justice gorsuch

Kisor Decided: What Does it Mean for Auer Deference?

July 2, 2019 by William Goren 1 Comment

I had a great time last week doing two CLEs with my colleague and foil Richard Hunt in Dallas. Those webinars can be found here and here. We had an absolute blast. I also got some personal time in as well with a really close friend and his family in nearby Fort Worth. So, ready to go for another week. Shortly before we did the first webinar, I got news from Robin Shea, the person behind the Labor And Employment Law Insider blog in my blogroll, that Kisor v. Wilkie came down. It’s timing could not have been better because the case explicitly and implicitly came up in both webinars. As promised last week, the blog entry of the week is on Kisor v. Wilkie. As usual the blog entry is divided into categories and they are: introduction; why Auer deference makes sense; Auer deference from here on out; why Auer deference doesn’t get overruled; stare decisis must be respected; why case must be remanded; Chief Justice Roberts concurring opinion stating that the majority opinion and Justice Gorsuch are not that far apart; Justice Gorsuch concurring opinion setting forth the case why Auer deference should have died; and takeaways. Of course, the reader can focus on any or all of the categories. That said, at a minimum, the reader is going to want to read III, Auer deference from here on out, and IX, takeaways, for sure. For those with a more academic bent, it’s interesting comparing Justice Kagan’s take on why Auer deference had good policy reason behind it (II), with Justice Gorsuch’s take on why Auer deference should be blown up (VIII). Similarly, the stare decisis section (V) is interesting in light of how the Supreme Court is not always following stare decisis of late.

Introductory Thoughts

Unanimous decision. However, unanimous in result only and not in its reasoning.
The swing vote was clearly Chief Justice Roberts. Of particular significance, he joined the section circumscribing Auer deference, the section talking about how stare decisis mattered, and the section discussing the merits of the case. Otherwise, he pointedly did not join the majority opinion.
Justice Kavanaugh did write a concurring opinion. That opinion essentially says he agrees with what Chief Justice Roberts said about how there is not much daylight between Justice Gorsuch and Justice Kagan.
We previously discussed the oral argument in this case here. Just to recap, what happened here was a veteran lost a benefits case because an agency interpretation of its regulations was given Auer deference. He then appealed through the system, and it eventually came before the United States Supreme Court.
Kenneth Culp Davis, widely recognized as the Dean of administrative law and cited to by Justice Gorsuch in his concurring opinion, actually taught administrative law while I was at the University of San Diego getting my JD degree. He had an absolutely brutal reputation, and I was too scared to take his class. I do remember some who did.

Why Auer Deference Makes Sense (plurality)

For various reasons, regulations may be genuinely ambiguous. That can happen for a variety of reasons. For example, the subject matter of a rule could be so specialized or varying in nature so as to be impossible to capture it in every detail. Or, it could be a situation where the agency when drafting the regulation could not have reasonably foreseen. Either way, real uncertainties about a regulation’s meaning arise.
Justice Kagan gives five different examples of how regulations have real uncertainty about their meaning, including: whether the ADA line of sight rule applies to only when people in the stadium are seated or whether it applies when people in a stadium are standing and a person with a mobility impairment needs to see over them; whether a Transportation Security Administration regulation applying to liquids, gels, and aerosols in carry-on baggage would apply to any kind of liquid or just to liquids that the policy is designed to protect against; whether a Mine Safety And Health Administration rule requiring employers to report occupational diseases within two weeks after they are diagnosed would include the results of a chest x-ray; an FDA regulation concerning what an active moiety is; whether a Police Department making disciplinary infractions subject to pay deductions factors in the whether police captains are eligible for overtime under the Fair Labor Standards Act (Auer). The first example pertaining to the ADA is interesting because both the Seattle Mariners and the Baltimore Orioles are engaged in litigation at this time on this very point.
Auer deference operates on a presumption that Congress generally wants the agency to play a primary role in resolving regulatory ambiguities.
The Supreme Court has held in the past that the power of an agency to interpret its own regulations is a part of the agency’s delegated lawmaking powers.
Agencies writing a regulation often have direct insight to what the rule was intended to mean.
If you want to know what a rule means, ask its author.
Resolving genuine regulatory ambiguities often entails the exercise of judgment grounded in policy concerns. For example, what comparable line of sight means is complicated in the sports arena when spectators sometimes stand up. The question arises as to how costly is it to insist that the stadium owner take that sporadic behavior into account and is the viewing value received worth the added expense. That is a policy question rather than a legal question.
Agencies have unique expertise often of a scientific or technical nature relevant to applying a regulation to complex or changing circumstances.
Agencies can conduct factual investigations, can consult with affected party, and can consider how their experts have handled similar issues over a long course of administering a regulatory program.
Agencies have political accountability because they are subject to the supervision of the president who in turn answers to the public.
Congress frequently has expressed a preference for resolving interpretive issues by uniform administrative decision rather than piecemeal through litigation.

III (majority)

Auer Deference from Here on Out

For Auer deference to apply, the regulation must be genuinely ambiguous. We mean it we mean it. That is, the regulation must be genuinely ambiguous even after a court has resorted to all the standard tools of interpretation.
If the reason for the presumption do not apply or there are other reasons outweighing the reason behind the presumption, courts should not give deference to an agency’s reading except to the extent it is persuasive authority.
Deference is not warranted where court concludes that an interpretation does not reflect an agency’s authoritative, expertise-based, fair, or considered judgment.
The new version of Auer deference gives agencies the ability to do their job while obligating courts to perform their reviewing and restraining functions.
If uncertainty in the regulation does not exist, no plausible reason for deference exist either. The regulation just means what it means and the court must go with that. That is, if there is only one reasonable construction of a regulation, then a court has no business deferring to any other reading no matter what the agency says would make more sense. Holding otherwise, would allow the agency to create a new regulation without going through the rulemaking process.
Only where the legal toolkit is empty and the interpretive question still has no single right answer does the judge get to conclude that Auer deference applies. It isn’t good enough that agency regulations can be difficult understand. Before Auer deference applies, an independent deep dive by the court is in order.
The deep dive includes carefully considering the text, structure, history, and purpose of the regulation as if the interpretation of the regulation did not exist.
Even if genuine ambiguity exists, the interpretation of the regulations still have to be reasonable. That is, it has to come within the zone of ambiguity the court has identified after applying all its interpretive tools. Citing to Chevron, Justice Kagan says that it is entirely possible interpretation of a regulation will not be reasonable.
In deciding whether Auer deference is or is not appropriate, you look to several factors: 1) whether the regulatory interpretation is the agency’s authoritative or official position, rather than an ad hoc statement not reflecting the agency’s views. That is, the interpretation must at least come from those actors using mechanisms understood to make authoritative policy in the relevant context; 2) the agency’s interpretation must implicate some form of its expertise. After all, administrative knowledge and experience largely account for the presumption that Congress delegates interpretive lawmaking power to the agency. This is especially the case when a rule is technical or commonly implicates policy expertise, such as the examples given by justice Kagan in the first part of her opinion. Finally, when the agency has no comparative expertise in resolving regulatory ambiguity, Congress presumably would not grant the agency the authority to do so; and 3) an agency’s reading of a rule must reflect fair and considered judgment. That does not include deferring to a merely convenient litigating position or an after-the-fact rationalization abandoned by the agency to defend the agency action against attack by others. It also does not include deferring to a new interpretation that creates unfair surprise to regulated parties. For that matter, it also generally does not include giving deference to agency interpretations advanced for the first time in legal briefs.
So, Auer deference from here on out as Justice Kagan put it, “is a deference doctrine not quite so tame as some might hope, but not nearly so menacing that they may fear.”

Why Auer Deference Doesn’t Get Overruled (plurality)

Auer deference as circumscribed is consistent with the judicial review provisions of the administrative procedure act because: 1) all traditional methods of interpretation must be applied first and plain meaning must be in force; 2) an independent deep dive always must be conducted; 3) the interpretation of the regulation must be reasonable; and 4) the interpretation must be authoritative, expertise-based, considered, and fair to regulated parties.
Auer deference as circumscribed is consistent with the administrative procedure act’s rulemaking requirements because: 1) interpretive rules do not have the force of law and never forms the basis for an enforcement action; 2) the courts get the ultimate say on Auer deference; and 3) no evidence exists that any regulation in American history was designed poorly because an agency can fall back on Auer deference.
Auer deference does not violate separation of powers principles because courts retain a firm grip on the interpretive function.

Why Auer Deference Should Continue as a Matter of Stare Decisis (majority).

Inherent to precedent is a fundamental principle of the rule of law because it promotes the evenhanded, predictable, inconsistent development of legal principles. It also fosters reliance on judicial decision and contribute to the actual and perceived integrity of the judicial process. To move away from that, requires special justification, which, outside of an argument that it was wrongly decided in the first place, is not the case here.
Auer deference goes back more than 75 years or more with the Supreme Court deciding dozens of cases on that point and the lower Court doing it thousands of times. In fact, Auer deference is all over administrative law.
Abandoning Auer deference would cast doubt on many settled constructions of rules.
Congress has refused to take up the question of whether Auer deference should continue. By statute, it could have gotten rid of Auer deference if it wanted to, but it never did.
The parties made no claim that Auer deference is unworkable, which is a traditional basis for overruling the case.
Auer deference is not a doctrinal dinosaur.
Absolutely true that agencies have far reaching influence, which is why Auer deference gets severely circumscribed by this case.

Why the Case Must Get Remanded (majority)

The Federal Circuit acted too fast in declaring the regulation ambiguous. That is, they didn’t do the deep dive before applying Auer deference. As mentioned above, that deep dive involves looking at a variety of indicators, such as the text, structure, history, and purpose as well as whether the regulation really has more than one reasonable meaning.
The Federal Circuit acted too fast in saying that Auer deference applied even if the regulation was genuinely ambiguous. That is, what the interpretation of the regulation of the sort that Congress would want to receive deference? Did the board member’s ruling reflect the considered judgment of the agency as a whole?

VII

Chief Justice Roberts Concurring Opinion Stating That There Isn’t Much Daylight between Justice Gorsuch and the Majority Opinion of Justice Kagan.

Under the majority opinion for Auer deference to apply, the following factors have to be considered: 1) the underlying regulation must be genuinely ambiguous; 2) the agency’s interpretation must be reasonable and must reflect its authoritative, expertise-based, and fair and considered judgment; and 3) the agency must take account of reliance interest and avoid unfair surprise.
On the other hand, Justice Gorsuch says that the situations a court might be persuaded by the interpretation of the regulation would include a court finding: 1) the agency considered the problem; 2) the agency offered a valid rationale; 3) the agency brought if expertise to bear; and 4) the agency interpreted the regulation in a manner consistent with earlier and later pronouncements.
Comparing ¶ 1 with ¶ 2 of this section of the blog reveals that the two are very close once style differences are accounted for.
Different question as to whether the court should give deference to an agency’s regulation (Chevron deference). That is, Chevron deference saved for another day, if ever.

VIII

Justice Gorsuch Concurring Opinion on Why Auer Deference Should Die

The majority opinion can’t get five votes to say that Auer deference is lawful or wise. Instead, it survives on the basis of stare decisis.
There are so many new restrictions and limitations put on Auer deference that Chief Justice Roberts claimed to see little practical difference between keeping it on life support and overruling it entirely.
Justice Gorsuch would stop the business of making up a new system for judges to abdicate their job of interpreting the law and allow the Court of Appeals to apply its independent judgment of the law’s meaning.
The scheme put forward by the majority is so complicated that it will no doubt come before the court again. At that time, hopefully the Supreme Court would just get rid of Auer deference entirely.
Auer deference originally began as dicta in a decision about emergency price controls at the height of the second world war. Only in the last few decades of the 20^th century lawyers in court dusted Auer deference off and shaped it into a reflexive rule of deference to regulatory agencies. They did that without even considering whether a rule like that could be legally justified or even made sense.
Auer deference first got his start in the Seminole Rock case, here, and there the statement had no authority to back it up. In fact, Professor Davis said that particular language was an unexplained aside and made no difference to the case’s outcome.
The same term the court came down with Seminole rock, it came down with Skidmore, which talks about persuasive authority.
In the name of Auer deference, courts have invariably, though not always, mechanically applied and reflexively treated Auer deference as a constraint upon the careful inquiry one ordinarily expects of courts.
In the real world, a judge uses his or her traditional interpretive toolkit to reach a decision about the best and fairest reading of the law. They do that in just about every area of the law. However, when it comes to interpreting federal regulations, Auer deference displaces that process by requiring judges to defer to the agency’s interpretation of the regulation as controlling regardless of what a considered analysis reveals.
Squaring Auer deference with §706 of the Administrative Procedure Act simply doesn’t hold up. That section requires a reviewing court to resolve for itself any dispute over the proper interpretation of an agency regulation.
Auer deference is also incompatible with §553 of the Administrative Procedure Act.. That section requires agency to follow notice and comment procedure when issuing or amending legally binding regulations (substantive rules), but not when offering mere interpretations of those regulations. Auer deference for all practical purposes means that any new interpretation of the regulation might as well be a new regulation.
Justice Kagan’s statement about how an agency’s interpretation lacks the force of law doesn’t add up because it rests on a too narrow understanding of what it means for an agency action to bear the force of law.
Auer deference allows for hidden legislative intentions to overrule express statutory directives.
Auer deference doesn’t work with the Constitution either as the judicial power of the United States vests exclusively in the Supreme Court and in the lower courts. A core component of that power is the duty of interpreting the laws and applying them in cases properly brought before it.
The founding fathers were very jealous of ensuring a fair hearing before a neutral judge so that the rule of law reigns supreme and does not merge into the rule of men.
Auer deference tells a judge that he or she has to interpret agency interpretation of regulations in a way that says what the executive agency says they mean. Problem with that if that executive officials are not nor are they supposed to be entirely impartial. That is, they have their own interest, constituency, and their own policy goals when interpreting a regulation.
Whether purposeful or not, the failure of an agency to write a clear regulation winds up increasing its power by allowing it to both write and interpret rules bearing the force of law. Such a system unites powers the Constitution deliberately separates and denies the people the right to an independent judicial determination of the law’s meaning.
The author knows best position of the majority makes little sense in light of the reality of administrative agencies. That is, agency personnel changes over time and agency policy priorities can shift dramatically from one presidential administration to another. Auer deference says that courts have to defer to the current view of those regulations when those current views may or may not correspond to the views of those who actually wrote the regulation in the first place.
In Justice Gorsuch’s opinion, technical expertise isn’t a reason to keep Auer deference either as courts can consider that technical expertise in the context of persuasive authority.
While stare decisis is used as the vehicle for keeping Auer deference, the new Auer deference system reshapes Auer deference in new and experimental ways. Further, preserving Auer deference through stare decisis on the basis of a heightened standard standard given to statutory decisions is not deserved as it was dicta from a decision of the Court..
Auer deference undermine judicial independence.
No persuasive rationale supports Auer deference.
Auer deference has not proved to be a workable standard and the new paradigm will make things even more confused and unworkable.
Auer deference is out of step with how courts normally interpret written laws.
Auer deference potential for mischief has grown exponentially with the explosive growth of the administrative state over the last half-century. In fact, the administrative state produces so many reams of regulation that it dwarfs the statutes enacted by Congress. In 2018 the Code of Federal Regulations total 242 volumes and 185,000 pages. So, the cost of continuing to deny citizens an impartial judicial hearing on the meaning of disputed regulations has increased dramatically since the beginnings of Auer deference.
The majority opinion raises the question of the continuing validity of decisions applying Auer deference just as if the majority had overturned Auer deference entirely.
The better approach is to allow court to decide cases based upon independent judgment and to follow the agency’s view only to the extent it is persuasive.
If Auer deference still gets applied quite a bit after this decision, then the Supreme Court should overrule it when the time comes.

Takeaways

From reading the majority opinion, it seems that Justice Breyer’s concern in oral argument about a judicial power grab may have affected Chief Justice Roberts in some way. Also, how getting rid of Auer deference would fundamentally reshape administrative law (stare decisis), most probably played a role as well since Chief Justice Robert joined the stare decisis part of the opinion..
A real she said he said situation between Justice Kagan and Justice Gorsuch regarding the policies behind Auer deference. Justice Kagan believes Auer deference has many things to commend it. On the other hand, Justice Gorsuch does not agree with that. To Justice Gorsuch’s mind, Auer deference results in administrative agencies going out of their lane. Whenever any branch of the US government goes out of its lane, to Justice Gorsuch that is a bridge too far.
Very interesting that of the examples Justice Kagan uses to explain her opinion, one of them is the site line dispute going on in stadiums at this very moment. I don’t know about the other examples, but I do find it curious an example was chosen where litigation is very much ongoing on that very point.
It makes sense to me that there are situations where an agency has unique expertise to bring to a matter where the regulations are unclear.
Justice Scalia must be smiling as his focus on plain meaning has now come to administrative law. That is, if a regulation is clear, then the courts are supposed to do a full stop right there.
Auer deference as reconfigured requires courts to engage in a deep dive, independent analysis, if there is a doubt as to what the regulation means. Pretty clear from the decision, that Auer deference is meant to be the exception rather than the rule.
The new paradigm is incredibly complicated. For example, just when is the agency’s expertise really brought to bear? Is that expertise only for technical matters, such as moiety’s, or does it extend to other situations? If so, what? At a minimum, whenever Auer deference comes up, a court is going to have to go through a lot of hoops before it allows Auer deference to proceed.
I’m not sure what to make of the fact that a few of the Justices talked about how Chevron deference is not at issue in this case. That seems a bit strange because the arguments in favor of Chevron deference are much stronger than the arguments for Auer deference.
Mechanical and reflexive application of agency interpretations is dead.
The Fair Housing Act circular on service dogs and emotional support animals is now very much up in the air because the Fair Housing Act does not talk about service animals and emotional support animals. For that matter, the Fair Housing Act doesn’t even have any regulations on the subject. One wonders how landlords are going to react to this. Some of that reaction may depend upon how the Department of Housing and Urban Development reacts to this decision.
In the education field, Office of Civil Rights letters frequently get thrown around in the same way as precedent. Unclear, how this decision impacts the persuasive authority of those letters.
One wonders about how Justice Gorsuch’s talking about the rule of law needing to reign supreme rather than the rule of men will impact some of the larger issues going on now with respect to the administration’s response to congressional subpoenas and to executive privilege. I don’t view Justice Gorsuch’s statement about this as anything surprising. As we discussed here, Justice Gorsuch is a very much every branch of government needs to stay in their lane type of guy.
Having worked for the Joint Committee on Administrative Rules in the State of Illinois, Justice Gorsuch’s view on the author knows best made a great deal of sense to me. However, Justice Kagan’s view on agency expertise also made sense to me for the same reasons.
In Illinois, there is a separate agency called the Joint Committee on Administrative Rules, a division of the legislature. JCAR’s job is to proofread all regulations and then more importantly ensure that the regulations meet legislative intent. If the regulations did not meet legislative intent, then a committee of the legislature could state as much and tell the agency to walk back to regulations. As a practical matter, when regulations went beyond legislative intent, the agency generally didn’t want to pick that fight and would walk it back once told as much by JCAR staff. One wonders if under this decision the JCAR’s of the respective States that have them will not get even more power than they currently have, which may not be a bad thing.
Enforcement guidances, technical assistance memorandums, circulars and anything not a regulation having gone through the notice and comment process are now up for individual assessment as to whether the courts are going to buy off on it. The problem with this approach is that there are many many District Court judges out there not to mention 12 different Courts of Appeals. It’s possible we will get an awful lot of conflicting decisions when it comes to giving deference to agency interpretation of the regulations.

In short, Auer deference very well may go too far, the new Auer deference paradigm may be too complicated, but persuasive authority may be chaos. It will be very interesting to see how all this works out.

Ministerial Exception

January 15, 2019 by William Goren Leave a Comment

One of the more fascinating areas of law, is the issue arising when a parochial school claims that an educator is a minister. We discussed that issue way back in 2012 in this blog entry. While the Supreme Court there said that a minister was involved, it couldn’t figure out the standard to use. Now, we get a very interesting decision from the Ninth Circuit on December 17, 2018, Biel v. St. James School, where they held that the ministerial exception did not apply. As usual, the blog is divided into categories and they are: facts taken directly from opinion; majority’s reasoning; dissent’s reasoning; my application of Hosanna-Tabor; and takeaways. The reader is free to concentrate on any or all of the categories.

Facts Taken Directly from Opinion

Biel received a bachelor’s degree in liberal arts and a teaching credential from California State University, Dominguez Hills. After graduating in 2009, Biel worked at two tutoring companies and as a substitute teacher at several public and private schools. St. James, a Roman Catholic parish school within the Archdiocese of Los Angeles, hired Biel in March 2013 as a long-term substitute teacher. At the end of that school year, St. James’s principal hired Biel as the school’s full-time fifth grade teacher. Biel is herself Catholic, and St. James prefers to hire Catholic teachers, but being Catholic is not a requirement for teaching positions at St. James. Biel had no training in Catholic pedagogy at the time she was hired. Her only such training was during her tenure at St. James: a single half-day conference where topics ranged from the incorporation of religious themes into lesson plans to techniques for teaching art classes.

Biel taught the fifth graders at St. James all their academic subjects. Among these was a standard religion curriculum that she taught for about thirty minutes a day, four days a week, using a workbook on the Catholic faith prescribed by the school administration. Biel also joined her students in twice-daily prayers but did not lead them; that responsibility fell to student prayer leaders. She likewise attended a school-wide monthly Mass where her sole responsibility was to keep her class quiet and orderly.

Biel’s contract stated that she would work “within [St. James’s] overriding commitment” to Church “doctrines, laws, and norms” and would “model, teach, and promote behavior in conformity to the teaching of the Roman Catholic Church.” St. James’s mission statement provides that the school “work[s] to facilitate the development of confident, competent, and caring Catholic-Christian citizens prepared to be responsible members of their church[,] local[,] and global communities.” According to the school’s faculty handbook, teachers at St. James “participate in the Church’s mission” of providing “quality Catholic education to . . . students, educating them in academic areas and in . . . Catholic faith and values.”^[1]9 The faculty handbook further instructs teachers to follow not only archdiocesan curricular guidelines but also California’s public-school curricular requirements.

In November 2013, Biel received a positive teaching evaluation from St. James’s principal, Sister Mary Margaret, measuring her performance in aspects both secular (e.g., her lesson planning strategies) and religious (e.g., displaying Church symbols in her classroom). The principal’s written evaluation praised Biel’s “very good” work promoting a safe and caring learning environment, noted that she adapted her teaching methods to accommodate her students’ varied learning styles, and observed that she encouraged social development and responsibility. The principal also identified some areas for improvement: for instance, Biel’s students had many items on their desks and two students were coloring in the pages of their books.

Less than six months after that evaluation—which was her first and only formal evaluation at St. James—Biel learned that she had breast cancer and informed the school administration that her condition required her to take time off to undergo surgery and chemotherapy. Sister Mary Margaret told Biel a few weeks later that she would not renew Biel’s contract for the next academic year, citing her belief that Biel’s “classroom management” was “not strict” and that “it was not fair . . . to have two teachers for the children during the school year.”

Biel sued St. James in the United States District Court for the Central District of California, alleging that her termination violated the ADA, which prohibits employment discrimination based on disability. See 42 U.S.C. § 12112(a). Following discovery, St. James moved for summary judgment, arguing that the First Amendment’s ministerial exception to generally applicable employment laws barred Biel’s ADA claims. The district court agreed and granted summary judgment for St. James.

Majority Reasoning Saying Ministerial Exception Does Not Apply

Hosanna-Tabor is the only case where the Supreme Court applied the ministerial exception.
The factors the United States Supreme Court considered included: 1) whether the employer held the employee out as a minister; 2) whether the employee’s title reflected ministerial substance and training; 3) whether the employee held itself out as a minister; and 4) whether the employee’s job duties included important religious functions. The test is a totality of the circumstances test.
Biel in this case does not have the credentials, training, or ministerial background of the plaintiff in Hosanna-Tabor.
There was no religious component to the Biel’s liberal studies degree or to her teaching credential.
The school had no religious requirement for Biel’s teaching position.
Even after Biel began working, her training consisted of only a ½ day conference whose religious substance was limited.
Unlike the plaintiff in Hosanna-Tabor, Biel appears to have taken on teaching work wherever she could find it including: tutoring companies; multiple schools; another Catholic school; and even a Lutheran school.
James did not hold Biel out as a minister by suggesting that she has special expertise in church doctrine, value, or pedagogy beyond that of any practicing Catholic.
Her job title was grade 5 teacher and there is nothing religious in that title.
Her employment was at will and on a year-long renewable contract and was not at all similar to how contract oversight was set up in Hosanna-Tabor.
Nothing in the record indicated that Biel considered herself a minister or presented herself as one to the community. She described herself as a teacher and claimed no benefits available only to ministers.
Biel did teach religion in the classroom. She taught lessons on the Catholic faith four days a week. She also incorporated religious themes and symbols into her overall classroom environment and curriculum as required by the school. Nevertheless, Hosanna-Tabor cannot be read to say the ministerial exception applies only if this particular characteristic is present. To say that would mean that most of the analysis in that case would be irrelevant dicta.
In Hosanna-Tabor, the United States Supreme Court emphasized the importance of assessing both the amount of time performing religious functions and the nature of the religious functions performed. Here, Biel’s role in Catholic religious education was limited to teaching religion from a book required by the school and incorporating religious themes into her other lessons. She did not orchestrate student daily prayers and did not teach, lead, or plan those devotions herself. Her responsibilities at mass were only to accompany her students and to make sure the kids were quiet in their seats. None of this amounts to the close guidance and involvement in the spiritual lives of her students that the plaintiff in Hosanna Tabor had.
With respect to other cases cited by the defendant, all of those plaintiffs had responsibilities involving pronounced religious leadership and guidance, which is not the case here.
At most, only one of the four Hosanna-Tabor factors weighs in defendant’s favor.
A rule stating that any school employee teaching religion falls within the ministerial exception is not faithful to Hosanna-Tabor or to its underlying constitutional and policy considerations. Such a rule would render most of Hosanna-Tabor’s analysis irrelevant. It means focusing on a single aspect of the employee’s role rather than on a totality of the circumstances involving her training, duties, title, and the extent to which he is asked to transmit religious ideas.
Looking at the historical backdrop to the First Amendment, it is clear that the ministerial exception does not extend to every employee whose job has a religious component.
While the handbook has references to a religious role by Biel, the defendant did not rely on the faculty handbook in support of its motion for summary judgment. Perhaps, because the handbook’s force and effect were contested. Further, it is unclear what role, if any, the handbook played at the school, and whether it actually reflected with teachers at the school were expected to do in practice.
Congress did not exempt religious organizations from title I of the ADA. Accordingly, that choice combined with the presumption of constitutionality enjoyed by congressional legislation means it is especially difficult to invalidate unnecessarily vast swaths of federal law as applies to many employees of religious organizations.
On remand, the defendant does get to argue that it was pedagogical and classroom management concerns and not Biel’s medical condition that was the basis for decision not to renew Biel’s contract.

Dissent’s (Judge Fisher), Reasoning

Biel did teach 30 minute religion classes four days a week using a curriculum from a Catholic textbook chosen by the school principal. Using that curriculum, Biel taught and tested students in her religion class about the Catholic sacraments, the lives of Catholic saints, Catholic prayers, Catholic social teaching, gospel stories, and church holidays.
In her secular classes, she was expected to incorporate Catholic teachings.
As required by the school, Biel attended a one day conference at the Los Angeles religious education Congress covering methods of incorporating God into lessons.
The faculty handbook contains many references to the religious aspect of her teaching.
Performance reviews at the school included a section evaluating Catholic identity factors.
The ministerial exception is an affirmative defense.
The ministerial exception is grounded in the First Amendment and operates independently of any exception granted by Congress. So, it doesn’t matter if the ADA’s title I provisions apply to a religious entity for the exception to apply.
Justice Alito and Justice Kagan said that the critical factor should be the employee’s function rather than his or her title ordination status. Plenty of functions here indicate a religious nature.
Justice Thomas’ view that the ministerial exception applies to any good-faith understanding of who qualifies as a minister is also applicable and is met in this case.
The Hosanna-Tabor test is a totality of the circumstances test.
The dissent comes out with two factors weighing in favor of the ministerial exception and two factors weighing against application of the ministerial exception. In that situation, it is overly formalistic to call it a draw. Accordingly, the court is free to decide which of the four factors come to the forefront. In this case, the dissent believed the importance of Biel’s role as a teacher of faith to the next generation outweighed other considerations.
It is important to not make the mistake of tying the ministerial exception too close to the Protestant Christian concept of ministers.
The ministerial exception should be given a broad application if it is to provide sufficient protection for religious freedom.

My Application of Hosanna-Tabor To These Facts:

Justice Roberts focused on the training of the employee and the title that the employee has. Applying that test leads to the conclusion that Biel is probably not a minister. Her title was a grade 5 teacher. Her training was not particularly religious.
Justice Thomas focuses on whether the religious organization had a good faith belief that the person is a minister based on a sincere determination of the religious entity that the person was a minister. As I mentioned when discussing this case the first time, I find this test very problematic because it gets into the issue of evaluating the good faith and sincerity of a religious entity’s belief. Nevertheless, applying this test, it is hard to believe that a Catholic institution could have a good faith belief based on a sincere determination that Biel was a minister considering all that goes into being a minister in the Catholic faith.
Justice Alito and Justice Kagan focus on the functions of the employee. This particular test is a much harder call. It may even depend upon the personal baggage that a judge brings to it. Looking at the facts laid out by the majority opinion and applying it to this particular test, I get an even split of five factors indicating a ministerial employee and five factors indicating that she was not a ministerial employee. Interestingly enough, that leaves me in the same place as the dissenting judge who also reached the conclusion that there was an even split. Fortunately, I am not the judge. If I were, I might look to the faculty handbook in the contract being very much a matter of dispute. I might also look to much of the performance review having nothing to do with the Catholic faith as well as the suspicious timing of the termination. However, if I came to the case from a very different perspective in terms of how I grew up, what I have come to believe in terms of my religious beliefs, and my identity as a person with a disability, I might reach a very different conclusion.

Takeaways

If this case shows anything, it shows that deciding whether the ministerial exception applies is a big mess. All of the tests put forward by the Justices in Hosanna-Tabor have their strengths and weaknesses. For example, a person’s religious training can be properly evaluated. However, job titles can easily be manipulated. Focusing on whether a religious organization has a good faith belief based upon a sincere determination of the religious entity becomes very problematic because then one is essentially applying a reasonable person test to the entity’s determination that a minister exists. That reasonable person who is applying the test may go very different places depending upon his or her background. The function test has a lot of appeal, but as we see in this case, functions can be spun by advocates. Also, even assuming judges will recognize spinning and they probably would, what do you do when it ties? Both the dissenting judge and myself found ourselves in that predicament.
The case also stands for the proposition that regardless of what a faculty handbook says, what actually happens on the ground is dispositive.
The ministerial exception is an affirmative defense.
Look for lots and lots of litigation over the ministerial exception. The difference now is that we have two new justices on the Supreme Court (Justice Gorsuch and Justice Kavanaugh). Justice Gorsuch is a big religious freedom person. I have not looked into Justice Kavanaugh’s jurisprudence on this issue. I have no idea what tests from Hosanna-Tabor Justice Gorsuch and Justice Kavanaugh will adopt. It may be a while before they take on a case like this since you can’t really say a conflict ever exists because any of several different standards might be in play. So, I would not expect the confusion generated by the various views expressed in Hosanna-Tabor of when the ministerial exception occurs to be resolved anytime soon.

What is a Service Establishment and the IRS 20 Factor Test

October 30, 2018 by William Goren 1 Comment

Before getting started on the blog of the week, would be hard to not mention what happened in Pittsburgh. At our synagogue over the weekend during family minyan, which is a small service that takes place before people go to community/Hebrew/religious school (I am never sure what to call it), we said mourners Kaddish and lit a yizkor candle for our brethren in Pittsburgh. In my class ( I teach seventh grade), we discussed the story of Samson which focuses on revenge v. justice. That led to a spirited discussion over what penalty might be in order for the shooter. My thoughts and prayers go out to Pittsburgh. Far as I know, it is uncertain what security measures out own synagogue may be taking. I do know that many synagogues all over Atlanta have memorial services/vigils planned, including my own. For some excellent thoughts on anti-Semitism and why you need to watch out for in your workplace, I commend you to Jon Hyman’s blog entry on the subject, which can be found here. I also saw in the Atlanta paper today that since 2016, 54% of hate crimes involve Jewish animus. My original idea before Jon’s blog entry hit me like a ton of bricks was to talk about some sporting events in the last week. For example, congratulations to the Boston Red Sox on winning the World Series. I was able to catch some of the games. Absolutely remarkable how they won three in a row in Los Angeles. Congratulations to Red Sox nation. I think one of the reason people enjoy sports so much, especially spectator sports, is because for the most part they offer an escape. Again, my thoughts and prayers are with Pittsburgh and with the Jewish community all over America. My parents always said that it could happen here, but I never wanted to believe it….

Turning to the blog entry for the week, back in July 2016, I blogged on a 10^th Circuit case that held a plasma center was a place of public accommodation under title III. Now, two years later the Fifth Circuit was faced with the exact same issue and decided the opposite. So, we now have a Circuit Court split. As usual, the blog entry is divided into categories and they are: facts; court’s reasoning; Texas Human Resources Code claim; could a blood donor really be an employee; and takeaways. The reader is free to concentrate on any or all of the categories.

Facts

If anything, the facts in the case we are blogging on today, Silguero v. CSL Plasma, Inc., are even more egregious than the one we blogged about in July, 2016. Levorsen involved a schizophrenic person wanting to donate blood. Here, one plaintiff used a service dog for anxiety, and the other one had an unsteady gait. What this plasma center does is exactly the same as what we discussed in my July, 2016, blog entry. The only other difference between the two cases is that the plaintiffs also sued under the Texas Human Resources Code, §121.001 et. seq., claiming that they suffered discrimination by a public facility.

Court’s Reasoning

The key question is the meaning of “or other service establishment,” contained in 42 U.S.C. §12181(7)(F). That particular section denotes laundromats, dry cleaners, banks, barbershops, beauty shops, travel services, shoe repair services, funeral parlors, gas stations, office of an accountant or lawyer, pharmacies, insurance offices, professional offices of the healthcare provider, and hospitals as specific service establishments. After hospitals, a comma appears and then the clause ends with, “other service establishment.”
In a footnote, the Fifth Circuit noted that the Department of Justice filed an amicus brief expressing its view that plasma collection centers are service establishments under title III.
In a footnote, the court noted that while plaintiffs argue that the defendants advertised their collection centers were a service it gives for customers, how a party advertises work performed has no bearing on what Congress meant by the term, “service.”
The word, “service” according to both Marion-Webster Collegiate Dictionary and Webster New World Collegiate Dictionary generally denotes some helpful act or an act giving assistance or advantage to another.
“Helpful,” implies that someone receives help from the act.
The verb “giving,” and the preposition “to,” indicate that the assistance or advantage is conveyed from the act to the individual.
Congress’s use of the word “service,” suggests not only that the establishment perform some action but also that the action helps or benefits the recipient. So, in the case of a “service establishment,” the establishments serve the members of the public who are helped or benefited by the service. Therefore, a “service establishment” is an establishment performing some act or work for an individual benefiting from the act or work. This construction of what is a service establishment, is essentially the same as what the 10^th Circuit came up with in Levorsen.
The word “service,” implies that the customer benefits by the act, and no such benefit occurs in the case of a customer donating blood at a plasma center.
The list of public accommodations appearing before the phrase “other service establishment,” does not include any establishment providing a service without a detectable benefit to the customer.
The structure of the ADA itself indicates that an establishment typically does not pay a customer for services it provides.
When it comes to a service provided by a service establishment, customarily, the service flows from the establishment to an individual. In this situation, donors receive no obvious benefit or help that makes the plasma collection center’s act a service. For example, donors do not have the plasma earmarked for themselves or to a specific third party for whom they are concerned. Rather, the plasma becomes the property of the plasma collection center to do with whatever it wants.
The labor furnished when donating blood is not useful to the donor, it is useful to the establishment, and the payment of money to the donor is wholly collateral to the act of plasma collection.
The canon of construction ejusdem generis says that a catchall phrase should be read in light of the preceding list. So, while the ADA itself says that the statute is to be liberally construed, that does not mean a court can come up with a construction that is untethered from its text.
If Congress wanted to cover all establishments, it could have done so by omitting the word service.
Legislative history is of no help to the plaintiffs. In a footnote, the court noted that it was essentially doing what the legislative history called for by trying to figure out what the overall category meant rather than whether particular places were service establishments.
Each of the items listed in 42 U.S.C. §12181(7)(F) involves an establishment acting in some way that benefit individuals. That is: dry cleaners press customer shirts; lawyers file pleadings; hospitals mend patients broken bones, etc. In each of these situations, the establishment performs an action directly benefiting the individual. A plasma collection center does not provide any such benefits to its donors.
While it is true that lawyers may work on a pro bono basis, that doesn’t change the fact that lawyers are working unambiguously to benefit clients, and therefore are performing a service.
While it is true that banks may pay customers through interest on savings, any payment they receive is not a result of the customer’s labor, but rather is the result of the act the bank performs to serve the customer. That is simply not the case with plasma centers where the plasma belongs to the plasma collection center, and the plasma collection center does not manage or oversee the plasma on behalf of the donor.
Paying for plasma donation is governed by other provisions of the ADA. In particular, that is more akin to employment or contract work, not to the provision of services to a customer.
Customers are purchasers of goods and services, while an employee is a person working for an employer for wage or salary. So, whether a person is being paid is relevant because it can indicate whether an individual was a customer or is instead an employee or other hired laborer.
With respect to the ADA, it is title I that applies to employment relationships, while it is title III that applies to places of public accommodations, which includes service establishments.
Interpreting service establishments and title III extremely broadly so that it includes employment and employment like relationships, risks overrunning Congress’s legislative choices in coming up with title I. In fact, it would make title I largely redundant by turning virtually every employer and entrepreneur into a service establishment.
Payment to or by the establishment is highly relevant for determining whether an establishment provides a service to a customer, and is therefore a service establishment.

III

Court’s Reasoning with Respect to the Texas Human Resources Code Claim

The Texas Human Resources Code differs significantly from the ADA. For example, it was enacted before the ADA and was not split into various titles covering distinctly different activities.
The Texas Human Resources Code use a different term to define its scope. For instance, instead of applying to public accommodations, 121.003(a) applies to public facilities. Further, the term, “public facility” per §121.002(5), is defined in an entirely different manner than “public accommodation,” under the ADA.
The Supreme Court of Texas has said that because the differences are so stark, it will not look to federal court interpretations of public accommodations when interpreting the term “public facility,” under the Texas Human Resources Code. So, it simply cannot be assumed that because CSL Plasma is not a place of public accommodation under the ADA, that it isn’t a public facility under the Texas Human Resources Code.
Texas courts have not interpreted the term, “public facility” often, apparently only once in a completely different context.
The Texas Constitution grants the Supreme Court of Texas the power to answer questions of state law certified by a federal appellate court. In deciding whether such certification is proper the following factors are considered: 1) the closeness of the question and the existence of sufficient sources of State law; 2) the degree to which considerations of comity are relevant in light of the particular issue and the case to be decided; and 3) practical limitations of the certification process: significant delay and possible inability to frame the issue so as to produce a helpful response on the part of the State court. When all of these factors are applied, certification is appropriate because: no State law guidance exists, and the federal analogue is not analogous; the answer to just what is a service establishment under Texas law could either impose future liability on many Texas businesses or preclude Texans from relying on an important antidiscrimination statute; and there is no hardship in certifying the question since it is possible to formulate discrete issues for consideration by the Supreme Court of Texas. Finally, neither party presented any reasons not to certify the relevant questions as to the Supreme Court of Texas.
With respect to what questions are certified to the Supreme Court of Texas, they are: 1) is a plasma collection center a “public facility,” under §121.002(5) of the Texas Human Resources Code?; 2) if so, does Texas law allow the plasma collection center to reject a person with a disability based upon the center’s concern for the individual’s health stemming from the disability? Further, what standard applies for determining whether the plasma collection center properly rejected the person rather than committed impermissible discrimination under §121.003(a) of the Texas Human Resources Code. Finally, the Supreme Court of Texas may certainly not confine its reply to the precise questions certified by the Fifth Circuit.

Could a Donor of Blood Really Be an Employee?

Much is made in this decision about the structure of the ADA and how a person donating plasma resembles an employee more than anything else. Could that person be an employee of the plasma center? There are various tests that can be used to figure out whether a person is an employee. A common one is whether the employer controls when, where, and how to do the job. When I was a general counsel to two different mental health mental retardation authorities in Texas many many moons ago, this was an issue that I dealt with constantly because we utilized a tremendous amount of independent contractors to provide services to the clients of the mental health and mental retardation authority. I always used Revenue Ruling 87-41’s 20 factor test to figure out whether the person was an employee or not. I thought it would make sense to discuss those factors here:
Instructions: is the worker required to comply with other persons instructions about when, where, and how he or she is to work? If so, you have an employee. This factor seems to cut against employee status because the person donating blood can show up to the plasma center whenever they feel like it.
Training: training a worker by requiring an experienced employee to work with the worker, by corresponding with the worker, by requiring the worker to attend meeting, or by using other methods, indicates that the person for whom the services are performed want the services performed in a particular method or manner. This factor cuts against employee status because nothing of this kind is going on when donating plasma.
Integration: integration of the worker services into the business operations generally shows that the worker is subject to direction and control. When the success or continuation of a business depends to an appreciable degree upon the performance of certain services, workers performing those services must necessarily be subject to a certain amount of control by the owner of the business. This one is a bit odd in the plasma donation context. Clearly, without the donor, the plasma center has no business at all. On the other hand, in the traditional sense of the term, you would be hard-pressed to say that the plasma center has direction and control over the employee in the way this paragraph would customarily refer to the term.
Services rendered personally: if the services must be rendered personally, normally the person for whom the services are performed are interested in the methods used to accomplish the work as well as in the results. With respect to this factor, services are certainly being rendered personally, but the hiring entity is certainly not interested in the methods used to accomplish the work. They are interested in the results.
Hiring, supervising, and paying assistants: if the person for whom the services are performed hire, supervise, and pay assistants, that factor generally shows control over the workers on the job. This factor is not applicable to the person donating blood at a plasma center and certainly cuts against an employment relationship.
Continuing relationship: a continuing relationship between the worker and the person for whom the services are performed indicates that an employer employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring although irregular intervals. This factor works in favor of the employment relationship.
Hours of work: the establishment of set hours of work by the hiring entity from the services are performed as a factor indicating control. This factor cuts against an employment relationship because there are no set hours of work.
Full time required: if the worker must devote substantially full-time to the business that restricts the worker from doing other gainful work. This factor also cuts against an employment relationship as donors of blood are not working full time in that capacity nor could they be.
Doing work on employer’s premises: if the work is performed on the premises of the person or person for whom the services are performed, that factor shows control over the worker, especially if the work could be done elsewhere. Control over the place of work is indicated when the person for whom the services are performed, such as the right to compel the worker to travel a designated route, to canvas a territory within a certain time, or to work at specific places as required. With respect to this factor, the work must be performed on the premises, but it can’t be done elsewhere except at another plasma center. Further, this is not a situation where the donor of blood is having to travel designated routes, canvas a territory, or work at specific places.
Order or sequence set: if a worker must perform services in the order or sequence set by the person for whom the services are performed, that factor shows that the worker is not free to follow the worker’s own pattern of work but must follow the established routines and schedules of the person for whom the services are performed. Taken literally, this factor cuts in favor of the employment relationship.
Oral or written reports: a requirement that the worker submit regular written reports to the person for whom the services are performed indicate a degree of control. This factor cuts against an employment relationship because no written reports or oral reports are occurring.
Payment by hour, week, month: payment by the hour, week, or month generally point to an employer-employee relationship. With respect to this factor, the person is being paid every time they donate blood. So, this factor also cuts against the employment relationship.
Payment of business and/or traveling expenses: if the person for whom the services are performed ordinarily the worker’s business and/or traveling expenses, the worker is ordinarily an employee. That is simply not what is going on here with respect to someone who would donating blood, and therefore, this factor cuts against the employment relationship.
Furnishing of tools and materials: the fact that the person for whom the services are performed furnishes significant tools, materials, and other equipment tends to show the existence of an employer-employee relationship. This factor works in favor of an employment relationship because the donator of the blood is not furnishing any tools or materials him or herself.
Significant investment: if the worker invests in facilities used by the worker in performing services and are not typically maintained by employees, that factor tends to indicate that the worker is an independent contractor. On the other hand, lack of investment in facilities indicates dependence on the person for whom the services are performed for such facility and thereby indicate the existence of an employer employee relationship. This factor cuts in favor of an employment relationship.
Realization of profit or loss: a worker who can realize a profit or suffer a loss as a result of the worker’s services is generally an independent contractor, but the worker who cannot is an employee. This factor also cuts in favor of an employment relationship because the person donating blood is receiving a take it or leave fee for the donation.
Working for more than one firm at a time: if a worker performs more than de minimis services for multiple unrelated persons or firms at the same time, that factor generally indicate the worker is an independent contractor. That said, it is possible that such a worker could be an employee of more than one person. This factor doesn’t cut either way.
Making service available to general public: the fact that a worker makes his or her services available to the general public on a regular and consistent basis indicates an independent contractor relationship. This factor cuts in favor of the employment relationship as services are not being made available to the general public.
Right to discharge: the right to discharge a worker is a factor indicating that the worker is an employee in the person possessing the right is an employer. An employer exercises control through the threat of dismissal, which causes the worker to obey the employer’s instructions. An independent contractor cannot be fired so long as the independent contractor produces a result that meet the contract specifications. Here, a plasma center might refuse to provide its services to a person wanting to donate blood. So, you might argue that the person is being fired, but each time a person wants to donate blood, it starts another relationship. So, my view is that this factor cuts against an employment relationship.
Right to terminate: if the worker had the right to end his or her relationship with the person for whom the services are performed at any time he or she wishes without incurring liability, that factor indicates an employer employee relationship. This factor cuts in favor of an employment relationship as certainly the person donating blood can end the relationship at any time they want for any reason without incurring liability. All they have to do not show up.
When I was doing this all the time, what I would do is add up the factors and see how many were on each side of the ledger. Keep in mind, it is a holistic question and there are situations were even though you have more factors on one side of the ledger than the other, you may still decide for the side of the ledger having fewer amount of factors. Also, in close calls, you’re probably better off erring on the side of an employment relationship. Adding up the factors here, I get 10 factors indicating that an employment relationship does not exist and 10 factors indicating that an employment relationship may well exist. So, now what? Well, the Fifth Circuit opinion gives an opening for plasma donors to argue that they are entitled to title I of the ADA protections. Will this opinion create lots of litigation over whether plasma donors are employees given our analysis of the 20 factors? It might.

Takeaways:

Revenue Ruling 87-41 isn’t the only test out there. The Department of Labor has its own tests. Fascinating that when I applied Revenue Ruling 87-41 tests to this situation, I wound up with roughly an even split. That means, plasma centers may want to have their legal counsel evaluate as to what their tax liability is with respect to paying donors. They may also want to have legal counsel evaluate whether the donors are employees for other purposes. Finally, they may be dealing with title I liability when they deny donors with disabilities the right to donate their blood.
Silguero and Levorsen are in direct conflict with each other and cannot be reconciled. This means it is teed up for the Supreme Court. How will the Supreme Court decide? That is anybody’s guess. As I have mentioned numerous times before, persons with disabilities have been very successful at the Supreme Court outside of the employment context. There are now new Justices on the Supreme Court. Impossible to say how Justice Kavanagh might analyze it. With respect to Justice Gorsuch, also very difficult to say. I do think he as well as Justice Kavanagh may be receptive to eujesdim generis, but as we discussed in this blog entry, Justice Gorsuch is not afraid to use common sense when deciding things. Swing vote is likely to be Justice Roberts with Justice Gorsuch a wild card. Also, it bears noting that the Department of Justice filed an amicus brief in the Fifth Circuit case stating that plasma centers are places of public accommodations. If they maintain that at the Supreme Court level, that may be very persuasive.
While when I applied the 20 factor test, I got an even split, intuitively it would seem that the donor of blood plasma would not be an employee. If they are indeed an employee, that opens up a tremendous can of worms, even more so than the can of worms the Fifth Circuit said it would open if it agreed with Levorsen.
Not covered in the decision was whether even assuming a plasma center is a place of public accommodation, could there be health and safety regulations that would allow the plasma center to prohibit certain people with disabilities from donating? That may or may not be the case.
If a plasma center is not a place of public accommodation and the person donating blood is not an employee, do they have any recourse for disability discrimination? Well, chances are the plasma center takes federal funds. If so, this blog entry might be of help.
Never forget about your own State law.

justice gorsuch

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