Civil Action No. 00-1614 Section: "C"(2)
March 20, 2002
ORDER AND REASONS
This matter comes before the Court on the motion of the American Civil Liberties Union Foundation of Louisiana ("ACLU") for preliminary injunction and declaratory relief seeking to enjoin the Secretary of the Louisiana Department of Revenue ("the State") from enforcing, and to have declared unconstitutional, certain Louisiana sales and use tax exemptions as violating the Establishment Clause of the First Amendment to the United States Constitution. Challenges to the ACLU's standing and a request for the Court to abstain from hearing the case were previously denied, and an interlocutory appeal to the United States Court of Appeals for the Fifth Circuit was dismissed without prejudice. Having considered the record, the memoranda of counsel and the law, the Court has determined that the ACLU's motion should be granted for the following reasons.
In its opposition, the State asks the Court to "revisit" the issue of abstention. The Court declines. No intervening law or newly developed fact has been presented.
The plaintiff makes three related facial challenges. First, it claims that Louisiana law unconstitutionally exempts the payment of sales, use and occupancy taxes at hotels and places of amusement at camp and retreat facilities operated by religious organizations for religious purposes under La. R.S. 47:301(6)(b) , La. R.S. 47:301(14)(b)(iv) and La. R.S. 33:4574.1(A)(1)(b) . Second, it challenges the exemption provided to the Society of the Little Sisters of the Poor from paying any sales and use taxes by La. R.S. 47:301(8)(e)(I). Finally, it challenges the constitutionality of the exemption of certain religious organizations from paying sales and use taxes on certain written material under La. R.S. 47:301(8)(d). The ACLU specifically argues that the statutes "are narrowly drawn to benefit only religious and faith based taxpayers and lack constitutional breadth and neutrality" under the applicable tests. (Rec. Doc. 32, p. 3). The State opposes the motion with the argument that "[t]he legislature may enact any legislation that the state constitution does not prohibit" and that statutes are presumed to be constitutional. (Rec. Doc. 34, p. 2). The State further argues that the challenged tax exemptions do not "attempt to establish, sponsor or support religion" under Walz v. Tax Commissioner, of City of New York, 397 U.S. 664 (1970). (Rec. Doc. 34, p. 4). Finally, the State argues that the plaintiff is not entitled to injunctive relief because it can not show the requisite "irreparable harm"
Section 301(6)(b) provides in pertinent part:
For purposes of the sales and use taxes of all tax authorities in this state, the term "hotel" as defined herein shall not include camp and retreat facilities owned and operated for religious purposes by nonprofit religious organizations, which includes recognized domestic nonprofit corporations organized for religious purposes, provided that the net revenue derived from the organization's property is devoted wholly to religious purposes.
Section 301 (14)(b)(iv) provides in pertinent part:
For purposes of the sales and use taxes of all tax authorities in the state, the term "place of amusement" as used herein shall not include camp and retreat facilities owned and operated for religious purposes by nonprofit religious organizations, which includes recognized domestic nonprofit corporations organized for religious purposes, provided that the net revenue derived from the organization's property is devoted wholly to religious purposes.
Section 4574.1(A)(1)(b) provides in pertinent part:
The term "hotel" as used herein shall not include camp and retreat facilities owned and operated for religious purposes by nonprofit religious organizations, which includes recognized domestic nonprofit corporations organized for religious purposes, provided that the net revenue derived from the organization's property is devoted wholly to religious purposes.
Section 301(8)(e) provides in pertinent part:
For purposes of the payment of the state sales and use tax and the sales and use tax levied by any political subdivision, the term "person" shall not include the Society of the Little Sisters of the Poor.
Section 301(8)(d)(I) and (iv) provides in pertinent part:
For purposes of the payment of the state sales and use tax and the sales and use tax levied by any political subdivision, the term "person" shall not in elude a church or synagogue . . . The exclusion from the sales and use tax authorized by this Subparagraph shall apply only to the purchases of bibles, song books, or literature used for religious instruction classes.
A preliminary injunction is appropriate only when the moving party establishes: (1) a substantial likelihood of success on the merits; (2) a substantial threat that failure to grant the injunction will result in irreparable injury; (3) that the threatened injury outweighs any damage that the injunction may cause the opposing party; and (4) that the injunction will not disserve the public interest. Allied Marketing Group, Inc. v. CDL Marketing, Inc., 878 F.2d 806 (5th Cir. 1989); State of Louisiana ex rel Guste v. Lee, 635 F. Supp. 1107, 1125 (E.D. La. 1986). It is an extraordinary remedy available only if the movant has clearly carried the burden of persuasion as to all four factors. Allied, supra. The Court's determination as to the likelihood of success on the merits is set forth hereinafter. With regard to the issue of irreparable harm, "It is well settled that the loss of First Amendment freedoms for even minimal periods of time constitutes irreparable injury justifying the grant of a preliminary injunction." Deerfield Medical Center v. City of Deerfield Beach, 661 F.2d 328, 338 (5th Cir. 1981). The Court construes the First Amendment presumption of irreparable harm to encompass the Establishment Clause claims at issue here.
With regard to the third and fourth factors, the Court finds that the plaintiff has shown that the threatened injury outweighs any damage that the injunction may cause the State; and that the injunction will not disserve the public interest. The State has not opposed the motion on these factors.
Likelihood of Success on the Merits
The Establishment Clause of the First Amendment provides that "Congress shall make no law respecting an establishment of religion, . . ." The clause is made applicable to the states through the Fourteenth Amendment. See e.g., Everson v. Board. of Education, 330 U.S. 1, 8 (1947). The First Amendment "requires the state to be a neutral in its relations with groups of religious believers and nonbelievers . . ."Id., 330 U.S. at 18. "The State must confine itself to secular objectives, and neither advance nor impede religious activity." Roemer v. Board of Public Works of Maryland, 426 U.S. 736, 747 (1976). In 1970, the Supreme Court refined its Establishment Clause jurisprudence into three tests: "[f]irst, the statute must have a secular legislative purpose; second, its principal or primary effect must be one that neither advances nor inhibits religion, . . . finally, the statute must not foster `an excessive government entanglement with religion.'" Lemon v. Kurtzman, 403 U.S. 602, 612-613 (1971). the subsequent jurisprudence, according to the Fifth Citcuit, provided two additional tests in addition to those provided in Lemon: "The second test, the "coercion" test, measures whether the government has directed a formal religious exercise in such a way as to oblige the participation of objectors. The final test, the "endorsement" test, prohibits the government from conveying or attempting to convey a message that religion is preferred over non-religion." (Citations omitted). Doe v. Beaumont Independent School District, 240 F.3d 462, 468 (5th Cir. 2001).
Here, the Court is presented with facial challenges and a record devoid of facts pertaining to the application of the challenged statutes. Nonetheless, the constitutionality of the statutes is governed by the three factors articulated in Lemon. Bowen v. Kendrick, 487 U.S. 589, 602 (1988). With a facial Establishment Clause attack, the first part of theLemon test is often determinative, and the court examines the statutes based on their text, context and legislative purpose to determine the nature of the purpose under Lemon. Santa Fe Independent School District v. Doe, 530 U.S. 290, 312-316 (2000). "Our Establishment Clause cases involving facial challenges, however, have not focused solely on the possible applications of the statute, but rather have considered whether the statute has an unconstitutional purpose." Santa Fe Independent School District v. Doe, 530 U.S. 290, 314 (2000). Nonetheless, the court may also consider the statutes' "inevitable" effects. Id. 530 U.S. at 316.
Here, all of the challenged statutes single out exemptions applicable only to religious organizations, and can be considered together on the basis of this commonality. The State relies on Walz, supra. wherein the Supreme Court recognized the constitutionality of a New York state property tax exemption to various nonprofit organizations, including religious. Significantly, however, in Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989), the Supreme Court held that a Texas state sales tax exemption for religious publications violated the Establishment Clause. In so doing, it distinguished Walz on grounds directly relevant here.
First, the Supreme Court in Texas Monthly, noted that in its previous cases, including Walz, "we emphasized that the benefits derived by religious organizations flowed to a large number of nonreligious groups as well. Indeed, were those benefits confined to religious organizations, they could not have appeared other than as state sponsorship of religion; if that were so, we would not have hesitated to strike them down for lacking a secular purpose and effect." Texas Monthly, 489 U.S. at 11. "The breadth of New York's property tax exemption was essential to our holding that it was "not aimed at establishing, sponsoring, or supporting religion'" Id., 489 U.S. at 12,quoting Walz, 397 U.S. at 674. In Walz, "we in no way intimated that the exemption would have been valid had it applied only to the property of religious groups or had it lacked a permissible secular objective. . . . We therefore upheld the State's classification of religious organizations among the socially beneficial associations whose activities it desired to foster." Texas Monthly, 489 U.S. at 12, fn 2.
In addition, the Supreme Court in Texas Monthly also acknowledged that "[e]very tax exemption constitutes a subsidy that affects nonqualifying taxpayers, forcing them to become "indirect and vicarious donors." Id., 489 U.S. at 14, quoting Bob Jones University v. United States, 461 U.S. 574, 591 (1983). "It is difficult to view Texas' narrow exemption as anything but state sponsorship of religious belief, regardless of whether one adopts the perspective of beneficiaries or of uncompensated contributors." Texas Monthly, 489 U.S. at 15. "What is crucial is that any subsidy afforded religious organizations be warranted by some overarching secular purpose that justifies like benefits for nonreligious groups Id., 489 U.S. at 15, fn 4. As in Texas Monthly, "[t]here is no evidence in the record, and (the State] does not argue in its brief to this Court, that the exemption for religious periodicals was grounded in some secular legislative policy that motivated similar tax breaks for nonreligious activities. It certainly appears from [the statutory language] that the exemption was intended to benefit religion alone." Id.
In the absence of any controverting evidence, the clear text of the challenged statutory exemptions benefits only religious, which provides a purpose and effect deemed unconstitutional under Lemon. For purposes of this motion, therefore, the plaintiff has shown a substantial likelihood of success on the merits and entitlement to the injunctive relief sought in this motion.
IT IS ORDERED that the plaintiff's motion for preliminary injunction and for declaratory relief is GRANTED. (Rec. Doc. 32).
IT IS FURTHER ORDERED that the parties shall submit a proposed preliminary injunction order, approved as to form, within ten days. The preliminary injunction will become effective upon the payment of security in the amount of $100.00. In addition, the parties shall advise the Court in writing and within ten days as to whether a permanent injunction hearing and trial will be necessary.