Litigation Update: Buettner-Hartsoe v. Baltimore Lutheran High School Association

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Buettner-Hartsoe v. Baltimore Lutheran High School Association d/b/a Concordia Preparatory School poses a question of whether Title IX applies to schools that do not receive federal financial aid.

Former students of Concordia Preparatory School, a private school, sued Concordia Prep. under Title IX alleging that the school had not adequately addressed complaints of sexual assault and sexual harassment. Concordia Prep. argued the lawsuit should be dismissed because, as a private school that did not receive federal financial assistance, it was not subject to Title IX. 

Judge Bennett of the United States District Court for the District of Maryland rejected that argument, instead holding that, because the school received a federal tax exemption as a 501(c)(3) organization, it was therefore subject to Title IX because it is a 501(c)(3) organization, regardless of the fact the school does not otherwise receive direct federal aid, nor any financial aid from the U.S. Department of Education.

Traditionally, independent schools that do not receive federal financial aid have not been considered to be subject to Title IX’s requirements. This decision could substantively expand the number of schools which are interpreted to be subject to Title IX. The case is currently on appeal. Mary Margaret Beecher of Napa Legal Institute, which filed an amicus brief in the case, joins us to discuss the case, the nature of the litigation, and the possible effects of this decision. 



  • Mary Margaret Beecher, Vice President and Executive Director, Napa Legal Institute
  • (Moderator) Amanda Salz, Associate, Morgan, Lewis, & Bockius LLP


As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.

Event Transcript



Chayila Kleist:  Hello, and welcome to this Federalist Society webinar call. Today, July 24, 2023, we host a Litigation Update in Buettner-Hartsoe v. Baltimore Lutheran High School Association—a case involving the reach and application of Title IX.

My name is Chayila Kleist, and I'm an Assistant Director of Practice Groups here at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today's call. The Federalist Society takes no position on particular legal or public policy issues.

Now, in the interest of time, I'll keep my introduction of both our speakers brief. But if you'd like to know more about either of our guests today, you can access their impressive full [email protected].

Today, we are fortunate to have with us Mary Margaret Beecher, who is Vice President and Executive Director at the Napa Legal Institute, which filed an amicus brief in this case. Ms. Beecher joined Napa legal in 2019, serving most recently as the organization's Senior Counsel.

Before working at Napa Legal, Ms. Beecher was an associate attorney with a Chicago-based law firm which specialized in nonprofits and tax-exempt organizations. Prior to serving the nonprofit sector, Ms. Beecher focused her career in finance, working with the CME Group and Dimensional Fund Advisors on financial compliance matters, implementation of U.S. sanctions programs, and cybersecurity risk management.

Also joining us today is our moderator, Ms. Amanda Salz, who is an associate with Morgan, Lewis, where she represents clients on a variety of litigation matters. Before joining Morgan, Lewis, she worked on civil and criminal trial and appeals as a law clerk to Judge Andrew Oldham on the U.S. Court of Appeals for the Fifth Circuit and Judge Reed O'Connor in the U.S. District Court for the Northern District of Texas. And I'll leave it there.

One last note. Throughout the panel, if you have any questions, please submit them via the question and answer feature likely found at the bottom of your Zoom screens so they'll be accessible to our speakers when we get to that portion of today's webinar. With that, thank you all for being with us today. Ms. Salz, the floor is yours.

Amanda Salz:  Thanks so much, Chayila. And thank you, Mary Margaret, for joining us today. While Mary Margaret and the rest of Napa Legal have their fingers on the pulse of religious liberty litigation generally—especially as it applies to nonprofits and tax-exempt organizations—she's uniquely well qualified to tell us today about the Buettner-Hartsoe appeal that we'll focus on as Napa Legal filed an amicus brief in this case, as Chayila said.

So, Mary Margaret, I have several questions for you, but depending on timing, I'm hoping we might be able to get to some listener questions as well. So, listeners, if you have any questions during the call, please feel free to send those in Q&A feature rather than the chat, and we'll try to get to as many of those as possible.

So, Mary Margaret, would you mind just starting us off with a high-level overview of the factual background of this case which some of our listeners may not be familiar with?

Mary Margaret Beecher:  Yes, definitely. Thanks Amanda, and thank you for the introduction. Chayila. This case, Buettner-Hartsoe, has received a lot of attention specifically for a case at this stage in the procedural process. It is a case in Baltimore. It was brought by five former students of an independent Christian high school that has 501(c)(3) tax exempt status.

The case has brought -- the kind of substance of the allegations was that there was sexual harassment taking place at the school in a certain period and that the administration didn't act aggressively enough to put an end to that.

So the focus, I think, of a lot of the interest in the case comes from the fact that one of the counts was made under Title IX of the Education Amendments of 1972. These provide that no person in the United States shall, on the basis of sex, be excluded from participation in or denied the benefits of or be subjected to discrimination under any education program or activity receiving federal financial assistance.

The reason this is such an interesting count in this case is that the school was not receiving any federal grants during the period in question. So the only basis for the coverage of Title IX would be the school’s tax-exempt status. And that's a pretty radical understanding of what tax exempt status is to say that that's federal financial assistance triggering this and potentially other regulatory programs that would not be otherwise applicable to a school like Baltimore Lutheran.

So back in July 2022—I believe it was when this started—the school filed a motion to dismiss, or in the alternative, move for summary judgment on the count of the applicability of Title IX just because it was not a recipient of any federal grants during the relevant period.

But on July 21, the district court denied the motion for summary judgment and held that the school was a federal financial aid recipient solely by virtue of its 501(c)(3) status. And that's just against a lot of the weight of precedent. And I think that's why we see—and we'll get into this later—the interest of so many amici in this case.

So the school filed for reconsideration, or in the alternative, an interlocutory appeal. The district court granted the latter. And we saw numerous amici filing already in favor of the grant of the interlocutory appeal, and then when that appeal was granted, additional amici filing in favor of reversal of the district court's opinion.

And then I want to note, too, before we proceed too far, that Title IX of the Education Amendments, it does have a religious exemption which provides that if the application of Title IX would contradict a religious organization’s beliefs, the organization can be exempt to the extent that that conflict exists. So what's really at stake here?

There definitely are serious religious implications. But I think the threshold, most direct implication of this case, would really be the administrative burden, general entanglement issues, and just concern of this analysis spreading to other federal financial assistance programs and the related oversight and regulations.

Amanda Salz:  Yeah. So as you mentioned, many see this as a pretty radical interpretation. But what exactly were Judge Bennett's rationales for concluding that the court had jurisdiction and that the claims could proceed in light of 501(c)(3) status and Title IX?

Mary Margaret Beecher:  Sure. So I pulled a quote from the district court's opinion that I think really is where a lot of the reaction in the practitioner community came from. The district court judge held that a number of opinions confirm that an institution qualifies as a recipient of federal assistance under Title IX even if it did not apply for aid or if the aid is indirectly provided. So again, like we talked about earlier, he's broadly construing the meaning of financial assistance to cover almost any economic benefit, including this kind of almost passive receipt of 501(c)(3) status.

And just briefly, I want to walk through four of the cases that were determinative in the judge's opinion. I'll start with kind of the least persuasive and then kind of advance to what I think is probably the strongest argument in favor of his position.

He references a case called Cannon—which in dicta cited two district court opinions from -- one from the 1970s and one from the 1980s—which said that tax exemption is federal financial assistance. But in both cases, the tax exemption was accompanied by some more substantive financial assistance—so like a direct grant or some other more active interaction between the exempt organization and the government.

And then in the case Smith, the Court—again, I viewed this as dicta—said that “entities that receive financial assistance whether directly or through an intermediary.” And that clause, just that clause, whether directly or through an intermediary, the district court here in Buettner constructed basically a syllogism that said because direct aid is not the only type of federal financial assistance that triggers the applicability of Title IX, therefore, federal 501(c)(3) status must be just because not all is. I found it a little bit unpersuasive, and I think a lot of practitioners in this area did as well.

And then the third case cited was Grove City College, which held that if a student receives federal financial aid for higher education that is passed on to an educational institution, the recipient institution is subject to federal Title IX oversight. And that's pretty well known.

I think that's where we see a school, something like Hillsdale College, where they're opting out of even having their students receive federal funding for their higher education because it's settled -- kind of settled law that if a student receives certain federal -- I believe it's like a FAFSA loan, then the recipient school would also be subject to that whole regulatory regime.  That's settled law, but it's really not particularly analogous to Baltimore Lutheran's case.

And then finally, we get to what I think is probably the most formidable of the contrary authorities cited for the holding in Buettner, which says that -- and this is the Regan case, Regan v. -- I can't remember the exact name of the other party, but it's like Taxation. And it held that the prohibition on lobbying by a 501(c)(3) was not unconstitutional.

And then again, in the holding, the Court's exact language—and this is a Supreme Court case—held that tax exemptions and tax deductibility are a form of subsidy administered through the tax system. That's a strong statement that did come from the Supreme Court. And I think that's probably where the basis for the district court is. Its arguments are at their strongest in the context of Regan. But again, I think even that is really not -- is not the prevailing view of 501(c)(3) status.

Amanda Salz:  Thank you for walking through each of those cases. I think that gives a very helpful context for both where the district court is coming from and likely what we'll see from the appellees in their response brief. Because briefing is so ongoing, we’ve yet to see their arguments, but Buettner Lutheran -- or Baltimore Lutheran, rather, has already filed its brief. So what are some of its main arguments in favor of reversal?

Mary Margaret Beecher:  Sure. There are a lot of textual arguments here which I think can be fun for anyone who's not practicing with exempt organizations but is just interested in textual interpretation. A lot of the amici also raised similar textual arguments that the implementing regulations for Title IX, they give a laundry list of what types of aid constitute federal financial assistance as almost like a term of art within the context of Title IX. And exempt status is never mentioned.

And then there are other -- the agencies do not discuss tax exempt status as a grant. And even the forms themselves that are used to apply for tax exempt status are called the Application for Recognition of Tax-Exempt Status. So we don't really discuss exempt status as something that's granted or awarded. It's just recognized. So that was the first piece of the argument.

And then we'll get into this a little bit more later. But there are a number of spending clause kinds of arguments, which is that the -- any legislation that is given under the spending clause has a higher burden of clarity, so to speak, because it's analogous to a common-law contract between the government and the recipient.

And so because it's analogous to contract, there has to be that meeting of the mind. And so you cannot accidentally become subject to conditions for federal funding without realizing it. And in this case, I think we'll get into this later. But some of the amici—and ours included—point out that Baltimore Lutheran actually had exempt status before Title IX was even enacted. So obviously, there was no meeting of the minds, and this was not something that was contemplated.

And then finally, Baltimore Lutheran raises harm arguments just about what a hardship it would be for exempt organizations if this broadly applicable kind of heavy administrative burden were imposed on organizations that they're very small, they don't have a lot of overhead staff to handle the scale that would be needed to implement Title IX.

And, I mean, those are policy arguments, but they're also strong legal arguments in the sense that the district court's interpretation here would revolutionize, absolutely revolutionize, the exempt organization sector. So I think we do have Scalia’s point from the EPA case where you've got an elephant in a mouse hole here. I don't think Congress would revolutionize the sector without some serious debate.

So those are the three primary arguments: textual common law contracts, spending clause, and then finally the harm argument. Those are the three that I think Baltimore Lutheran emphasizes in its brief.

Amanda Salz:  Great. Well, your organization, the Napa Legal Institute, was one of 12 amici to appear in this case, including the Institute for Justice, the St. Thomas More Society, the National Business Officers Association, and a variety of educational associations. You've obviously touched on the policy implications here. But if you could just speak directly to why do you think that this case garnered so much attention from associations like Napa Legal.

Mary Margaret Beecher:  Yes, this case did. It garnered a lot of attention. And I think the reason for that is that this case—I hate to use militaristic metaphors—but this case is kind of a battle and an ongoing war, so to speak. And a lot of the time, it's kind of an esoteric war. We practitioners talk a lot about tax exemption theory.

So what are the justifications for tax exemption? And that's an ongoing debate. And 90 percent of the time, it's a little bit esoteric. But then during the 10 percent of the time when it does come into -- become the focal point of litigation like this, you understand why it's so important because it's absolutely outcome determinative here.

And I'll just briefly, for the benefit of our listeners, walk through four of the main justifications for tax exemption theory and why that's kind of the issue in the crosshairs here in this Baltimore Lutheran case. The first is what comes through in the judge's opinion here, and that's tax subsidy theory.

And that theory views tax exemption as a tax expenditure. So anytime under this perspective, anytime there's a 501(c)(3), the government is kind of granting money that the government was entitled to to go to this program. So it's kind of the government deserves to be receiving a portion of this nonprofit, this exempt organization's revenue, and it's forgoing that revenue in order to further some public objective, some policy objective.

And that view, it really -- it starts with tax, but it also goes to policy as well because along with that perspective, you say, “Okay. Well, if the government is granting, then they deserve to have a say in policy. They deserve to have a say in how this organization is run, what it's doing, what it's talking about.”

And so you can see quickly this becomes not just a tax issue but a very, very considerable First Amendment issue for all of civil society. And so I think that's why you see so much engagement from the amici.

And then on the contrary perspective—and this is advanced by a lot of the amici—are three theories of justification for tax exemption that cut the other way. The first is the tax-based theory. And under this view, it's just that it basically says that charitable activity isn't part of the tax base— only for profit, only private benefit type activity belongs in the realm of taxable activity. And so the activity of an organization like Baltimore Lutheran just isn't subject -- it's just not taxable.

The second one is the historical perspective, which is kind of similar to the tax-based theory, but it looks at the fact that going back all the way to Samaria, to Babylon, churches, religious organizations have been exempt from the applicable tax regime. It's just viewed as kind of a different realm. You have the temporal realm and then you have these religious activities, and it's just not subject to civil government in the same way that commercial activity would be.

And then finally, there's -- I’m missing it in my notes. Finally, there's the autonomy argument, which is that religious activity is something, again, altogether different from commercial activity, more secular activities. And so it's not really, I guess, the government's business. It's kind of completely out of the scope altogether of what would be taxed.

Amanda Salz:  There's obviously a lot there. Are there any arguments that Napa Legal specifically focused on? Or just walk us through your brief, essentially.

Mary Margaret Beecher:  Yes. So we filed our brief through pro bono counsel. So I'm really standing on their shoulders here as a non-litigator in recounting some of the arguments. But ours really focused on the text and structure of both Title IX and 501(c)(3).

So just looking at the ordinary meaning of federal financial assistance, looking at the context of both 501(c)(3) and Title IX, and then the history of how these regulations have been administered, those were some of the core. And then as well the administrative regulations implementing Title IX, we also emphasized, and then finally, Supreme Court precedent on this issue.

And just to build this out a little bit more, we included as well the Scalia view of the elephant and mouse holes that a congressional kind of revolution of 501 -- the entire tax exempt sector would not be done inadvertently kind of by implication. It would be done affirmatively. It would be the fruit of a lot of debate. And so it seems very unlikely that that's the meaning of Title IX.

And then also, the enforcement mechanisms are not built into the statutory framework of Title IX. So if the amount of oversight that the district court's opinion would imply was actually expected, there would have been a lot more oversight built into the statutory framework and the implementing regulations.

And then finally, the Department of Justice's Title VII and Title IX manuals, Title VII -- Title VI, excuse me, is somewhat relevant just because it's parallel in many ways. They're both statutes that impose nondiscrimination obligations on recipients of federal financial assistance. Their legal manuals on both of these acts do not list exempt status as a form of aid that would trigger the coverage and the regulatory oversight that the district court's opinion suggests might be applicable.

Amanda Salz:  Okay. So that's all focused on your one brief. I believe there are seven briefs total. So including Napa Legal’s and including Baltimore Lutheran’s, there are five other amicus briefs. I don't know how familiar with those. But do you know? Are there any standout arguments that you think may influence the Fourth Circuit from those other amicus briefs?

Mary Margaret Beecher:  Yes. So the arguments advanced by the amici fall really into four categories, some of which overlap kind of what we've talked about. The first is the agency interpretation.

In the years subsequent to 1972 when Title IX was enacted, no agency has attempted to enforce Title IX against exempt organizations that don't have any other form of federal financial assistance. So clearly, the agencies don't see this meaning. And that, I think, is relevant to what the text -- a correct interpretation of the text.

The second would be that this is settled precedent. With the exception of one or two district court cases, exempt status has never been viewed as an affirmative grant of financial assistance in our jurisprudence. So this really doesn't have that type of historical support.

And then second would be interpretation and application of spending clause legislation principles, which really go back a little bit more to common law contract principles as well, that these are offers of federal funding conditioned on the recipient's adherence to particular policy obligations, particular nondiscrimination or oversight or other conditions of the funding.

And that needs to be clear and unambiguous. It cannot be by implication. It can't be sort of understood. It has to be a very clear thing. So I'll contrast this, for example, with the paycheck protection loans. Those are universally understood to be federal financial assistance.

And in the application itself for a paycheck protection loan, there is a litany of conditions that the recipient certifies to like, “I understand that these are my obligations.” You're subject to traditional audit requirements. You're subject to a number of different policy and nondiscrimination obligations for the duration of the loan. And there's nothing like that on the application for 501(c)(3) status. There's nothing like that on the 1023.

And then finally, there are some very persuasive arguments on the -- just how serious the implications of this interpretation would be with one of the amici actually saying this case threatens the existence of nonprofits. One of them notes that I think several thousand nonprofits within the association's purview have fewer than 50 students. And so hiring a full time Title IX coordinator would make the education offered by those schools unaffordable for the majority of the families that they serve.

So that kind of goes back to that elephant and mouth holes, I think, perspective of this couldn't be what was meant because of the context in which the legislation was enacted.

Amanda Salz:  Definitely. And I'm sure we'll get further into that, just broader implications. So it sounds like there are many persuasive arguments in favor of reversal. And notably, there weren't any amici that appeared in support of the plaintiff appellees—the one below. So it seems like they have their work cut out for them and responding to all seven briefs. But when is their response brief due?

Mary Margaret Beecher:  Their response brief is due on August 4.

Amanda Salz:  Okay, great. So we don't have long to wait. Well, up until now, we've been talking about Buettner-Hartsoe specifically. And before taking a step back and getting further into the potential implications of this case, I want to just remind listeners that they can send any questions via the Q&A feature. We already have a few lined up, but I will be into those soon.

So if you do have any questions, feel free to just submit those. But looking at the bigger picture, what effect do you think an affirmative in this case would have on independent educational institutions?

Mary Margaret Beecher:  The administrative burden is the first, I think, that comes to mind. It would be an additional expense that most schools did not contemplate. Many smaller schools intentionally avoid federal financial assistance at this time just because they don’t -- they cannot handle some of the administrative and oversight regulations that go along with it.

But I think there are also policy considerations as well and autonomy considerations. And these are raised in a lot of the amici that the schools, they're all accredited, so they have oversight through the accreditation process. And imposing federal oversight in addition to the more tailored kind of oversight through accreditation could interfere with the school's mission.

It could interfere with their understanding of the best way to go about delicate issues and to create the community that they're seeking to create -- that's their mission to create. So I think those are the primary implications on educational organizations specifically.

Amanda Salz:  And are there broader impacts? I'm assuming so, given the amount of amici and the considerations you've already discussed. But what are some of the broader implications or ramifications on 501(c)(3)s generally that we may expect?

Mary Margaret Beecher:  Well, I think there are a few cases ongoing that I think would be impacted if Baltimore Lutheran's district court opinion stands or is upheld. One, I believe, is settled. It's the Valley Christian Academy case, I believe that settled earlier this year.

But that case also was a case about whether a school's position on -- I want to say it was whether they could have a coed football team. They preferred to have -- because of their Christian understanding of the identity of men and women had separate sex distinct athletic teams.

And a student sued under Title IX saying that this sex-specific distinction was not permitted under Title IX. So I believe that case settled. But you can kind of see that would show, “Okay, these are the types of implications if Title IX was applied.”

A lot of the, I think, sex-specific programming would be off the table. I think there would be potentially some consequences to religious liberty as well. Even though Title IX includes a religious exemption, it's not a narrow exemption necessarily, but it's not particularly broad in the sense that there's a lot of autonomy that would be lost.

And then we're also starting to see some administrative interpretations similar to the district court's opinion here. I'm thinking specifically of a U.S Department of Agriculture case. I believe it's called Church of Compassion. And the U.S. Department of Agriculture is taking the position that an organization participating in one of the USDA's food poverty relief programs needs to disclaim or kind of narrow its statement of faith if it wants to continue participating in this USDA program.

So it's not exactly analogous because it's not focused on 501(c)(3) status. But I think it's a case that illustrates how there can be a conflict between an organization's religious identity, its understanding of its mission, and the regulatory and oversight that's triggered by participation in federal financial aid programs.

And then finally, I think there's for years been this tension between organizations that -- the perspective that tax-exempt organizations, civil society is autonomous more or less and then the view that civil society should be kind of subordinated to the government and subordinated to government policy and have a lot of -- I guess, a lot of hands-on guidance so to speak. And this is, I think, an installment in that kind of series.

And so even if -- yeah. I think one of the biggest implications would be to kind of further -- to reduce the autonomy of tax-exempt organizations in favor of greater government oversight generally, even if it's not specific to exempt status, just to their operations overall.

Amanda Salz:  Yeah. So, I mean, it seems like almost boundless effects. It could lead to a lot more than what we're talking about today. But thanks so much for just talking through this case. We have a few listener questions, so I'll start going through those. Maybe we've already touched on them as they've been coming in.

But the first question is, “How similar or different do you see this in regard to the proceedings in E.H. v. Valley Christian Academy in California—so the case that you mentioned which is settled—but whether this case is similar or different, just how those work together and whether this case has -- or rather if they have any overlap?

Mary Margaret Beecher:  I think that they're very similar cases. I believe the biggest distinction would be that, if I'm remembering correctly, I believe that Valley Christian Academy had a paycheck protection loan outstanding during the period where the conduct in question occurred.

And so I think that the focal point of that litigation wasn't as much on whether 501(c)(3) status taken alone would be enough to trigger the application of Title IX. So I would have to double check. We did not file an amicus in that case. So I'm only a little bit familiar with the specifics, but I believe that that was the distinction.

Amanda Salz:  Okay. And then another question is, “What was the Supreme Court decision reached in the most recent precedent listed?” I believe maybe that's Regan that you mentioned.

Mary Margaret Beecher:  Yes. So that case was Regan v. Taxation with Representation. And in that case, the Supreme Court held that the prohibition on -- well, not prohibition on lobbying, but the limitations on lobbying by 501(c)(3)s and the prohibition on political campaign activity was not unconstitutional.

And the specific quote that I had pulled from that was -- this is a 1983 case, and it was kind of dicta. It said, “Tax exemption has much the same effect as a cash grant to an organization of the amount of tax it would have to pay on its income.” So that was the holding.

I do think that's considerable contrary authority that needs to be contended with. But I think that the Court is not anchoring that view in any statute. I guess it's precedent, but I think it's a little bit questionable in the sense that it's not tied to any legislation. So from my view, it's a bit more of a policy perspective, and I think it could be challenged successfully, in my view.

Amanda Salz:  Well, and this question also mentions the members on the Court at the time. So obviously, we have a completely different Supreme Court makeup now.

Mary Margaret Beecher:  Right.

Amanda Salz:  I don't know if you've thought about this at all, but a case like that and how do you think that might come out today? Or is that something that we could consider as far as just if there is there -- if there are differences and you're able to distinguish it? What does that look like today if it goes up to the Court?

Mary Margaret Beecher:  We have a much more robust church autonomy jurisprudence than we did 10 years ago, certainly 20 years ago, and certainly 30 years ago when Regan was decided. So I think that those autonomy arguments, they're not exactly on point. But I think that they're relevant in suggesting how our jurisprudence views civil society and religious organizations specifically.

And what does appropriate government civil society interaction -- what do they look -- what do appropriate interactions between the government and civil society look like? And then when do we run afoul of entanglement clause issues?

And I want to say we have an interesting case coming up. I believe it's something like the Russian Orthodox Church, and it's an internal church governance issue in that case. But I think all of these autonomy conversations, they're not the same legal issue, but I do think they're indicative of how our jurisprudence is viewing civil society and religious organizations specifically—not just on issues of doctrine, but on issues of governance.

Amanda Salz:  Yeah. Well, the next question is, is there any reason to believe that the district court's 501(c)(3) organization -- oops, sorry -- district court's reasoning, rather, would not apply to organizations that are tax exempt under IRC provisions other than 501(c)(3)?

Mary Margaret Beecher:  That's a very good question. Yeah, let me think about this for a second. Well, I don't really think it would go that direction. I mean, the main distinction between a 501(c)(3) and orgs that are exempt under other provisions of the tax code would, in most cases -- the exemption from income tax for the organization itself, that -- those organizations have in common all of the 501(c)(3)s.

But most, I believe, if not all 501(c)(3)s also, are able to offer to their donors a tax deduction on the donor's own contribution. So there's sort of an incentive for support for 501(c)(3)s, and that's not present in other -- that’s not present for other tax classifications.

I actually looked for that in the district court's two opinions whether they were making a distinction between the organization's income tax exemption and the deductibility of contributions to the organization—so kind of the income tax exemption for contributors. But the Court doesn't make any distinctions in its analysis between those two facets of the exemption.

Amanda Salz:  Do any of the other cases make that distinction, discuss the distinction at all, or is that something that's just at this point unresolved?

Mary Margaret Beecher:  It's not discussed in any of the amici, but I do think it's kind of thought provoking. But in both cases, I think that it would turn on whether an exemption is a tax expenditure, which is a form of federal financial assistance.

So I think the reasoning would be the same on both fronts. But I think in the interest of precision, it's appropriate to analyze them separately—those two facets of 501(c)(3) tax exemption.

Amanda Salz:  Well, the next question is, “Are the institutions that are in the crosshairs here only 501(c)(3) organizations that are educational organizations? Are there any religious schools categorized as religious organizations instead? And if so, does that make any difference?” There are a few questions going on there.

Mary Margaret Beecher:  Yeah, that's a really good question. And actually it makes me want to go back to the text of Title VI, I think it is. Let me just take a minute and see if I can pull that up.

I think Title IX, specifically, it's focusing on education. But let me just get the text to Title VII as well. Yeah. Title VI of the Civil Rights Act of 1964, its prohibitions apply to any program or activity receiving federal financial assistance. So it's not limited to education. It would be any program or activity. So there's definitely an analogy there.

The statutory frameworks are separate. I think it's very important that we don't conflate them. But courts often rely on -- they're a little bit interdependent. If you look at the jurisprudence for both of those two statutes, the jurisprudence is very interdependent. Whether it should be or not is kind of a separate issue.

So at the moment, I think the direct impact would be on educational organizations, but it would only take a couple of opinions to kind of analogize between the Title IX analysis here and the Title VI analysis for the purposes of the Civil Rights Act of 1964.

Amanda Salz:  Okay. Has the Biden administration made any indication that it agrees that tax-exempt status is federal financial assistance?

Mary Margaret Beecher:  Not to my knowledge. Not to my knowledge.

Amanda Salz:  Okay. And what are some of the potential implications for higher education regarding student rights and due process?

Mary Margaret Beecher:  So I don't think that higher education organizations would really be impacted as much because they are typically, unless it's like we're talking just specifically about the one or two colleges that aren't receiving federal financial aid either through their students or directly, they wouldn't be impacted by the outcome of this litigation. So I think, for the most part, higher education isn't really going to come into play here.

It would just be like a Hillsdale college, or I think there's one other college that's not receiving federal financial assistance but does have tax-exempt status. So those would really be the only two that would be affected. And, I mean, perhaps looking at their track record, maybe they would just forgo the tax exemption as well.

Amanda Salz:  Yeah. I think the specific question here—and it sounds like it'd be very narrow if ever applied—but just whether that could impact the ability of students to sue a college, like Hillsdale, for a violation of due process. So do you know if that would have any impact?

Mary Margaret Beecher:  I mean, that would be outside of the scope of my area of focus, but I could sort of speculate and say no. Due process and that type of thing aren't implicated. And I think it's worth noting that all the litigation that we're discussing today is only one count of the five counts -- or one count of those raised by the students in this context.

So the students’ opportunity to have their wrongs or harms remedied isn't being questioned. It's really just what are the venues or the legal basis through which they could kind of achieve or litigate this. But their ability to litigate at all is certainly not in question.

Amanda Salz:  Okay. I think this next question may be a little bit outside of the scope of your role as an amicus in this case. But just in case you have any familiarity, one questioner asks, “Did you seek initial en banc consideration of this case? Why or why not? “More of a procedural question.

Mary Margaret Beecher:  Yeah, that's a procedural question, of course. I don't know, but I do know I've read the majority of the filings in this case. And I didn't see any requesting en banc, but I don’t know. I can't say for sure that that wasn't requested.

Amanda Salz:  Okay. Are there any other federal appellate cases on this question?

Mary Margaret Beecher:  On the question of whether federal 501(c)(3) status is financial assistance, I think not. I think there are two district court cases that held this back, as I said, in the ‘70s and ‘80s. But on this issue, I don't think there's any contrary authority. And I think that there is favorable authority.

Amanda Salz:  Okay. And then so if the district court's opinion is affirmed, which federal agency would be responsible for enforcement?

Mary Margaret Beecher:  Yeah, that's a good question, and it's probably a little bit out of my area of focus. But I know that the Department of Justice is the one that is implementing Title IX. So I assume it would probably be the Department of Justice in partnership maybe with the Department of Education. Yeah, that would be my expectation, but I don't know that for sure.

Amanda Salz:  Okay. I think we've hit all the questions in here. If others have any, you can add those in now, but I’m just making sure we didn't miss anything. Yeah. It looks like that really covers everything.

I mean, this has been a great conversation so far. I don't know if you have any concluding thoughts as we wait and see if any other questions come in or just anything else you'd like to address.

Mary Margaret Beecher:  Well, I would encourage everyone listening to continue tracking this case specifically. And I would like to see more engagement just generally on the tension we discussed between the subsidy theory and some other theories of exemption just because I think as the culture becomes more polarized, some of these distinctions become less academic and much more practical. And so I think we would be doing our duty to engage with those conversations now and make sure that everyone's perspective is being heard as these issues are being debated and resolved.

Amanda Salz:  Great. Well, thanks so much, Mary Margaret.

Mary Margaret Beecher:  Thanks, Amanda.

Amanda Salz:  I think Chayila may want to come back on to close us out.

Chayila Kleist:  Absolutely. Thank you so much for joining us. We really appreciate you taking the time and giving us the benefit of your valuable time and expertise today. To our audience, we also thank you for giving us a portion of your afternoon and joining and participating.


We welcome listener feedback by email at [email protected]. And as always, keep an eye on our website and your emails for announcements about other upcoming virtual events. With that, thank you all for joining us today. We're adjourned.