Posted by Eugene Volokh:
Lawsuit Alleging that AIG's Use of Sharia-Compliant Financing Violates the
Establishment Clause Survives a Motion To Dismiss:
http://volokh.com/archives/archive_2009_05_24-2009_05_30.shtml#1243464959
The case in [1]Murray v. Geithner, and here's an excerpt:
A motion brought pursuant to Fed. R. Civ. P. 12(b)(6) for failure
to state a claim upon which relief may be granted tests the legal
sufficiency of Plaintiff�s claims. The Court must accept as true
all factual allegations in the pleadings, and any ambiguities must
be resolved in Plaintiff�s favor. While this standard is decidedly
liberal, it requires more than the bare assertion of legal
conclusions. Thus, a plaintiff must make �a showing, rather than a
blanket assertion of entitlement to relief� and �[f]actual
allegations must be enough to raise a right to relief above the
speculative level.� ...
The Establishment Clause of the First Amendment provides that
�Congress shall make no law respecting an establishment of
religion.�. The clause has been construed as preventing the
government �from enacting laws that have the purpose or effect of
advancing or inhibiting religion.� The Court examines Establishment
Clause challenges under the test delineated in Lemon v. Kurtzman,
403 U.S. 602, 612�13 (1971): �First, the statute must have a
secular legislative purpose; second, its principal or primary
effect must be one that neither advances nor inhibits religion;
finally, the statute must not foster �an excessive government
entanglement with religion.�� Recent Supreme Court decisions have
modified the test slightly by �fold[ing] entanglement analysis into
the effect analysis because �entanglement is . . . an aspect of the
inquiry into a statute�s effect.�� Establishment Clause queries are
conducted under the objective reasonable observer standard.
It is beyond question that the EESA [the Emergency Economic
Stabilization Act of 2008] does not violate the Establishment
Clause on its face. Congress enacted the EESA in response to what
the parties portray as a monumental economic crisis for the sole
purpose of restoring stability to financial institutions. The
statute makes no mention of religion or religious institutions.
Instead it focuses entirely on institutions that are primarily, and
in most cases entirely, secular. Nothing from the plain text of the
statute hints at an improper relationship between the government
and religion.
It is the application of the EESA as it relates to AIG, however,
that Plaintiff challenges. The Supreme Court has previously
permitted as-applied challenges to facially constitutional
statutes. ...
The circumstances of this case are historic, and the pressure upon
the government to navigate this financial crisis is unfathomable.
Times of crisis, however, do not justify departure from the
Constitution. In this case, the United States government has a
majority interest in AIG. AIG utilizes consolidated financing
whereby all funds flow through a single port to support all of its
activities, including Sharia-compliant financing. Pursuant to the
EESA, the government has injected AIG with tens of billions of
dollars, without restricting or tracking how this considerable sum
of money is spent. At least two of AIG�s subsidiary companies
practice Sharia-compliant financing, one of which was unveiled
after the influx of government cash. After using the $40 billion
from the government to pay down the $85 billion credit facility,
the credit facility retained $60 billion in available credit,
suggesting that AIG did not use all $40 billion consistent with its
press release. Finally, after the government acquired a majority
interest in AIG and contributed substantial funds to AIG for
operational purposes, the government co-sponsored a forum entitled
�Islamic Finance 101.� These facts, taken together, raise a
question of whether the government�s involvement with AIG has
created the effect of promoting religion and sufficiently raise
Plaintiff�s claim beyond the speculative level, warranting
dismissal inappropriate at this stage in the proceedings.
I'm surprised that the court has allowed the case to go forward, for
reasons I described [2]when the case was filed. At the same time, I
continue to expect that the case will be thrown out, either on summary
judgment or on appeal, for those very reasons. As I noted earlier, the
theory is apparently that the government may not invest in any company
that, in part of its operations, provides products that are tailored
to a particular religious faith, and that may be accompanied by
donations to religious charities. But lots of companies do this, for
the simple reason that religious consumers have their religious tastes
such as consumers have other ethical or esthetic tastes.
For instance, a food processing company might have a division that
produces kosher products and donates some money to Jewish-specific
charities (as a way of better wooing Jewish buyers). An investment
company might seek to attract conservative Christian investors by
offering a fund that doesn't invest in (say) hospital chains that
perform abortions, and by donating some share of its profits to
religious causes. Other companies might provide funds that don't
invest in munitions manufacturers, to satisfy the desires of Quaker
investors. A store might sell, among other products, religiously
significant garments or religious symbols. A bookstore might sell
religious books alongside other books.
Under the plaintiffs' theory, either Islam is subject to special
constitutional constraints, or -- once that constitutionally forbidden
legal rule is rejected -- all of these companies would somehow be
forbidden as targets of government investments. The government
couldn't bail them out. It presumably couldn't invest public employee
retirement funds in them. It couldn't sell religious books alongside
other books in public university bookstores, or serve kosher food
alongside other food in public university cafeterias.
Likewise, [3]a state-run liquor store wouldn't be able to stock kosher
wine. (Visit [4]this site, search for "kosher," and you'll see how
much kosher wine the apparently Establishment-Clause-violating New
Hampshire State Liquor Commission does indeed sell.) That's plainly
wrong, under any sound theory of the Establishment Clause, or even
under the broadest theories suggested by Justice Brennan and other
Establishment Clause maximalists.
The government investment decisions don't have a "primary religious
purpose," because the obvious purpose is to prop up important
companies -- and have them continue making as much money as possible
-- and not to advance Islam. The government no more cares about
advancing Sharia through the AIG bailout than my local Ralphs
supermarket (or the New Hampshire State Liquor Commission) cares about
advancing kosher laws by selling products that are certified kosher.
The "primary religious effect" inquiry has always been extremely
vague, but none of the precedents applying that inquiry would treat
the continued provision by AIG of products that some religious
customers like as a "primary religious effect."
The "endorsement" argument doesn't make sense here, because reasonable
observers wouldn't treat the government's decision to bail out AIG,
including its subdivision that sells financial products that Muslims
prefer for religious reasons, as an endorsement of Islam. Again, the
"endorsement" test is quite vague, but this is a pretty clear example:
Making money by satisfying some customers' religious preferences (and
lots of other customers' nonreligious preferences) isn't an
endorsement of religion. Nor does the allegation that some of the
money that is raised is donated to Muslim charities affect the
analysis. That donating money to religious charities is good business
for AIG doesn't make it impermissible for the government -- which
after all wants AIG to make as much money as possible, so the
government isn't left paying the bill -- to invest in AIG.
The only even theoretically plausible objection in such cases, I
think, arises if the government becomes too entangled in the religious
decisions of the company, for instance if government officials end up
supervising the programs and deciding what Sharia law truly requires,
or [5]what really is or isn't kosher. But on the facts this just
doesn't seem to be so: The operational decisions related to these
religiously themed products and programs are made by the company (or
perhaps even by the company's subcontractors), not by government
officials. There seems to be no danger that some government officer
would have to engage in quintessentially religious activities. And it
is government decisionmaking, not government stock ownership, that
triggers the Establishment Clause, which is one reason that government
employee retirement plans can invest in companies without making them
state actors governed by the Free Speech Clause, the Establishment
Clause, the Due Process Clause, and so on. (This distinguishes the
[6]hypothetical of a government-chartered school, which remains a
government actor, engaging in religious education.)
It's not exactly clear from the court's opinion what sort of facts the
judge envisions might be enough to prove an Establishment Clause
violation. If the judge believes that there'd be an Establishment
Clause violation simply if it were proven at trial that government
money is flowing to "Sharia-compliant financing," or that the
government is cosponsoring an "Islamic Finance 101" forum, then the
plaintiffs will win -- but they shouldn't, and I'm pretty confident
that such a decision would be reversed on appeal. Such catering to
consumer preferences is no more an Establishment Clause violation than
a [7]state-owned liquor store's stocking kosher wine in order to
satisfy its kosher-observing customers, plus educating its employees
and contractors on which wines kosher-observing customers prefer.
On the other hand, perhaps the judge is waiting to see whether there's
evidence of some other alleged misbehavior -- maybe what I mentioned
in the paragraph beginning "The only even theoretically plausible
objection" (though again it's hard to tell, because the opinion is so
terse on the subject). In that case, I'd expect that absent evidence
of some such misbehavior, the case will be thrown out on summary
judgment, as I think it should be.
References
1. http://www.saneworks.us/uploads/news/applications/43.pdf
2. http://volokh.com/posts/1229464059.shtml
3. http://www.nh.gov/liquor/index.shtml
4. http://www.nh.gov/liquor/index.shtml
5. http://volokh.com/2002_07_07_volokh_archive.html#85230182
6.
http://prawfsblawg.blogs.com/prawfsblawg/2008/12/the-church-or-mosque-of-aig.html
7. http://www.nh.gov/liquor/index.shtml
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