Equal Employment Opportunity Commission v. St. Francis Xavier School and Church 99-5428 CASE BEING CONSIDERED FOR TREATMENT PURSUANT TO RULE 34(j) OF THE GENERAL RULES. IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 99-5428 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. ST. FRANCIS XAVIER SCHOOL and ST. FRANCIS XAVIER CHURCH, Defendants-Appellees. Appeal from the United States District Court for the District of Columbia REPLY BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION C. GREGORY STEWART General Counsel PHILIP B. SKLOVER Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel JULIE L. GANTZ Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of the General Counsel 1801 L Street, N.W. Washington, D.C. 20507 (202) 663-4718 TABLE OF CONTENTS TABLE OF CONTENTS i TABLE OF AUTHORITIES ii GLOSSARY iii SUMMARY OF ARGUMENT 3 ARGUMENT 5 CONCLUSION 16 CERTIFICATE OF LENGTH CERTIFICATE OF SERVICE TABLE OF AUTHORITIES CASES Albers v. Church of the Nazarene, 698 F.2d 852 (7th Cir. 1983) 10 In re Convertible Rowing Exerciser Patent Litigation, 817 F. Supp. 434 (D. Del. 1993) 12 F.E.L. Publications, Ltd. v. Catholic Bishop of Chicago, 754 F.2d 216 (7th Cir. 1985) 10 Geary v. Visitation of the Blessed Mary Parish Sch., 7 F.3d 324 (3d Cir. 1993) 15 Griffith v. Keystone Steel and Wire, 887 F. Supp. 1133 (C.D. Ill. 1995) 12 Planned Parenthood v. Holy Angels Catholic Church, 765 F. Supp. 617 (N.D. Cal. 1991) 15 Saud v. Chicago Police Dep't, 1986 WL 8373 (N.D. Ill.) 12 United States v. BCCI Holdings (Luxembourg), S.A., 833 F. Supp. 32 (D. D.C. 1993), aff'd 46 F.3d 1185 (D.C. Cir. 1995) 11 United States v. ITT Blackburn Co., 824 F.2d 628 (8th Cir. 1987) 11 Wright v. Manatee County, 717 F. Supp. 1493 (M.D. Fla. 1989) 15 STATUTES Americans with Disabilities Act 42 U.S.C. § 12101 et seq 1 RULES *Fed. R. Civ. P. 17(b) 2, 3, 5, 10, 11, 12, 16 MISCELLANEOUS *Adam J. Maida & Nicholas Cafardi, Church Property, Church Finances, and Church-Related Corporations 23 (1984) 13-14 Authorities upon which we chiefly rely are marked with asterisks. GLOSSARY 1. "ADA" refers to the Americans with Disabilities Act. 2. "Commission" refers to the Equal Employment Opportunity Commission. 3. "Def. Br." refers to the Brief for Appellees. 4. "Dep." means Deposition. 5. "EEOC" refers to the Equal Employment Opportunity Commission. 6. "EEOC Br." refers to the Brief for Appellant. 7. "JA" means Joint Appendix. 8. "R." refers to the district court's docket sheet. IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 96-5428 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. ST. FRANCIS XAVIER SCHOOL and ST. FRANCIS XAVIER CHURCH, Defendants-Appellees. Appeal from the United States District Court for the District of Columbia REPLY BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION The Commission alleges in this action that St. Francis Xavier School ("School") and St. Francis Xavier Church ("Church") violated the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq., when they refused to interview Roberta Stein for a position as a music teacher at the School because she uses a wheelchair. The district court granted defendants' motion for summary judgment on the ground that they are not suable entities. In so ruling, the court rejected the Commission's argument that the Church and School, taken together, constitute an unincorporated association which may be sued for a breach of federal law under Fed. R. Civ. P. 17(b)(1). According to the court, defendants cannot be an unincorporated association because they are merely "divisions" of the Archdiocese of Washington, a corporation sole. In our opening brief, we pointed out that defendants have all the attributes of an unincorporated association in that they are a collection of individuals, without a charter, formed to promote a common objective. See EEOC Br. at 14. We argued that, in analogizing the relationship between the defendants and the Archdiocese to the relationship between a business corporation and its operating divisions, the district court ignored uncontroverted evidence that defendants are not a division of a corporation in any conventional meaning of that word, and are, in nearly all respects, independent of the Archdiocese. The Commission emphasized that the Church operates independently from the Archdiocese in employment and financial matters to such an extent that it cannot be said to operate under the Archdiocese's charter as a corporate division. For example, we noted that persons applying to work at the School use a form containing a statement that they will not be employees of the Archdiocese if hired, but instead will work for the pastor of the church that runs the particular school, JA 145; the School contracts with employees in its own name, JA 146-47; and the pastor of the Church signs employment contracts and payroll checks for all Church employees, JA 70, 74 (1998 Bava Dep. at 25, 38); JA 110, 112-13 (Salah Dep. at 12, 14-15). We pointed to evidence that defendants raise money through donations, School tuition, and payments for day care services that is deposited into bank accounts in the name of the Church and the School for which the pastor is the sole signatory. JA 77, 78 (1998 Bava Dep. at 50-53, 54-55); JA 118, 121-25 (Salah Dep. at 20, 23-27). EEOC Br. at 16-18. We also pointed out that, under Canon Law, the Catholic Church and defendants view the Church as a public juridic person independent from the Archdiocese. EEOC Br. at 16. In response, defendants repeat the district court's assertion that they are not suable entities, but do not respond to the arguments in the Commission's opening brief or dispute the evidence establishing defendants' independence from the Archdiocese. Instead, defendants spend most of their brief discussing irrelevant matters or issues not in dispute. We submit this short reply to clarify the issue that is actually presented in this appeal. SUMMARY OF ARGUMENT We argued in our opening brief that defendants are an unincorporated association that can be sued to enforce the ADA under Fed. R. Civ. P. 17(b)(1), and that the district court erred in concluding that defendants are merely divisions of the incorporated Archdiocese, and hence lack the capacity to be sued. In response, defendants restate the court's conclusion that they are not suable entities, and do not respond to the Commission's arguments or refute the evidence that the Church and School act autonomously from the Archdiocese. Instead, defendants' brief addresses irrelevant matters or issues not in dispute. First, defendants insist that the Commission mistakenly named the Church as a defendant when the entity controlling the School is really known as the "Parish." However, defendants' use of the term "Church" to connote the entity that operates the School throughout this litigation belies this contention. The Church is the proper defendant. Second, defendants' only response to our argument that the Church and School operate independently from the Archdiocese in financial and employment matters is that the Archdiocese holds title to the real property on which the School and Church are located and defendants are required to submit yearly budgets on a form generated by the Archdiocese. Neither of these undisputed facts addresses or lessens the importance of the fact that defendants generate and control their own assets, contract in their own names, and make their own employment decisions apart from the Archdiocese. Third, case law relied upon by defendants does not dictate a conclusion that the Church and School are improper defendants. Instead, these cases involve state law claims where Rule 17(b) is inapplicable; traditional commercial corporations and their operating divisions that cannot be analogized to the Archdiocese and defendants; and/or unincorporated entities without their own assets. Fourth, defendants quibble with a discussion of Canon Law cited in our opening brief, but their preferred citation is entirely consistent with ours. Defendants ignore the focal issue of this appeal -- whether the Church falls within the definition of "unincorporated association" and operates independently from the Archdiocese to such an extent that it cannot be considered to be an operating division of a corporation. Because defendants are an unincorporated association, as demonstrated in our opening brief, they may be sued under Rule 17(b) to enforce the ADA. ARGUMENT DEFENDANTS MAY BE SUED IN FEDERAL COURT TO ENFORCE THE ADA BECAUSE THEY ARE AN UNINCORPORATED ASSOCIATION WITHIN THE MEANING OF FEDERAL RULE OF CIVIL PROCEDURE 17(b) 1. Throughout this litigation, the Commission has used the title "St. Francis Xavier Church" to refer to the entity, headed by the pastor, which operates St. Francis Xavier School and the day care center, as well as the church itself. Defendants now argue that this appellation is incorrect. They contend that the entity that controls the School and day care center is known as "St. Francis Xavier Parish." According to defendants, "St. Francis Xavier Church" is "nothing more than a building." Def. Br. at 5. This assertion is belied by numerous documents in the record in which defendants themselves use the term "St. Francis Xavier Church" to mean the entity, not the building. Most notably, defendants' mission statement, which we referred to in our opening brief, is flatly inconsistent with defendants' present contention that "St. Francis Xavier Church" is only a building. This document purports to state the philosophy of the "Church," a building according to defendants' brief. Defendants' financial records are likewise inconsistent with its current assertion that the "Church" is merely a building. Each page of the Annual Report and Budget<1> submitted to the Archdiocese features the heading "Summary Balance Sheet - St. Francis Xavier Church" and lists both Church and School data such as "assets" and "liabilities" under this general heading. JA 96-98. In addition, checks for child development services were made out to the Church and deposited in a bank account opened under the Church's name. JA 76, 77 (1998 Bava Dep. at 49, 52). See also JA 89-93 (Income and Expense Statement for St. Francis Xavier Church listing "School Fund Accounts"). In normal usage the term "church" describes both a building where religious services are held and the entity that holds the services and runs any other church-related functions. See Webster's Ninth New Collegiate Dictionary 240 (1986)(defining "church" as a building for worship, and "organization of religious believers," and the "clergy . . . of a religious body"). Defendants' own documents demonstrate that they used the term in both senses. Furthermore, defendants' previous filings in this lawsuit demonstrate that they understand the term "church" to refer to the entity they now prefer to call the "parish." See, e.g., JA 30 & 37(Answer at ¶4, admitting that the Church operates and controls the School and day care center); JA 82-84 (response to interrogatory requesting names of person employed at "church," child development center, and school with lists labeled "school," "development center," and "parish"). By naming "St. Francis Xavier Church" as a defendant in this action, the Commission properly and clearly named the entity operating the School that refused to consider Ms. Stein's application for employment. Defendants' disingenuous argument to the contrary is simply their latest effort to avoid any consideration of the serious allegations of discrimination in the Commission's complaint. 2. In our opening brief we demonstrated why, based on the undisputed evidence in the record, the Church fits the definition of an unincorporated association and why, contrary to the district court's unsupported assertion, the Church cannot be considered a corporate division. In response, defendants simply restate the district court's assertion that the Church is a division of the Archdiocese without responding to the Commission's arguments or offering any basis for disputing the factual record that supports those arguments. Defendants assert without citation to the record that "[t]he entities have no independent assets as contended." Def. Br. at 15. However, as we noted in our opening brief, the uncontested testimonial and documentary evidence demonstrates that the Church and School contract in their own name for goods and services, generate their own income, and store substantial cash assets in their own bank accounts -- assets that could be used to satisfy a judgment against the Church. See JA 76, 77, 78 (1998 Bava Dep. at 48, 50-53, 54-55); JA 118, 121-23 (Salah Dep. at 20, 23-25); JA 88-94 (1992-93 Annual School Report and Budget). Defendants' only response is that the Archdiocese owns the real property on which the Church sits, and that the Church was obligated to use a form created by the Archdiocese when submitting its annual budget to the Archdiocese. See Def. Br. at 9, 15. That the Archdiocese holds title to the Church's real property is entirely consistent with the Commission's assertion that the Church generates and controls substantial assets. Similarly, the Church's use of a form generated by the Archdiocese does not establish that the Archdiocese exerts financial control over the Church in the face of the undisputed evidence that the Archdiocese does not control the day-to-day operations of the Church, direct the Church on how funds are to be spent, or provide regular operating funds to the Church. JA 69, 70 (1998 Bava Dep. at 19-21, 22-24); JA 114, 115 (Salah Dep. at 16, 17). Defendants have essentially ignored the critical issue in this case: that the Church falls within the definition of "unincorporated association" and operates independently from the Archdiocese to such an extent that it cannot be considered to be an operating division of a corporation. 3. In arguing that the district court erred in assuming that the Church is an operating division of the Archdiocese, we relied in our opening brief on the specific uncontroverted facts of the Church's financial independence from the Archdiocese and complete separation from the Archdiocese in employment matters. In response, defendants cite a random assortment of cases reaching a different result under different legal principles and different facts. The cases on which defendants rely involve state law claims, commercial corporations and their operating divisions, or involve unincorporated entities lacking their own assets. Accordingly, none of these cases support the district court's holding in this case. Defendants cite two cases involving churches, but neither is on point. Contrary to defendants' assertion, F.E.L. Publications, Ltd. v. Catholic Bishop of Chicago, 754 F.2d 216 (7th Cir. 1985), does not control this case. The relevant holding was not under the Copyright Act but instead dealt with plaintiff's state law claim of tortious interference with a business relationship. See 754 F.2d at 221. The instant case involves the interpretation of Fed. R. Civ. P. 17(b)(1) which, by its terms, applies only to actions enforcing a substantive right arising under federal law. Moreover, the evidence in F.E.L. Publications revealed that individual parish priests had only limited power to purchase the hymnals and song sheets at issue, and that these materials were actually owned by the Archdiocese. This bears no relation to the facts of the case at bar, where the pastor is the sole signatory on the Church's and School's bank accounts, signs employment contracts and payroll checks, and contracts for goods and services on behalf of the Church and School. Albers v. Church of the Nazarene, 698 F.2d 852 (7th Cir. 1983), also involved a state law tort action; thus plaintiff could not have availed herself of the Rule 17(b) exception. Furthermore, in Albers, the court held that the Church could not be sued because, as an unincorporated division, it had no separate assets. 698 F.2d at 857. This holding has no applicability to this case where it is undisputed that the Church controls its own assets. Nor do other cases cited by defendants, see Def. Br. at 10, support the district court's ruling that the Church is not a proper defendant in this action. All but one of these cases involve commercial corporations and their operating divisions. As we argued in our opening brief, the Church's relationship to the Archdiocese bears no resemblance to the relationship of an operating division to a business corporation. Furthermore, none of these cases were decided under Fed. R. Civ. P. 17(b). United States v. ITT Blackburn Co., 824 F.2d 628 (8th Cir. 1987), involved the sufficiency of a criminal indictment and implicated the Fifth Amendment. The court's holding that a grand jury indictment naming an unincorporated division could not serve to indict the corporation for purposes of the trade embargo violation at issue has no bearing on the central issue in this case. See 824 F.2d at 632. The holdings of several cases cited by defendants rest on the assumption that the corporate division in question has no assets of its own. See United States v. BCCI Holdings (Luxembourg), S.A., 833 F. Supp. 32, 38 (D. D.C. 1993), aff'd 46 F.3d 1185 (D.C. Cir. 1995)(case involving a civil forfeiture provision held that bank branches are not entities separate from their parents because they are subject to the control of the parent bank and their assets belong to the parent bank and are only nominally held in the names of the particular branches); Griffith v. Keystone Steel and Wire, 887 F. Supp. 1133, 1138 (C.D. Ill. 1995)(holding that an unincorporated division of a commercial corporation was not suable in own right because it had no separate assets); In re Convertible Rowing Exerciser Patent Litigation, 817 F. Supp. 434, 443 (D. Del. 1993) (ruling that plaintiff should have named the entity controlling the assets in the complaint). In contrast, the record in this case indicates that only the real property is owned by the Archdiocese and that the Church generates and controls substantial assets. Consequently, the above cases in no way direct a conclusion that the Church lacks the capacity to be sued. The one case cited by defendants where a court rejected the application of Rule 17(b)(1) to a non-commercial entity, Saud v. Chicago Police Dep't, 1986 WL 8373 (N.D. Ill.), is readily distinguishable from this case. In Saud, the court set aside a default judgment against the Chicago Police Department because the Police Department was an organizational department of the City of Chicago. 1986 WL 8373, * 2. Defendants' reliance on Saud is based on the unreasonable assumption that the Chicago Police Department "surely had" its own source of cash income and its own bank account separate and apart from the City of Chicago. It is also extremely doubtful that the Chicago Police Department used an employment application that informs applicants that, if hired, they will not be employees of the City of Chicago.<2> Accordingly, the court's determination in Saud that the police department is not suable in no way supports a determination that the Church lacks the capacity to be sued. 4. In our opening brief, we cited to a treatise on Canon Law in support of our argument that a church such as St. Francis Xavier is considered a separate juridic person that can be sued. See EEOC Br. at 16. Defendants criticize our citation, but then offer a counter-cite that says essentially the same thing. See Def. Br. at 14. The statement defendants cites, that "a legitimately erected parish has juridic personality by the law itself," Def. Br. at 14, citing Canon 515 Sec. 3, is fully consistent with our position that the Catholic church considers the Church a separate entity from the Archdiocese. As the Canon Law treatise we cited clarifies: [S]ince a public juridic person is the object of its own rights and duties, a religious institute, a diocese, or a parish would have rights and duties distinct from the sum total of individual rights and duties of all its members. As its own public juridic person, it may sue and be sued, it may possess and administer property, it may sell off property, and it may contract debts and obligations in its own name and right. Adam J. Maida & Nicholas Cafardi, Church Property, Church Finances, and Church-Related Corporations 23 (1984). The Canon Law cited by defendants adds that a bishop can "erect" or "suppress" a parish. Def. Br. at 14, citing Canon 515, Sec. 2. Contrary to defendants' assertion, this fact does not support the district court's conclusion that the Church is merely a division of a corporation. After all, a corporation may create or dissolve a wholly-owned subsidiary, but that does not mean the subsidiary is merely a division of the corporation. 5. Defendants' brief is replete with tangential and irrelevant points that avoid the central issue of this appeal. First, defendants make the puzzling statement that the Commission "seems to be contesting the District Court's findings on the facts." See Def. Br. at 4. The only facts relevant to this appeal - the undisputed facts regarding the relationship between the Church and the Archdiocese - are not mentioned in the district court's decision. The only other "facts" stated in the EEOC's opening brief consist of a single paragraph summarizing the allegations relevant to the underlying ADA claim. EEOC Br. at 4-5. Although this case was filed over six years ago, the district court has never addressed the merits of the ADA claim. Accordingly, our summary of the allegations in the complaint cannot conceivably be "contesting the District Court's findings on the facts." Defendants also suggest that the Church may not have received notice of the EEOC investigation. Defendants state that "[f]rom the information produced by EEOC, it appears that there was never any notice to the Parish or even to St. Francis Xavier Church by EEOC." Def. Br. at 13. It is unclear what significance defendants attach to that assertion. The administrative charge identifying the Church is part of the record, see JA 148, and the Church has never before disputed that it had notice. The issue is therefore irrelevant and not before the Court. For this reason and because the School, Church, and Archdiocese share the same counsel, it is disingenuous for defendants to now assert that the Church never received notice of the charge from the Commission. 6. Defendants conclude their brief with a run-down of the cases we cited in our opening brief,<3> distinguishing the facts of each case. We did not contend that any of the cases cited in our opening brief were on all-fours with this case. The cases we cited contain legal principles relevant to the issue presented<4> and lead to the conclusion that the district court erred in holding that defendants do not have the capacity to be sued to enforce the ADA under Fed. R. Civ. P. 17(b)(1). Defendants offer no response to these legal arguments. CONCLUSION For the foregoing reasons, the judgment of the district court should be reversed and the case remanded for further proceedings. Respectfully submitted, C. GREGORY STEWART General Counsel PHILIP B. SKLOVER Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel JULIE L. GANTZ Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of the General Counsel 1801 L Street, N.W. Washington, D.C. 20507 (202) 663-4718 CERTIFICATE OF LENGTH I hereby certify that the foregoing brief has been prepared in monospaced (nonproportionally spaced) typeface using Corel Word Perfect 8, Courier New 12-point font, and does not contain more than 6,250 words. _________________________ Julie L. Gantz CERTIFICATE OF SERVICE I, Julie L. Gantz, hereby certify that, on June 19, 2000, two copies of the foregoing Reply Brief of the Equal Employment Opportunity Commission were sent by first class mail, postage prepaid to: ANTHONY P. INTERDONATO Attorney at Law 12604 Glen Road Potomac, MD 20854 _________________________ Julie L. Gantz 1 This report was described as "the overall annual report and budget for fiscal year July 1992 through June 30, 1993, for the parish plant, St. Francis Xavier Church." JA 107 (1994 Bava Dep. at 57). 2 As discussed in our opening brief, the School uses an employment application that states at the top of the page: "The use of this form by any Catholic School within the Archdiocese of Washington in no way indicates that the applicant will be employed by the Archdiocese." JA 145. 3 Defendants include in their list two cases that we did not rely on in our opening brief. Def. Br. at 16 (citing Wright v. Manatee County, 717 F. Supp. 1493 (M.D. Fla. 1989); Geary v. Visitation of the Blessed Mary Parish Sch., 7 F.3d 324 (3d Cir. 1993)). 4 A parenthetical in our opening brief was based on an erroneous reading of Planned Parenthood v. Holy Angels Catholic Church, 765 F. Supp. 617, 619 (N.D. Cal. 1991). We acknowledge that that case has no holding regarding the issues presented in this case.