Freedom From Religion Foundation, Inc. v. Shulman, Douglas
Filing
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ORDER granting 25 Motion to Intervene signed by District Judge Lynn Adelman on 2/3/14. (dmm)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WISCONSIN
FREEDOM FROM RELIGION FOUNDATION, INC.,
Plaintiff,
v.
Case No. 12-C-0818
JOHN KOSKINEN, Commissioner
of the Internal Revenue Service,
Defendant.
DECISION AND ORDER
Section 501(c)(3) of the Internal Revenue Code exempts entities that are organized
and operated exclusively for religious, charitable, scientific, or other specified purposes
from having to pay federal income taxes. A condition of this exemption is that the entity
not participate or intervene in any political campaign on behalf of, or in opposition to, any
candidate for public office. 26 U.S.C. § 501(c)(3). The plaintiff in this case, the Freedom
from Religion Foundation, alleges that the Internal Revenue Service has a policy of not
enforcing this condition to tax-exempt status against churches and religious organizations.
At the same time, the Foundation alleges, the IRS enforces the condition against other taxexempt organizations. The Foundation, which is itself a § 501(c)(3) organization, contends
that the IRS’s policy of disparate treatment violates its rights under both the Establishment
Clause and the equal-protection component of the Due Process Clause of the Fifth
Amendment. For relief, the Foundation seeks a declaratory judgment stating that the IRS’s
alleged policy of providing preferential treatment to churches and religious organizations
is unlawful, as well as an injunction requiring the IRS to abandon that policy. The IRS
denies that it has a policy of not enforcing § 501(c)(3)’s electioneering restrictions against
churches and religious organizations.
Before me now is a motion to intervene filed by Father Patrick Malone and the Holy
Cross Anglican Church. The church is a tax-exempt organization that does not obey the
electioneering restrictions of § 501(c)(3). See Decl. of Father Patrick Malone ¶¶ 4, 29. In
particular, Father Malone, the vicar of the church, regularly makes statements during
worship services and church gatherings in which he urges members of the congregation
to vote for or against certain candidates for public office. Id. ¶¶ 11–12, 20. So far,
however, the IRS has not taken any action in response to the church’s activities. Id. ¶ 29.
But the church and Father Malone are concerned that if the Foundation obtains the relief
it seeks in this lawsuit, then the IRS will be required to “punish” them for having engaged
in political activity. Id. ¶¶ 25–26. Thus, the church and Father Malone claim that they have
an interest in this suit and seek to intervene as defendants. They seek intervention as of
right under Federal Rule of Civil Procedure 24(a)(2) or, in the alternative, permissive
intervention under Rule 24(b)(1)(B). If allowed to intervene, the movants would argue that
they have a legal right to participate in political campaigns without forfeiting their taxexempt status. The movants contend that their position is supported by the Religious
Freedom Restoration Act (“RFRA”) and the Free Speech, Free Exercise, and
Establishment Clauses of the First Amendment.
For a movant to have a right to intervene under Rule 24(a)(2), the movant must
claim “an interest relating to the property or transaction that is the subject of the action”
that might be “impair[ed] or imped[ed]” by the disposition of that action. Fed. R. Civ. P.
24(a)(2). In the present case, the interest that the movants seek to protect is their interest
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in having Father Malone preach to the church about whom to vote for without jeopardizing
the church’s tax-exempt status. They believe that if the Foundation obtains an injunction
requiring the IRS to enforce § 501(c)(3)’s electioneering restrictions against churches and
religious organizations, the IRS will be required to initiate proceedings to possibly revoke
the church’s tax-exempt status on the ground that Father Malone has and will continue to
preach about candidates for political office. However, the threat to this interest is at least
one step removed from this lawsuit. If the Foundation prevails, it will not obtain an order
requiring the IRS to immediately investigate whether Father Malone and Holy Cross have
violated § 501(c)(3)’s electioneering restrictions. Rather, because the IRS does not have
infinite resources and must exercise discretion in choosing which tax-exempt entities to
investigate, it is uncertain whether the IRS, if compelled to enforce the electioneering
restrictions against churches, would ever take any action against Father Malone or Holy
Cross.
Still, in litigating this lawsuit, the Foundation will advance legal arguments that if
accepted would impair or impede the movants’ interests. The Foundation intends to argue
that any policy of non-enforcement of § 501(c)(3)’s electioneering restrictions against
churches and religious organizations violates the Establishment Clause. The movants
contend that the IRS’s enforcing those restrictions against churches and religious
organizations would violate the Establishment Clause. So if the Foundation prevails, a
cloud would be cast over the movants’ argument that the Establishment Clause prevents
the IRS from enforcing the electioneering restrictions against churches and religious
organizations. The movants should be permitted to intervene in this case for the purpose
of protecting their argument.
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It is true that even if the Foundation prevails, the movants will still have a chance to
litigate the issue of whether the Establishment Clause and other laws grant them a right
to both preach about candidates for office and maintain their tax-exempt status. Because
the movants, if denied intervention, would not be bound by any of the orders entered in this
case or be precluded from advancing contrary legal arguments in the future, they will be
free to assert the Establishment Clause as a defense in any IRS action to revoke their taxexempt status. “But the possibility that the would-be intervenor if refused intervention
might have an opportunity in the future to litigate his claim has been held not to be an
automatic bar to intervention.” City of Chicago v. Fed. Emergency Mgmt. Agency, 660
F.3d 980, 985–86 (7th Cir. 2011). Rather, “[c]ases allow intervention as a matter of right
when an original party does not advance a ground that if upheld by the court would confer
a tangible benefit on an intervenor who wants to litigate that ground.” Id. Here, the
movants wish to advance the argument that the IRS may not enforce the electioneering
restrictions of § 501(c)(3) against churches and religious organizations, an argument that
the original party, the IRS, does not intend to advance and which, if successful, would
confer a tangible benefit on the movants.
The Foundation points out that the Tax Anti-Injunction Act, 26 U.S.C. § 7421(a),
generally forbids courts from entertaining suits to prevent the IRS from enforcing the Tax
Code, and that therefore the movants could not commence a separate action against the
IRS to obtain a ruling that they may engage in political campaigning without jeopardizing
their tax-exempt status. The Foundation contends that the movants should not be
permitted to use intervention to obtain relief that would otherwise be barred by § 7421(a).
But the movants are not intervening for the purpose of obtaining relief against the IRS; they
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are intervening for the purpose of preventing the Foundation from obtaining relief against
the IRS that would be inconsistent with their argument that the IRS may not enforce the
electioneering restrictions of § 501(c)(3) against them. Even if the movants are successful
in showing in this action that they have a legal right to both participate in political
campaigns and keep their tax-exempt status, they would not obtain any relief against the
IRS. Indeed, the movants propose to intervene as defendants—on the side of the
IRS—and have not indicated that they would bring a cross-claim against the IRS. Really
what the movants seek is not to establish their right to engage in political activity while
maintaining their tax-exempt status, but to prevent the Foundation from obtaining relief that
would be inconsistent with, and therefore impair or impede, their later establishing that
right. Thus, allowing the movants to intervene would not implicate the Tax Anti-Injunction
Act.
To have a right to intervene, the movants must show not only that the disposition of
the suit could impair or impede their interests, but also that the existing parties will not
adequately represent their interests. See Fed. R. Civ. P. 24(a)(2). In the present case,
the IRS will adequately represent the movants’ interests to some extent. Like the movants,
the IRS wishes to prevent the Foundation from obtaining an order requiring it to enforce
§ 501(c)(3)’s electioneering restrictions against churches and religious organizations. But
the IRS’s defense is that it does not have a policy against enforcing those restrictions
against churches and religious organizations in the first place. The IRS does not intend
to argue that, if it is determined that it has such a non-enforcement policy, the policy is
justified or compelled by the Establishment Clause and other laws. Thus, the IRS does
not fully represent the movants’ interests. However, unless the Foundation is able to prove
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that the IRS has a policy of not enforcing the electioneering restrictions against churches
and religious organizations, the movants will have no occasion to advance their legal
arguments. As discussed, the movants do not (and because of the Tax Anti-Injunction Act
probably cannot) assert a cross-claim against the IRS. So if the IRS succeeds in showing
that it does not have a policy against enforcing § 501(c)(3)’s electioneering restrictions
against churches and religious organizations, the case will be over and the movants will
have nothing to do. Still, this does not mean that the movants cannot intervene now and
wait on the sidelines in case there comes a time in the suit when their legal interests
require protection.
A final requirement for intervention is that the motion to intervene be timely, and the
Foundation contends that the present motion is untimely. However, the Foundation has
not pointed to any prejudice caused by the timing of the motion, and I cannot detect any.
The primary issue in this case is the factual one of whether the IRS has a policy of not
enforcing the electioneering restrictions of § 501(c)(3) against churches and religious
organizations. As noted, only if this issue is resolved in favor of the Foundation will the
movants have any need to present their legal arguments. The earliest time to present
those arguments would be summary judgment, and motions for summary judgment are not
due until April 1, 2014. The movants have not indicated that they wish to take any
discovery, and because the issues they seek to litigate are pure legal issues, it is hard to
envision them having a need to take discovery. Here, the motion to intervene was filed on
December 12, 2013, well in advance of the summary-judgment deadline, and in the
context of this case that was early enough to render the motion timely.
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Accordingly, the motion to intervene is GRANTED.
Dated at Milwaukee, Wisconsin this 3rd day of February, 2014.
s/ Lynn Adelman
_____________________________
LYNN ADELMAN
District Judge
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