public disclosure. The sticking point in this case is the unique classification dividing religious organizations between (1) groups relying primarily on internal funding but also possibly obtaining large amounts and percentages of income from public funding from (2) groups which look to the public for "more than half" of their funding.

We turn to the constitutional implications of this disparate treatment of religious sects. The First Amendment to the Constitution of the United States provides that "Congress shall make no law respecting an establishment of religion ..." Some forty years ago it was ruled that this clause applies to state legislative enactments as well as to federal action. Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S.Ct. 900, 903, 84 L.Ed. 1213 (1940). In the landmark Establishment Clause decision it was thereafter stated:

The "establishment of religion" clause of the First Amendment means at least this: Neither a state nor the Federal Government can set up a church. Neither can pass laws which aid one religion, aid all religions, or prefer one religion over another ... (The) Amendment requires the state to be a neutral in its relations with groups of religious believers and non-believers ... State power is no more to be used so as to handicap religions than it is to favor them. Everson v. Board of Education, 330 U.S. 1, 15, 18, 67 S.Ct. 504, 511, 513, 91 L.Ed. 711 (1947).

It has been stated as a fundamental proposition that "(t)he government must be neutral when it comes to competition between sects." Zorach v. Clauson, 343 U.S. 306, 314, 72 S.Ct. 679, 684, 96 L.Ed. 954 (1951).

The nondiscrimination principle, in the religious context, has been formulated by the second Justice Harlan as follows:

In any particular case the critical question is whether the scope of the legislation encircles a class so broad that it can be fairly concluded that (all groups that) could be thought to fall within the natural perimeter (are included). Welsh v. United States, 398 U.S. 333, 357, 90 S.Ct. 1792, 1805, 26 L.Ed.2d 308 (1970 concurring opinion), citing Walz v. Tax Comm'n, 397 U.S. 664, 696, 90 S.Ct. 1409, 1425, 25 L.Ed.2d 697 (1970 separate opinion).

It is most difficult, if not impossible, in the present case to ascertain any basis for holding that the separate treatment of various religious organizations in the exemption provision of the Act follows any "natural perimeters" of public policy concerns. The need for public information would seemingly apply equally to religious organizations obtaining 40 and 60 percent of their funding from the public. It is not difficult to imagine a situation in which a religious organization which obtains 40 percent of its funding from the public obtains a substantially higher dollar amount from the public than does a religious organization which obtains 60 percent of its funding from the public. The special burdening of the latter group is in question.

The statutory discrimination between such organizations smacks of "religious gerrymandering," ⁴ an apparently intentional favoritism for the religious organizations obtaining some but less than half of their funds from the public. As further discussed, it may be inferred that the draftsmen of this legislation wished to reduce the burdens otherwise imposed on well-established churches which had achieved strong but not total financial support from their members; the draftsmen have exhibited less concern for easing regulations applicable to churches which are new and lacking in a constituency, or which, as a matter of policy, may favor public solicitation over general reliance on financial support from members. Actual discrimination exists if, as we assume, there are church organizations...