Courthouse Steps Oral Argument Teleforum: Espinoza v. Montana Department of Revenue

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This teleforum addresses the January 22 Supreme Court argument in Espinoza v. Montana Department of Revenue.  The question in this case is whether it violates the Free Exercise Clause for a state supreme court to invalidate a school choice program, merely because that program includes religious options, pursuant to that state’s Blaine Amendment. The Institute for Justice represents the Plaintiffs in the case.


Erica Smith, Senior Attorney, Institute for Justice



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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Religious Liberties Practice Group, was recorded on Thursday, January 23, 2020, during a live teleforum conference call held exclusively for Federalist Society members.        


Wesley Hodges:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is a "Courthouse Steps Oral Argument Presentation on Espinoza v. Montana Department of Revenue." My name is Wesley Hodges, and I am the Associate Director of Practice Groups at The Federalist Society.


      As always, please note that all expressions of opinion are those of the expert on today's call.


      Today, we are fortunate to have with us Erica Smith, who is a Senior Attorney with the Institute for Justice. Now, the Institute for Justice is representing the petitioners for this case, and this case was heard at the Supreme Court just yesterday. After our speaker gives her remarks today, we will have time for your questions, so please keep in mind what questions you have for the case. We'll get to those at the end of the call.


Thank you very much for sharing with us today. Erica, the floor is yours.


Erica Smith:  Thank you, Wes. And thank you, everyone, for being here. This is a pretty exciting case involving issues of free exercise and separation of church and state, and, of course, school choice.


      So what had happened in this case, I'll just give you a little bit of factual background for those who are not familiar, is in 2015, the Montana Legislature enacted a school choice program, and it was designed to help low-income and middle-income families afford private school if the public schools were not working for them.


      So it was actually a tax credit scholarship program, which meant that private donors could donate to private scholarship organizations, and in return, they would get a modest $150 tax credit. Then those donations would be used to fund scholarships for needy families and needy kids.


      This is a model that has worked very successfully in 18 other states. And, of course, there's many other types of school choice programs out there, like voucher programs, that have also been very successful. So when this program was passed, Montana families were pretty happy, but then things got messy pretty fast.


      What happened was that the agency, the state agency, who was in charge of administrating the tax credit scholarship program enacted a rule that said the scholarships could only be used at non-religious schools. So that meant that all the families who were counting on the scholarships to go to religious schools were completely out of luck, and that included Kendra Espinoza, our lead client in the case.


      Kendra, at that point, had been working two to three jobs just to keep her kids at Stillwater Christian School. She was working in the office from 9-5 and then doing house cleaning and janitorial work just to keep up with the tuition payments. And when this program had been passed, she was very hopeful that she would get a scholarship to take the financial burden off of her. But then this rule was enacted, and she was out of luck.


      So we joined up with Kendra Espinoza, as well as two other families who were affected, and we sued. And we made a few arguments. We said that the rule was ultra vires and some other arguments, and we also said that the rule violated free exercise of religion as well as equal protection in the Establishment Clause.


      And to also give you a little background about why the Montana agency passed this rule, that was because the Montana State Constitution has a provision known as a Blaine Amendment. 37 states have these provisions, and they say that the state cannot aid religious institutions including religious schools. We argue that these programs don't aid schools, they aid families. But more fundamentally, interpreting these provisions to bar religious options in school choice programs violates free exercise and equal protection in the Establishment Clause.


      So we won at the trial court. The trial court held that the rule was ultra vires because the Montana Legislature had intended the scholarship to be used at all schools. And they also held that to hold otherwise could create serious problems with the federal Constitution because it's discriminating against religion.


      This Montana agency then appealed to the Montana Supreme Court—there's no mid-level appellate court—and the Montana Supreme Court ruled against us. And they made two key holdings. The first thing they did is they held that the Montana Constitution actually did require the exclusion of religious options from student aid programs, including this program. That was their judgement.


And then their remedy did something strange and unexpected. They struck down the entire program for both the kids attending religious schools and kids attending non-religious schools, even though nobody had asked them to do that. And we were the plaintiffs in the case, and we certainly weren't asking them to strike down the program.


And the court said that they had to strike down the whole thing because the scholarships for kids going to religious schools were not severable from the program. There was no way to distinguish kids going to religious schools from kids going to non-religious schools, couldn't be severed and invalidating the whole program was the only way to ensure that not a dime of money went to kids going to the religious schools.


So we petitioned for cert at SCOTUS, and we got cert in June. And we argued that if you're invalidating a program solely because it allows families to have religious options, then that discriminates against religion. And we argued that the Court should rule for us under Trinity Lutheran and that the Court should also distance this case from the Locke v. Davey case back in 2004. And I could give a little background about those cases as well.


The main issue in this case is we already know -- the Supreme Court has already said that religious schools can be included in these scholarship programs. That was the Zelman v. Simmons-Harris case in 2002. The question in this case is whether once the state has a scholarship program, does it have to include religious options or if it could have a carve out?


And we argue that whether you're using a state Blaine Amendment, that's the state constitutional provision here, or if whatever policy reason you have, you cannot exclude religious options from these scholarship programs.


Now, to give a little legal background on this issue, as many of you know, in 2017, the Supreme Court decided the Trinity Lutheran case. And in Trinity Lutheran, the Court reaffirmed its free exercise jurisprudence. The government cannot discriminate based on religious beliefs, religious status, or religiously motivated conduct. And we argued that all three of that type of discrimination was present in this case.


But there was also the last student aid case that the U.S. Supreme Court decided was in 2004, the Locke v. Davey case. And in that case, the Court seemed to carve out a very narrow exception to its general rule that the government has to be neutral, not hostile, toward religion. That case also involved a scholarship program. It was a college scholarship program.


And there, Washington State had provided scholarships for academically gifted kids, kids who had gotten really good grades in K-12, and said you can use these scholarships at any school that you want including religious schools. You can use these scholarships to pretty much take whatever major that you want, but the only thing you couldn't do is major in devotional theology. And devotional theology is for people who are studying to become priests or pastors.


And then one student had received a scholarship. He wanted to major in devotional theology, and he brought a free exercise clause against the State of Washington for saying that he couldn't use his scholarship for that reason. The Supreme Court upheld that religious exclusion, and they did so on two main bases. First, they said that the program otherwise went a long way toward including religion in its benefits because the plaintiff in that case is free to take as many religious classes as he wanted. He was free to attend any religious school that he wanted. He just couldn't have one major in devotional theology, and it was very narrow.


And the Court also said that this was justified because the state, and really, the country, has this historical interest in not funding the clergy, going all the way back to the founding. This was a unique interest, the Court said, and the state can have this small carve out for this reason.


This case, Espinoza v. Montana Department of Revenue, is really about well, how can we reconcile the Locke case with Trinity Lutheran? We know the government can't discriminate against religion, but there was this Locke case with this very narrow exception. Is this case closer to Trinity Lutheran or is it closer to Locke?


And we argue that it's definitely in the Trinity Lutheran box. That here, the program doesn’t just have a narrow religious exception, it has a wholesale religious exclusion. It prohibits any child from using a scholarship at any religious school and that this violates free exercise.


The other issue in the case is whether because the Montana Supreme Court invalidated the entire scholarship program, not just for kids going to religious schools, if that somehow cured the religious discrimination in this case. And that's what Montana argued at the U.S. Supreme Court.


We argue that it does not cure the discrimination, that the only reason the program was invalidated was because it included religious options, and that absolutely discriminates. And we actually cite in our briefs the desegregation cases from the 1970s that the U.S. Supreme Court decided. And there, something very similar happened. A lot of local governments were resisting desegregation orders, and they tried to shut down public programs, including the public schools, to prevent desegregation efforts.


And they argued then that oh, well, we're treating everyone the same. There's no public schools anymore so we can't be discriminating against African Americans. And the Court said no, it's very obvious that the reason you're shutting down the schools and these other public programs is because you don’t want to include a protected class in that program.


Just like that state action discriminated against African Americans based on race, shutting down the program here discriminated against religion and religious families. That's what we argued in our brief, and then yesterday, we had the oral arguments. Some of you may have read the transcripts or actually attended. It was a pretty full courtroom. And we are very optimistic based on what happened yesterday.


There were a lot of questions from the left side of the Court, specifically Justice Sotomayor and Kagan and Ginsburg, about the procedural issues in this case, the fact that the whole program was shut down. But then the right side of the Court seemed pretty convinced that there was still discrimination in this case.


And Chief Justice Roberts specifically asked how is this different from shutting down a program because it included African Americans? And the government was not able to distinguish race from religion here.


I think we're pretty solid on the merits. There were very few questions about the merits from the left. It was mostly focused on procedure. So as long as the Court is comfortable addressing the merits of the case, which we think they are, we are confident that we have 5-4 on this. And I am happy to take questions.


Wesley Hodges:  Well, thank you so much for that wonderful presentation, Erica. Let's go ahead and go to our first caller.


Bob Fitzpatrick:  Hi, Bob Fitzpatrick here in D.C. I wonder if you could address the discussion at argument yesterday about mootness and how you see the Court splitting on that issue. Thanks.


Erica Smith:  Sure. That's a great question. So the mootness argument is wrapped up in the standing and procedural questions in this case. The fact that if the entire program is gone, then both families attending religious schools are being treated the same as families attending non-religious schools. So where is the religious discrimination? And sometimes, that's framed as a standing question, sometimes it's framed as a mootness question, and sometimes it's framed as a merits question.


      I think it was Justice Sotomayor who was really focusing on it from a standing question -- a standing angle. And we argue that we brought this lawsuit because our families were denied scholarships based on religion, and they're still being denied scholarships based on religion. The fact that other families are now also being denied scholarships, again, based on religion, just makes those families unfortunate collateral damage in a religious discrimination case.


      Misery may love company, but that doesn't relieve the misery. And there's no question that if the U.S. Supreme Court reversed the Montana Supreme Court's judgement in this case that the scholarship program would spring back into action, and our clients would be able to get relief and they would, once again, be able to get scholarships.


      Now, I think the concerns about that issue were coming from really Justices Kagan, Sotomayor, Ginsburg, and, to a lesser extent, Justice Roberts, Chief Justice Roberts. And I think we were able to persuade the Court -- not the liberal justices but the Chief, that this is a very live and active controversy that there is still religious discrimination here regardless about how other families are being treated, and it needs to be resolved on the merits.


      And a very telling moment during the argument was when Justice Roberts and, to a lesser extent, Justice Breyer were making this analogy to race. Like, of course, if you had had the same situation but involving race, that the program was shut down because it included African American schools, for example, there's no question that would discriminate based on race, so how is it any different here? And when that question was posed to the government attorney, he was not able to distinguish this case from that situation. And Chief Justice Roberts in particular seemed very troubled by that.


      And, of course, the other -- for those who read the transcript or who were present, the other four justices, Thomas, Kavanaugh, Alito, and Gorsuch, seemed very firmly on our side and very much wanted to reach the merits of this issue. One thing that Justices Kavanaugh and Alito were very much focusing on was actually the origin of this state constitutional provision that started this whole controversy, sometimes called Montana's Blaine Amendment.


      This provision was enacted in the late 1800s to discriminate against Catholic schooling. It was at a time when the country was very Protestant, and the public schools were run in a Protestant fashion and that was threatened when there was a wave of Catholic immigrants in the mid-1800s. And this provision was passed to stop funding for Catholic private schools.


      Justice Kavanaugh said this is a grotesque and discriminatory history, and it's hard to imagine that this provision can be continued to use to discriminate against religion today. It was enacted to discriminate against Catholics, and now it's being used to discriminate against all religious schooling. So the right side of the Court was very concerned about that as well.


Bob Fitzpatrick:  Was there any discussion or did it come up in the briefs, as I recall, there were some cases back in the ‘60s, ‘70s having to do with swimming pools --


Erica Smith:  Oh, that's a great question.


Bob Fitzpatrick:  -- that had been segregated where the pools were shut down completely, which would seem to be an argument the other side could use against you as a potentially inept analogy. Did that come up?


Erica Smith:  It did not come up and for a good reason. You're referring to the Palmer v. Thompson case.


Bob Fitzpatrick:  Yeah. Yeah.


Erica Smith:  That was actually referenced in a New York Times editorial or op-ed a couple months ago. And what had happened in that case is that a town or municipality had shut down a public [pool], and the plaintiffs claimed that the reason they shut it down was because they didn't want to include African Americans in that pool, and they were being ordered to desegregate the pools.


      But the Court's holding in that case focused on the fact that it was unclear why the town was shutting down the pool. There was a lot of evidence introduced that they were actually shutting it down for budgetary reasons, and the Court was reluctant to analyze the town's motives.


      So since that case, of course, Arlington Heights came out, and the U.S. Supreme Court now does inquire into government motives when discrimination is involved. But either way, the Palmer v. Thompson case is not relevant here because we know why the Montana Supreme Court invalidated the program. They say it in black and white. It's because it included religious schools.


      So the whole mixed motive or uncertain motive issue is not present here. And, in fact, the government didn't even cite it in their briefs. And the more compelling precedent, which is still good law, is the Griffin case and the Bush case where the government tried to shut down public schools because they didn't want to desegregate. And in both cases, the U.S. Supreme Court -- the motive was totally clear. There was no question about why they were shutting down the public schools. It was because of race.


And the U.S. Supreme Court, in both those cases, said no, you cannot do that. The fact that you're closing the whole public school down and treating everyone equally doesn't make it neutral toward race, just like doesn't make it neutral toward religion here.


Wesley Hodges:  Here now is our second caller of the day.


Matt McReynolds:  Hi, Matt McReynolds from Pacific Justice Institute. Thanks for the discussion today. Question, since so many states have these Blaine Amendments or sometimes baby Blaine Amendments, was there concern expressed by Chief Justice Roberts or the other conservatives yesterday about the potentially far-reaching implications of a ruling in this case, overturning the amendment?


Erica Smith:  That's a great question, and it did come up a little bit. Although, Justices Alito and Kavanaugh seemed very eager to strike down all the Blaine Amendments based on their questions. I think we were clear that it's unnecessary to strike them all down because what we're arguing in this case is that the Blaine Amendments are unconstitutional as applied to school choice programs.


And there may be situations that the Blaine Amendments could be applied that could be constitutional. Putting their discriminatory history aside, maybe they could have constitutional applications. For instance, preventing the government from building a chapel or having a program that's only buying prayer books, something that's very clearly preferential toward religion. So we argued it was unnecessary for the Court to even reach the facial question. And our brief only focused on the as-applied question.


      The solicitor general, who argued for 10 minutes in the case, took a more aggressive position and did argue that all the Blaine Amendments were unconstitutional on their face because the very text of the Blaine Amendments single out religion and funding for religious institutions and religious schools. But we emphasized the Court did not need to go there, and there didn't seem to be a big concern from the right that that was an issue.


Wesley Hodges:  Next caller. You are up.


Caller 3:  I was wondering what the legislative response to this could be. So for instance, in Trinity Lutheran, if the state had just said well, if you're going to force us to consider religious schools, the whole program is gone now, whether that would've been acceptable as a legislative response. Or in this case, in Montana, if the legislature said well, if we have to accept religious schools in the program, the whole program is gone. Not because necessarily of religious animus but maybe because of funding reasons or some of the reasons that Justice Kagan elaborated in oral argument.


Erica Smith:  Also, a very good question. So it's our position that if the legislature had repealed the program, that would've been a completely different issue than the Montana Supreme Court invalidating it. And it's because legislatures make political judgments, and they have many reasons that they might want to repeal a program, complicated, political reasons, whether because of budgetary reasons or they're concerned about civil unrest or separation of church and state. I mean, there's a hundred members of the Montana Legislature, and if they vote to repeal something, they're all going to have their own personal reason for doing that. And it's so difficult to discern legislative motive.


And that's something that the conservative justices have historically been concerned about is delving into legislative motive. But when a court invalidates the program, that is a legal determination, and courts routinely review legal determinations. The key determination in this case that the Montana Supreme Court made was that excluding religious options from the program did not violate the Free Exercise Clause. And that's wrong. And we are very hopeful that the U.S. Supreme Court will correct that legal judgment and hold that yes, it does violate the Free Exercise Clause to bar religious options from an otherwise generally available program.


      In short, if the legislature does something, that's one thing. But if a court does it, it's totally different.


Wesley Hodges:  We do have a couple more questions now in the queue. Let's go ahead and move along to our next caller.


Caller 4:  Good afternoon and thank you very much. I wonder if the ambiguous situation where the rules are different in higher education than K-12 came up. It is commonplace for students in higher education to use Pell Grants, GI Bill rights, all kinds of ways to go to schools that are very religious in their overall orientation. That seems to be a subtle question. Was the distinction between higher education and K-12 raised by anybody?


Erica Smith:  It actually was not, at least not at oral argument. But you are right that this case does have implications for higher education. If the Court were to hold that it's permissible to bar religious options in student aid programs, then that would mean that the federal government could bar college students from using their Pell Grant or GI Bill or any other scholarship program from going to schools like Notre Dame or Yeshiva or BYU.


      So this case does have serious implications not just for K to 12 school choice programs but all scholarship programs and all student aid programs. But no, the Court did not bring it up, and a distinction between K to 12 and college programs was not made.


Caller 4:  The concept of what is a religious school is not so clear. You mentioned Notre Dame, where my son graduated, that would be considered a Catholic school, but Georgetown, which is also a Catholic school, is a very different kind of educational experience than Notre Dame. And for a court to get into the dimensions of how a religious a school has to be, whether it's a K-12 or an higher education by examining curriculum, other kinds of requirements, would seem to be quite intrusive.


Erica Smith:  I absolutely agree with you. And historically, the Court has been very reluctant to delve into how pervasively Sectarian a school is because it creates entanglement issues. For the government to say that we're going to bar religious schools from a program and then we're going to have to figure out whether or not you're religious by looking at your curriculum and looking at what you're teaching and looking at who's running the school, that creates serious entanglement issues between government and religion.


      And the government should not be in the business of examining religious schools' curriculum and saying how religious they are and whether they're too religious. The government is supposed to be neutral toward religion. They're just supposed to be blind toward it. And that's all we're asking in this case, that the government has to be neutral toward religion and treat kids who go to religious schools exactly the same as kids who go to non-religious schools.


Wesley Hodges:  Next caller, you're up.


Caller 5:  Yeah, thank you for the presentation. Because of the structure of this program, it appears that the state money, if you want to call it that, is like four steps removed from a direct payment from the state to the schools. Does your case turn on that or will the outcome be the same even if there was a more direct line from the state money to the religious schools?


Erica Smith:  So we expect the outcome to be whatever -- if the Court decides the merits in this case, we expect that their holding would apply equally to both voucher programs that are when the state directly funds these scholarships as well as tax credit programs when there's a much more attenuated connection between the government funding and the scholarship.


      One of the reasons we expect that to be true is because the Montana Supreme Court made a determination that the tax credit program was essentially indirect public funds. And because of that, because the Montana Supreme Court interpreted their constitution to apply to tax credits, even though their tax credits -- even though their constitution only applies to government funding, we expect that the U.S. Supreme Court wouldn't disturb that finding and just take it as it is and say oh, well, the Montana Supreme Court said this was indirect funding, so we're going to take that to be true. And we're going to just say that regardless of whether or not the program involves tax credits, you cannot bar religious options from the program.


      If the Court were to take a more narrow approach and limit this to tax credit programs, it would create a lot of problems because this issue comes up in both voucher programs and tax credit programs. So they would just be kicking the can down the road. The lower courts have been confused for the last 30 years about whether religious options do need to be included in these programs. And if the Court only decides it for tax credit programs, that still leaves an open question as to well, what about voucher programs? And it's very important that the Court clarify this issue for all programs.


      And, of course, it creates the same free exercise issues either way, regardless of whether you're talking about a tax credit program or a voucher program. So we expect the ruling to apply to both.


Caller 5:  I understand, thank you. But can I follow up with one question?


Erica Smith:  Sure.


Caller 5:  It seems to me that the Establishment Clause concerns in a tax credit program are kind of attenuated, but they're really a lot more acute if you're talking about something that's more direct. And isn't the Blaine Amendment potentially justifiable because of the Establishment Clause concerns where you have more direct state funding of a religious institution?


Erica Smith:  We would argue no and for two reasons. One, the U.S. Supreme Court already decided in Zelman v. Simmons-Harris—that was 2002, and that actually did involve a voucher program—that including religious options in these programs did not violate the Establishment Clause. And the Court has also held in its other cases, including Widmar and Trinity Lutheran, that the state does not have a compelling interest in creating greater separation between church and state than that which exists in the federal Constitution.


      So in other words, the state cannot justify discriminating against religion on the basis that they want to create a higher wall between separation of church and state. So that concern would not be able to justify the discrimination here.


Wesley Hodges:  Well, seeing no immediate questions, Erica, I want to turn the mic back to you. Do you have any closing thoughts or anything that you wanted to cover before we end the call today?


Erica Smith:  Sure. One other thing I wanted to cover was Chief Justice Roberts did have a question very early on in the argument about standing and whether the fact that these scholarships were going to the religious schools meant that it should've been the religious schools that brought this challenge instead of the parents. And I think we, in the rebuttal especially, answered that question to his satisfaction.


      And the answer to that is the U.S. Supreme Court has already held in the Zelman case that these programs aid families, not religious schools. It's families that are the intended beneficiary of these programs. And schools are only, at most, incidental beneficiaries. So it makes sense that it has to be the families that bring this free exercise challenge and not the school.


      And I think after the Court mulled that over that especially the right side of the Court were satisfied that it should be the parents bringing this lawsuit and that there were not outstanding concerns, and we feel pretty good about that. So we are optimistic that we'll have five come June, and if we do, it will be a huge victory for families across the country who just want to have the opportunity to send their children to the school of their choice, regardless of whether that school is religious or non-religious.


Wesley Hodges:  Well, this has been a wonderful presentation. Thank you so much for your time, Erica. On behalf of The Federalist Society, I'd like to thank you for the benefit of your valuable time and expertise today. We welcome all listener feedback by email at [email protected]. Thank you all for joining us for the call. We are now adjourned.


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