Section  of State and Local Government







State & Local News
Vol. 21, No. 2, Winter 1998

SUPREME COURT WATCH

By Beate Bloch

This column concludes the roundup of decisions issued in the closing days of the Court's October 1996 Term.

First Amendment
In Agostini v. Felton, 65 U.S.L.W. 4524 (decided June 23), petitioner sought relief under Fed. R. Civ. Proc. 60(b) from the injunction entered after the Supreme Court's earlier decision in Aguilar v. Felton, 473 U.S. 402 (1985). In Aguilar, the Court had ruled that the Establishment Clause barred New York City from sending public school teachers into parochial schools to provide remedial education to disadvantaged children. Here, the district court denied petitioner's motion, and the Second Circuit affirmed. The Supreme Court reversed 5B4.

Justice O'Connor, for the Court, held that Aguilar was no longer good law because of supervening decisions. The opinion cited Zoberst v. Catalina Foothills School District, 509 U.S. 1 (1993) (holding it permissible for a deaf student to bring a state-employed sign language interpreter to his Catholic high school); and Witters v. Washington Department of Services for the Blind, 474 U.S. 481 (1986) (upholding a grant made directly to a blind student who intended to use it for a religious education).

Justice Souter, joined by Justices Stevens, Ginsburg, and Breyer, dissented, on the ground that Aguilar was still good law, and that Zoberst and Witters were distinguishable. The other dissenters also joined Justice Ginsburg's separate opinion, finding the whole procedure a misuse of a Rule 60(b) motion.

Boerne, Texas v. Flores, 65 U.S.L.W. 4612 (decided June 25), arose under the Religious Freedom Restoration Act of 1993 (RFRA), which was passed by Congress in the wake of the Court's decision in Employment Division, Department of Human Resources of Oregon v. Smith, 494 U.S. 872 (1990). In Smith, the Court upheld the denial of unemployment compensation to two drug counselors who had been dismissed for their sacramental use of peyote, because the state's criminal law prohibiting the use of controlled substances was a neutral, generally applicable law.

In Flores, the city's zoning authority denied a building permit for enlargement of a church located in what had been designated a historic district, because there had been no pre-approval by the Historic Landmark Commission. The decision was challenged under the RFRA, which prohibits a government from substantially burdening a person's exercise of religion even if the burden results from a rule of general applicabilityCunless the state demonstrates a compelling governmental interest and shows that the burden is the least restrictive means to protect that interest. The Court, voting 6B3, held the Act invalid.

Justice Kennedy's opinion for the Court found that the statute "cannot be considered remedial, preventive legislation." By making any law "subject to challenge at any time by any individual who alleges a substantial burden on his or her free exercise of religion," the RFRA "is a considerable congressional intrusion into the States' traditional prerogatives and general authority to regulate for the health and welfare of their citizens."

Justice Stevens, concurring, thought that the RFRA is a "law respecting an establishment of religion" that violates the First Amendment. It shows a government preference for religion, because there would have been no question of permit eligibility if the building had not been owned by the Catholic Church.

Justice Scalia's concurring opinion, joined by Justice Stevens, responded to Justice O'Connor's dissenting opinion, which was joined by Justice Breyer. They thought that Smith had been wrongly decided, and should be re-examined before the RFRA was reviewed. Dissenting opinions were also filed by Justices Souter and Breyer.

Commerce Clause
Camps Newfound/Owatonna v. Harrison, Maine, 65 U.S.L.W. 4337 (decided May 19, 1997), involved the "Camps," a nonprofit corporation operating a summer camp in Maine for children of the Christian Science faith, 95 percent of whom were nonresidents of the state. A Maine tax statute provides an exemption for charitable institutions incorporated in the state. Camps, which could not qualify for the exemption, sued to obtain a refund of taxes paid in 1989B91 and an exemption from future taxes.

Justice Stevens' opinion for the Court, joined by Justices O'Connor, Kennedy, Souter, and Breyer, noted that the Commerce Clause is a limitation on the power of the states. Camps was engaged in commerce, in a manner comparable to a hotel. A real estate tax, like any other tax, can burden commerce, and the statute at issue expressly distinguishes between entities serving interstate and intrastate markets. Nonprofits are not excluded from the negative Commerce Clause. The Court refused to treat the tax exemption as a subsidy.

Justice Scalia, joined by the Chief Justice and Justices Thomas and Ginsburg in dissent, described "the provision at issue" as "a narrow tax exemption, designed merely to compensate or subsidize those organizations that contribute to the public fisc by dispensing public benefits the State might otherwise provide." Justice Thomas' separate dissent, joined by the Chief Justice and Justice Scalia, objected to the "negative" Commerce Clause, and noted that the tax in this case was imposed on real estate and was not a duty on imports.

Taking
Suitum v. Tahoe Regional Planning Agency, 65 U.S.L.W. 4385 (decided May 27), involved a plan adopted by the Agency in 1987, which prohibited "additional land coverage or other permanent land disturbance" in Stream Environment Zones (SEZs). Suitum's property, located in a SEZ, was ineligible for development, but was entitled to "Transferable Development Rights" (TDRs). She filed an action for compensation for a regulatory taking. The Ninth Circuit held her claim not ripe for decision, because she had not tried to transfer her TDRs. The Supreme Court reversed, without dissent. Justice Souter's opinion for the Court pointed out that the only question remaining to be decided was the market value of the TDRs, which could be determined by the court. Justice Scalia, joined by Justices O'Connor and Thomas, concurred in part and concurred in the judgment.

ERISA Preemption
In De Buono v. NYSA-ILA Medical and Clinical Services Funds, 65 U.S.L.W. 4410 (decided June 2), the Court upheld the New York Health Facility Assessment (HFA) tax of .6 percent on the gross receipts for patient services at diagnostic and treatment centers. The question was whether ERISA precluded imposition of the tax on the income of medical centers operated by ERISA funds.

Justice Stevens' opinion for the Court found the case governed by New York State Conference of Blue Cross and Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645 (1995), which held that ERISA did not preempt a law requiring hospitals to collect surcharges from patients covered by carriers other than Blue Cross-Blue Shield; and by California Division of Labor Standards Enforcement v. Dillingham Construction, N.A., 65 U.S.L.W. 4097 (decided this term).

The HFA, the Court ruled, is a law of general applicability that "impose[s] some burdens on the administration of ERISA plans," but does "not 'relate to' them within the meaning of the governing statute." The tax was imposed on hospitals, and most hospitals are not owned or operated by ERISA funds.

Justice Scalia, joined by Justice Thomas, dissented on the ground that the Court should have dismissed the case for lack of jurisdiction under the Tax Injunction Act.

In Boggs v. Boggs, 65 U.S.L.W. 4418 (decided June 2), the Court held, 5B4, that ERISA preempts a state law allowing a testamentary transfer by a nonparticipating spouse of her community property interest in undistributed pension benefits. Dorothy, the pensioner's deceased spouse, had willed her community property interest in her husband's pension rights to their sons. He remarried, and Sandra, his surviving spouse, claimed the right to his survivor's annuity. Justice Kennedy, for the majority, noted that ERISA provides that plan benefits "may not be assigned or alienated," and held that the attempted testamentary transfer was a prohibited "assignment or alienation."

Justice Breyer was joined by the Chief Justice, and Justices O'Connor and Ginsburg in dissent.

Tax Injunction Act
Arkansas v. Farm Credit Services of Central Arkansas, 65 U.S.L.W. 4414 (decided June 2), was an action by an organization of four Production Credit Associations (PCAs). PCAs are organized by ten or more farmers, primarily to make loans to farmers, and are chartered by the Farm Credit Administration. They are exempt from state taxes on their "notes, debentures, and other obligations."

The Tax Injunction Act precludes a district court from enjoining the collection of a tax under state law if the state provides a "plain, speedy and effective remedy." The United States, however, may sue to protect itself or one of its instrumentalities from state taxation. The district court granted the PCAs a declaratory judgment and injunctive relief exempting them from the Arkansas sales and income taxes, and the Eighth Circuit affirmed. The Supreme Court reversed, unanimously.

Justice Kennedy, writing for the Court, held that while the PCAs are instrumentalities of the United States, this does not by itself give them the same right as the United States has to avoid the Tax Injunction Act. They have no regulatory authority. The United States was not a co-plaintiff, and, in fact, opposed jurisdiction.

Due Process
In Kansas v. Hendricks, 65 U.S.L.W. 4564 (decided June 23), the Court, voting 5B4, upheld the Kansas Sexually Violent Predator Act, which provides for civil commitment of persons likely to engage in "predatory acts of sexual violence."

Justice Thomas, writing for the majority, noted that the Act requires a finding of dangerousness to self or others, as well as a showing of "mental abnormality" or "personality disorder," as a prerequisite to involuntary confinement. There was no double jeopardy, because neither a criminal conviction nor a criminal intent was a prerequisite to civil commitment. The predator was treated like a patient, rather than a prisoner, and a new judicial proceeding was required to continue the confinement after one year. Justice Kennedy wrote a concurring opinion.

Justice Breyer, joined by Justices Stevens and Souter and, in part by Justice Ginsburg, dissented on the ground that the Kansas statute was an ex post facto law, which just imposed a further punishment. No treatment was provided until after Hendricks' release from prison and only inadequate treatment thereafter.


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