Gaylor, Annie et al v. Lew, Jacob et al

Filing 35

OPINION & ORDER granting 21 Motion to Intervene. Signed by District Judge James D. Peterson on 1/19/17. (jat)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

ANNIE LAURIE GAYLOR; DAN BARKER;
IAN GAYLOR, personal representative of
the estate of Anne Nicol Gaylor; and
FREEDOM FROM RELIGION FOUNDATION, INC,
Plaintiffs,
v.

OPINION & ORDER

JACOB LEW, Secretary of the United States
Department of Treasury; JOHN KOSKINEN,
Commissioner of the Internal Revenue
Service; and the UNITED STATES OF
AMERICA,

16-cv-215-bbc1

Defendants.
Plaintiffs Annie Laurie Gaylor, Dan Barker, Ian Gaylor, and Freedom from Religion
Foundation, Inc. are proceeding on a claim that 26 U.S.C. § 107(2) violates the
Establishment Clause because that law allows a “minister of the gospel” to exclude from his
taxable income a “rental allowance paid to him as part of his compensation,” but the law does
not provide the same benefit to similarly situated secular employees. Now before the court is
a motion to intervene under Federal Rule of Civil Procedure 24 filed by Bishop Edward
Peecher, Chicago Embassy Church, Father Patrick Malone, Holy Cross Anglican Church, and
the Diocese of Chicago and Mid-America of the Russian Orthodox Church Outside of Russia.
Dkt. 21.
Because the proposed intervenors have shown that they meet the requirements to
intervene as of a right under Rule 24(a)(2), the court will grant their motion. This makes it
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Because Judge Crabb is on medical leave, I am issuing this order to prevent an undue delay
in the progress of this case.

unnecessary to consider the proposed intervenors’ alternative arguments regarding permissive
intervention under Rule 24(b).

ANALYSIS
Under Rule 24(a)(2), a party may intervene as of a right if she meets the following
requirements: (1) the motion to intervene is timely; (2) the proposed intervenor possesses an
interest related to the subject matter of the action; (3) disposition of the action threatens to
impair that interest; and (4) the parties may not represent the interest adequately. Ligas v.
Maram, 478 F.3d 771, 773-74 (7th Cir. 2007).
Plaintiffs have not filed an opposition brief to the motion to intervene, so presumably
they agree with the proposed intervenors that each element of the above standard is satisfied.
The government opposes intervention, but does not raise any arguments about the first two
requirements. The court concludes that the first two requirements are met. Because the
merits of plaintiffs’ claim have not yet been resolved and the proposed intervenors represent
that they do not need any changes to the schedule, the motion is timely. And because it is
undisputed that the proposed intervenors are part of the group that would lose their tax
exemption if 26 U.S.C. § 107(2) is invalidated, it is clear that they have a concrete interest in
the outcome of the case. In fact, no group of people face more to lose if plaintiffs succeed
than ministers such as the proposed intervenors.
The two issues in dispute are whether the proposed intervenors’ interest will be
impaired if they cannot intervene and whether the government adequately represents that
interest. The proposed intervenors’ arguments regarding both issues are straightforward. As
to the impairment of their interest, each of them is located within Seventh Circuit, so if this

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court and the court of appeals rules in favor of plaintiffs, the proposed intervenors will lose
their tax exemption. As to the adequacy of the government’s representation, the proposed
intervenors do not for the most part challenge the government’s competence, but rather
contend that the government’s interests are different from theirs. In particular, the proposed
intervenors say that they want to defend § 107(2) from their own perspective, arguing that
striking down § 107(2) would violate their constitutional rights under the Free Exercise
Clause, the Establishment Clause, and the Due Process Clause.

Also, the proposed

intervenors want to provide facts to the court related to how the tax exemption they receive
works in practice, which they believe will help to demonstrate that § 107(2) has a secular
purpose and effect and does not violate the Establishment Clause.
The court is persuaded that the proposed intervenors have satisfied the requirements
for intervening as of right and rejects the government’s arguments to the contrary.

The

government says that denying intervention would not impair the proposed intervenors’
ability to protect their interest because, in the event of an adverse ruling, they could seek
relief directly with the IRS, either through a “prepayment review” or by paying the tax and
then suing for a refund. That argument is not persuasive for two reasons.

First, the

government does not explain how the agency could simply disregard an adverse decision in
this case, particularly if that ruling were upheld on appeal. Even if the decision did not have
preclusive effect, it would at the very least be persuasive authority that a minster would have
to convince the IRS not to follow. Flying J, Inc. v. Van Hollen, 578 F.3d 569, 573 (7th Cir.
2009) (“[C]oncern with the stare decisis effect of a decision can be a ground for
intervention.”); See also 6 James Wm. Moore et al., Moore's Federal Practice § 24.03[3][b] (3d
ed. 2016) (proposed intervenor does not have to show that it would be bound by decision; “a

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negative stare decisis effect and other types of impairment will satisfy the rule as well”).
Second, the alternatives the government suggests would impose their own costs and burdens,
particularly if the ministers were to pay the tax and sue for a refund. Flying J, 578 F.3d at 573
(proposed intervenor’s interest may be impaired if alternative means of enforcing right
“would impose substantial inconvenience on the [intervenor] with no offsetting gain”).
As to whether the government can adequately represent the proposed intervenors, the
parties debate whether the government is entitled to a presumption of adequacy. The court
need not resolve that dispute because the proposed intervenors have overcome whatever
presumption the government should receive.
The government relies on Wisconsin Education Association Council v. Walker, 705 F.3d
640, 658-59 (7th Cir. 2013), in which the court upheld the denial of a motion to intervene,
stating that “the Employees [the proposed intervenors] and the state [the defendant]
share[d] the same goal: protecting [a law] against the [plaintiffs’] constitutional challenge.”
As the government points out, the same is true in this case: both the government and the
proposed intervenors want the court to uphold § 107(2). However, the court of appeals went
on to say that the proposed intervenors “identif[ied] no conflict rendering the state’s
representation inadequate. Instead, [they relied] largely on post hoc quibbles with the state’s
litigation strategy.” Id. In this case, the proposed intervenors have pointed to more than just
quibbles with strategy. As described above, they wish to raise issues of both fact and law
regarding how § 107(2) and plaintiffs’ challenge to it affects the interests of ministers. The
government does not deny that it has no intention of raising those issues in this case. City of
Chicago v. Fed. Emergency Mgmt. Agency, 660 F.3d 980, 985-86 (7th Cir. 2011) (“[I]ntervention
[is allowed] as a matter of right when an original party does not advance a ground that if

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upheld by the court would confer a tangible benefit on an intervenor who wants to litigate
that ground.”). See also 6 James Wm. Moore et al., Moore's Federal Practice § 24.03[4][a] (3d
ed. 2016) (government’s representation “frequently” not adequate “when one group of
citizens sues the government, challenging the validity of laws or regulations, and the citizens
who benefit from those laws or regulations wish to intervene and assert their own, particular
interests rather than the general, public good”).
The government also relies on Freedom from Religion Foundation, Inc. v. Geithner, 644
F.3d 836 (9th Cir. 2011). At first look, that case looks like it is on all fours with this one.
After all, it involved the same challenge to § 107(2) and the question before the court of
appeals was whether ministers who could lose their tax exemption should be permitted to
intervene as of right under Rule 24(a)(2). The court focused solely on the question whether
the government was an adequate representative of the ministers and the court concluded that
it was. Geithner, 644 F.3d at 842.2
A closer look at Geithner shows that it is distinguishable for the same reasons as
Walker. In Geithner, the ministers did not identify any issues that they wished to raise that the
government was not already raising.

Because the proposed intervenors in this case have

identified multiple issues of both fact and law that will not be argued if their motion is
denied, Geithner is not instructive.
Finally, the government says that the proposed intervenors can protect their interest
simply by filing an amicus brief in this case. This might be persuasive if the proposed
intervenors simply wanted to make legal arguments, but, again, the proposed intervenors
2

After Freedom from Religion Found., Inc. v. Geithner, 644 F.3d 836 (9th Cir. 2011), was
remanded to the district court, the parties agreed without explanation to dismiss the case
without prejudice. Case no. 2:09-cv-02894-WBS-DAD, Dkt. 87 (E.D. Cal. June 17, 2011).

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want an opportunity to develop the record with facts showing how the tax exemption they
receive works in practice. Because amici have no right to submit evidence to the court, a
brief would not be adequate.
In sum, the court concludes that the proposed intervenors have satisfied each of the
requirements for intervening as of right under Rule 24(a)(2). No other group of people has
the potential to be more significantly affected by this case than ministers such as the
proposed intervenors and those they represent. In light of that substantial interest, the
unique perspective that the proposed intervenors could provide and the absence of any
showing of prejudice to the other parties, the court sees no reason to deny the request to
intervene.

ORDER
IT IS ORDERED that the motion to intervene filed by Bishop Edward Peecher,
Chicago Embassy Church, Father Patrick Malone, Holy Cross Anglican Church, and the
Diocese of Chicago and Mid-America of the Russian Orthodox Church Outside of Russia,
Dkt. 21, is GRANTED.
Entered January 19, 2017.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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