Green v. Regan Brief for Plaintiffs-Appellees

    In the
UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

No. 83-IS3I

WILLIAM H. GREEN, et al.,
Plaintiffs-Appellees

v
DONALD T. REGAN, Secretary of the Treasury 

of the United States, et al.,
Defendants-Appellees,

CLARKSDALE BAPTIST CHURCH,
Intervener-Appellant.

On Appeal from the United States District Court 
for the District of Columbia

BRIEF FOR PLAINTIFFS--APPELLEES

ROBERT H. KAPP 
JOSEPH M. HASSETT 
SARA-ANN DSTERMAN 
DAVID S. TATEL 
WALTER A. SMITH, JR.

WILLIAM L. ROBINSON 
NORMAN J. CHACHKIN 
FRANK R. PARKER

Civil Rights under Law 
733 15th Street, N.W.
Suite 520
Washington, D.C. 20005 
(202) 623-6700

Lawyers' Committee for
PATRICIA A. BRANNAN 

Hogan & Hartson 815 Connecticut Avenue, N.W 
Washington, D.C. 20006 
(202) 331-4500

Attorneys for Plaintiffs-Appellees



In the
UNITED STATES COURT OF APPEALS FOR THE 

DISTRICT OF COLUMBIA CIRCUIT

No. 83-1831

WILLIAM H. GREEN, et al. ,
Plaintiffs-Appellees,

v.
DONALD T. REGAN, Secretary of the Treasury 

of the United States, et al.,
Defendants-Appellees,

CLARKSDALE BAPTIST CHURCH,
Intervenor-Appellant.

On Appeal from the United States District Court 
for the District of Columbia

BRIEF FOR PLAINTIFFS-APPELLEES

CERTIFICATE OF COUNSEL
required by Rule 8(c) of the General Rules 
of the United States Court of Appeals for 

the District of Columbia Circuit

The undersigned, counsel of record for plaintiffs-appellees, 
certifies that the following parties appeared below:

i



Plaintiffs:
William H. Green, on his own behalf and on behalf of his minor 
children, Connie Green, Belinda Green, Ronnie Green, and Bessie 
Green. 1/
Vernon Tom Griffin, on his own behalf and on behalf of his minor 
son, Vernon Tom Griffin, Jr.
John D. Wesley, on his own behalf and on behalf of his minor 
children, Shirley Ann Wesley, Florence Wesley, and Jessie Lee 
Wesley.
Warren G. Booker, on his own behalf and on behalf of his minor 
adopted son, Adam Wayne Gilley, and
Essie Bernice Austin.

Defendants;
Donald T. Regan, as Secretary of the Treasury of the United 
States.
Roscoe Egger, as Commissioner of Internal Revenue.

Intervenor Defendants:
Dan Coit, on his own behalf and on behalf of his minor children, 
Lauren Faye Coit and Linda Ann Coit. 2/

Intervenor Defendant (Appellant herein):
Clarksdale Baptist Church, Clarksdale, Mississippi.

1/ The listing of parties in the Brief for Appellant at i 
fails to include three minor children of plaintiff William H. 
Green who were added as parties plaintiff by Order of the dis­
trict court entered May 25, 1979. (See A. IS.)
2/ Coit, et al. were permitted to intervene in this action on 

January 21, 1970 (A. 6). Since May 14, 1981, when the Clarks­
dale Baptist Church was permitted to intervene (A. 26), the Coit 
interveners have filed no pleadings and have taken no active 
role in this lawsuit. No counsel for Coit, et al. appeared at 
any of the hearings in this matter subsequent to May 14, 1981 
nor has any counsel for Coit, et al. entered an appearance be­
fore this Court in this matter. The Coit intervenors therefore 
"appaered" below only in the most technical sense.

n



These representations are made in order that Judges of 
this Court, inter alia, may evaluate possible disqualification

- iii -



TABLE OF CONTENTS

Certificate of Counsel (required by Rule 8(c)) ........  . i
Table of Authorities . . .................................vi
Counter-Statement of Issues Presented . . . . .  ........  1
Prior and Related Proceedings ..........................  3
Statutes and Rules Involved . . .......................... 5
Reference to Parties and Rulings ......................  5
Statement............   6

A. Background of the Case: Initial Proceedings . . 6
B. The Supplementary Proceedings ................  10
C. Appellant's Entry Into This C a s e ................ 17
D. The Evidence..................................... 18

Summary of Argument............  23
ARGUMENT ......................... '........ .. 27

I The District Court's Decree May Properly 
Be Applied To Church-Sponsored Private 
Schools Without Violating The First Amendment . . 28
A. Application of the "Norwood Presumption" 

to Church-Related Schools Is not
Irrational................................... 28

B. The District Court's Decree Does not
Create an "Excessive Entanglement" 
between Government and Religious 
Organizations which Violates the Free 
Exercise Clause ..........................  33

C. The Specific Provisions of the District 
Court's Decree Do not Burden Appellant's 
Free Exercise of Religion in Violation
of the First Amendment.......................40

1. Appellant misconstrues paragraph
(2) of the May 5 Order as requiring 
it to take particular steps in order 
to qualify for tax-exempt status . . 41

Page

iv -



Page
2. The Internal Revenue Service could 

require churches to take the actions 
enumerated in paragraph (2) without 
violating the Free Exercise Clause . . 44

II The District Court Correctly Refused To 
Reooen The Question Of Plaintiffs'
Standing To Maintain This S u i t ................ 47

Conclusion ............................. * ..............
Appendices

A —  U.S. Constitution, Amend. I, 26 U.S.C.
§§ 501(c)(3) and 7428

B —  IRS News Releases of July 10, 1970 and July 19,
1970

C —  IRS Commissioner Thrower's December 10, 1970 
affidavit

D —  IRS Form 5578 (October, 1976)

NOTE: The Appendix to the Briefs in this case required by
Rule 30, F.R.A.P., is cited herein as "A. ■" Pleadings and
other materials which are not included within the Appendix but 
which are a part of the Record transmitted to this Court are 
cited by the document number assigned by the Clerk of the Dis­
trict Court when the Record on Appeal was prepared, e ,g.,
"R. Doc. No.

v



TABLE OF AUTHORITIES

Alexander v. Holmes County Bd. of Educ.,
396 U.S. 19 (1969) ............................... 22n

*Bob Jones University v. United States,
U.S. , 76 L. Ed. 2d 157 (1983)............  18n, 20,

25, 32
Bob Jones Univ. v. United States, 639 F.2d 147 

(4th Cir. 1980), aff'd, U.S. ,
76 L. Ed. 2d 157 (1983) ...........................  35n, 40

Braunfeld v. Brown, 366 U.S. 599 (1961) ..............  41
Brown v. Board of Educ., 347 U.S. 483 (1954)..........  36
Brown v. Dade Christian Schools, Inc., 556 F.2d 

310 (5th Cir. 1977), cert, denied, 434 U.S.
1063 (1978)..................................... . 47n

Brumfield v. Dodd, 425 F. Supp. 528
(E.D. La, 1976)...................... .. 12n, 30, 37

Brumfield v. Dodd, 405 F. Supp. 338 (E.D. La. 1975) . . 12n, 28, 37
Cantwell v. Connecticut, 310 U.S. 296 (1940)..........  41

*Cap Santa Vue, Inc. v. NLRB, 424 F.2d 883
(D.C. Cir. 1970) . ...............................  34n, 46n

Christian Echoes Nat'l Ministry v. United States,
470 F.2d 849 (10th Cir. 1972), cert, denied,
414 U.S. 864 (1973).............. ................ 32,35n

Clarksdale Baptist Church v. Green, 52 U.S.L.W.
3261 (U.S. October 3, 1983).................... .. 4

Coffey v. State Educ. Fin. Comm'n, 296 F. Supp.
1387 (S.D. Miss. 1969) ............ .............. 7, 21, 29,

Coit v. Green, 404 U.S. 997 (1971) . . . . . .  ........  2,4, 48n
Columbus Bd. of Educ. v. Penick, 443 U.S. 449 (1979) . . 31
Cook v. Hudson, 365 F. Supp. 855 (N.D. Miss. 1973), 

aff'd per curiam, 511 F.2d 744 (5th Cir. 1975), 
cert, dismissed, 429 U.S. 165 (1976) .......... .. 29n

•Jp

Page
Cases:

Cases or authorities chiefly relied upon are marked by asterisks.

- vi -



Page
Cases (continued)

Dayton Bd. of Educ. v. Brinkman, 443 U.S. 526 (1979) . .
Dolter v. Wahlert High School, 483 F. Supp. 266

(N.D. Iowa 1980) .................................
*EEOC v. Mississippi College, 626 F.2d 477 (5th Cir.

1980), cert, denied, 453 U.S. 1272 (1981) ........
EEOC v. Pacific Press Publishing Ass'n, 676 F.2d

1272 (9th Cir. 1982), aff'g 482 F. Supp. 1291 
(N.D. Cal. 1979) .................................

EEOC v. Pacific Press Publishing Ass'n, 482 F. Supp.
1291 (N.D. Cal. 1979) ............................

EEOC v. Southwestern Baptist Theological Seminary,
651 F.2d 277 (5th Cir. 1981), cert, denied,
456 U.S. 905 (1982) ...............................

Fogel v. Chestnutt, 668 F.2d 100 (2d Cir. 1981), 
cert, denied, U.S. , 74 L. Ed. 2d 66
(1982) ...........................................

Founding Church of Scientology v. United States,
412 F.2d 1197 (Ct. Cl. 1969), cert, denied,
397 U.S. 1009 (1970) ............................

Gilmore v. City of Montgomery, 337 F. Supp. 22 
(M.D. Ala. 1972), aff'd in relevant part,
473 F .2d 832 (5th Cir. 1973), aff'd in
relevant part, 417 U.S. 556 (1974) .......... .. .

Goldsboro Christian Schools, Inc. v. United States,
436 F. Supp. 1314 (E.D. N.C. 1977), aff'd mem.,
464 F .2d 879 (4th Cir. 1981), aff'd, U.S.

, 76 L. Ed. 2d 157 (1983) ............ .. . . .
Gray v. Gulf, Mobile & O.R. Co., 429 F .2d 1064 (5th

Cir. 1970), cert, denied, 400 U.S. 1001 (1971) . .
Green v. Connally, 330 F. Supp. 1150 (D.D.C.), aff'd

sub nom. Coit v. Green, 404 U.S. 997 (1971) . . . .
Green v. Kennedy, 309 F. Supp. 1127 (D.D.C.), appeal 

dismissed sub nom. Cannon v. Green, 398 U.S.
956 (1970) .......................................

Green v. Regan, No. 83-1831 (D.C. Cir. August
18, 1983).............................. .. . . . .

31

35n, 45n

34n, 35n, 36, 
45n, 46n

34n

36n, 45n 

34n

48, 50 

35n

28, 30

35n, 40 

34n, 46n 

passim

3-4, 7, 15n,
29, 47
4

* Cases or authorities chiefly relied upon are marked by asterisks.
vii -



Page

Green v. Regan, No. 82-1134 (D.C. Cir. June
22, 1983).............. .. ............... 4

Green v. Regan, No. 81-2032 (D.C. Cir. Jan.
29, 1982) ............................... . . . . .  4

Green v. Regan, No. 81-1038 (D.C. Cir. Sept.
24, 1981)......................................... 4

Green v. Regan, No. 80-1913 (D.C. Cir. April
10, 1981) ................  . . . . . . . . . . . .  4

Henry v. Clarksdale Municipal Separate School
Dist., 433 F. 2d 387 (5th Cir. 1970)..............  22n

Henry v. Clarksdale Municipal Separate School
Dist., 409 F .2d 682 (5th Cir.), cert, denied,
396 U.S. 940 (1969).............................   22n

Johnson v. Board of Educ. of Chicago, 457 U.S. 52
(1982) (per curiam)............................ .. 48

* Jones v. Wolf, 443 U.S. 595 C1979)................ - • 28, 29
Keyes v. School Dist. No. 1, Denver, 413 U.S.

189 (1973) ....................................... 31
*King's Garden, Inc. v. FCC, 498 F.2d 51 (D.C. Cir.),

cert, denied, 419 U.S. 996 (1974)..................  34n
Knowles v. Board of Public Instruction of Leon

County, 405 F.2d 1206 (5th Cir. 1969)........ .. . 50
Lavine v. Milne, 424U.S. 577 (1976).................... 31
Leary v. United States, 395 U.S. 6 (1969) . . . . . . .  29
Marshall v. Pacific Union Conf. of Seventh-Day 

Adventists, 14 Empl. Prac. Dec. 11 7806
(C.D. Cal. 1977)    35n, 36n, 45n

McCormick v. Hirsch, 460 F. Supp. 1337 (M.D. Pa.
1978).................................. .. 35

Meek v. Pittenger, 421 U.S. 349 (1978) ........  . . . . 33n, 35
Mitchell v. Pilgrim Holiness Church Corp., 210 F .2d 

879 (7th Cir.), cert, denied, 347 U.S. 1013 
(1954) . . . . . . .  ................................  34n

Cases (continued):

* Cases or authorities chiefly relied upon are marked by asterisks.

vxxx -



Page

Moore v. Tangipahoa Parish School Bd., 298 F. Supp.
288 (E.D.'La. 1969).......................... - *

Morrow v. Dillard, 580 F.2d 1284 (5th Cir. 1978) . . . .
Norwood v. Harrison, 413 U.S. 455 (1973) . . .  ........
*Norwood v. Harrison, 382 F. Supp. 921 (N.D. Miss.

1974) . . . . . . .  .............................
Page v. St. Louis-Southwestern Ry. Co., 349 F.2d

820 (5th Cir. 1965).................. ............
Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) . . .

Cases (continued)

50
48
10

passim

48
50n

*Prince Edward School Foundation v. Commissioner,
478 F. Supp. 107 (D.D.C. 1979), aff'd by unpublished order, No. 79-1622 (D.C. Cir.
June 30, 1980), cert, denied, 450 U.S. 944 
C1981) .......................................

Ritter v. Mount St. Mary's College, 495 F. Supp.
724 (D.Md. 1980) . . . . .  ..................

Roemer v. Maryland Pub. Works Bd., 426 U.S. 736
(1976) ................  ....................

Sherbert v. Verner, 374 U.S. 398 (1963) ..........
Stell v. Savannah-Chatham County Bd. of Educ.,

255 F. Supp. 88 (S.D. Ga. 1966) ..............
Surinach v. Pesquera de Busquets, 604 F.2d 73

(1st Cir. 1979) . . . ....................... ..
Synanon Foundation, Inc. v. California, 444 U.S.

1307 (1979) (Rehnquist, J., Circuit Justice)
Thomas v. Review Bd., 450 U.S. 707 (1981) . . . . .
Thompson v. Sawyer, 678 F.2d 257 (D.C. Cir. 1982)
Tot v. United States, 319 U.S. 643 (1943) ........
United States v. California Cooperative Canneries,279 U.S. 553 (-1929) . . . ",..................

4-5, 9n, 30 

34n-35n,- 45n

27n, 34, 36n 
41

50

35-36, 36

29
41
49 
29

50

*Cases or authorities chiefly relied upon are marked by asterisks.
xx



Page
Cases (continued)

*United States v. Freedom Church, 613 F.2d 316(1st Cir. 1979) ............................. .. 29, 29-30
United States v. Holmes, 614 F.2d 985 (5th Cir.

1980)............................ ................  32, 33n,
United States v. Kissinger, 250 F.2d 940 (3d Cir.),

cert, denied, 356 U.S. 958 (1958) .................  34n
United States v. Lee, 455 U.S. 252 (1982) ............  34n
United States v. Mississippi, 499 F.2d 425(5th Cir. 1974) (en banc) ........................ 28
United States v. School Dist. of Omaha,

367 F. Supp. 198 (D. Neb. 1973)..................  50
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1

(1976) . .........................................  30
Walz v. Tax Comm'n, 397 U.S. 644 (1970) ..............  24, 25,33, 34
Wisconsin v. Yoder, 406 U.S. 205 (1972) . . . . . . . .  41, 46
Wright v. Miller, 480 F. Supp. 790 (D.D.C. 1979), 

rev'd sub nom. Wright v. Regan, 656 F.2d 820
(1981), cert, granted, 77 L. Ed. 2d 1365 (1983) . . 4

*Wright v. Regan, 656 F.2d 820 (D.C. Cir. 1981), cert.
granted, ___ U.S. , 77 L„ Ed. 2d 1365 (1983) . . 26, 50, 5

Statutes and Rules:

26 U.S.C. § 501(c)(3)
26 U.S.C. § 508 ( c ) .....................................-LD“
26 U.S.C. § 5 1 1 ...................................... 37n
26 U.S.C. § 5 1 3 ........................ ..............37n
26 U.S.C. § 7428 ...................................... 5, 19n
26 U.S.C. § 7605 (c) .................................. 32
F.R. Civ. P. 25 (d) (1) ................................ 6n

*Cases or authorities chiefly relied upon are marked by asterisks.

, 35r 

35n

1

, 23

x



Page
Regulations:

26 C.F.R. § 1.6033-2 (g) (1983)........................  13n' 16n
Rev. Proc. 75-50, 1975—2 Cum. Bull. 587 ..............  12n, 13n
Rev. Proc. 72-4 , 1972-1 Cum. Bull. 706 ................  37n
Revenue Ruling 75-231, 1975-1 Cum. Bull. 158 ..........  12
44 Fed. Reg. 9451 (February 13, 1979) . . . . . . . . .  14
43 Fed. Reg. 37296 (August 22, 1978).................. 14
42 Fed. Reg. 767 (Jan. 4, 1977) .......................  13n

Legislative Materials;

129 Cong. Rec. (1983) . . . . . . . . . . . .  ........  14n
128 Cong. Rec. (1982) . . . . . . . . . . .  ..........  14n

Other Authorities;

IB J. Moore, J. Lucas & T. Currier, Moore's
Federal Practice (2d ed. 1983) ..................  49-50

D. Nevin & R. Bills, The Schools That Fear Built —Segregationist Academies in the South (1976) . . . 29n
Note, Section 1981 and Discrimination in Private

Schools, 1976 Duke U.L.J. 125 ....................  29n
Note, Segregation Academies and State Action,

82 Yale L.J. 1436 (1973) . ................. 29n
U.S. Comm'n on Civil Rights, School Desegregation

in. Ten Communities (1973)........................  2^n

*Cases or authorities chiefly relied upon are marked by asterisks.

xi



In the
UNITED STATES COURT OF APPEALS FOR THE 

DISTRICT OF COLUMBIA CIRCUIT

No. 33-1831

WILLIAM H. GREEN, et al.,
Plaintiffs-Appellees,

v.
DONALD T. REGAN, Secretary of the Treasury 

of the United States, et al.,
Defendants-Appellees,

CLARKSDALE BAPTIST CHURCH,
Intervenor-Appellant.

On Appeal from the United States District Court 
for the District of Columbia

BRIEF FOR PLAINTIFFS-APPELLEES

COUNTER-STATEMENT OF ISSUES PRESENTED

In 1971 a three-judge district court granted permanent 
declaratory and injunctive relief requiring defendants to deny 
federal tax exemption (and consequent tax deductibility of con­
tributions) to racially discriminatory Mississippi private 
schools. Green v. Connally, 330 F. Supp. 1150 (D.D.C. 1971).

1



Intervenors other than the present appellant challenged the 
plaintiffs' standing to sue but the Supreme Court affirmed the 
district court's judgment. Coit v. Green, 404 U.S. 997 (1971). 
In 1980 the district court awarded further relief. Its order 
sets out evidentiary standards, derived from analogous federal 
court rulings, to be applied by defendants in determining 
whether or not a school follows a racially discriminatory pol­
icy. The order requires the Internal Revenue Service to util­
ize those evidentiary standards in assessing the eligibility of 
all Mississippi private schools -- church-related and non-sec­
tarian —  for federal tax exemption. The present appellant 
intervened after that order was issued and moved unsuccessfully 
to modify it. The issues on this appeal are as follows:

1. Does the requirement that the Internal Revenue Service 
(IRS) collect and consider information regarding the establish­
ment, history, student enrollment (by race) and staff employment 
(by race) of Mississippi non-public schools which are affiliated 
with churches, when IRS determines whether those schools are 
eligible for federal tax exemption, violate the Establishment 
Clause of the First Amendment because it creates "excessive en­
tanglement" between the federal government and churches?

2. Is it irrational, arbitrary, and violative of the First 
Amendment to infer that a Mississippi church-operated non-public 
school —  which (a) opened its doors the very day when local 
public school desegregation began, (b) tripled its white student 
enrollment five years later when public school integration ac­
celerated, and (c) has never enrolled a black student nor

2



employed a black teacher -—  follows a racially discriminatory 
policy and is ineligible for federal tax exemption unless the 
school can demonstrate by clear and convincing evidence that it 
is nondiscriminatory?

3. Does the district court's order require appellant, or 
any other Mississippi church school, as a condition of eligi­
bility for federal tax exemption, to take any specific action 
contrary- to its religious beliefs, thus violating any rights 
under the Free Exercise Clause of the First Amendment?

4. Did the district court err in refusing, on the basis of
the "law of the case" doctrine, to reexamine plaintiffs' stand-

_3/ing to maintain this action?

PRIOR AND RELATED PROCEEDINGS

The instant matter was commenced in 1969. A preliminary 
injunction was issued in 1970 sub non. Green v. Kennedy,

3/ Appellant also contends that the appropriateness of the 
district court's granting of summary judgment is an issue on 
this appeal (App't Br. at vii).. However, the district court's 
summary judgment ruling was an alternative holding. Its Order 
explicitly provides (A. 245):

The Court further, and alternatively, rules directly 
upon intervenor's Motion to Modify Injunction, since 
intervenor contends that summary judgment is inappro­
priate. Upon the basis of all of the evidence (includ­
ing specifically the deposition testimony of the wit­
nesses for the intervenor), the Court finds that inter­
venor has failed to establish that application by the 
Internal Revenue Service of the procedures and stan­
dards contained in the Court's injunctive decree of 
May 5, 1980 (as amended June 2, 1980) to the Clarks- 
dale Baptist Church or to church-connected schools in 
Mississippi, generally, violates any statutory or con­
stitutional right of the intervenor.

- 3 -



309 F. Supp. 1127. A permanent injunction was issued by a 
three-judge court in 1971 sub nom. Green v- Connally, 330 
F. Supp. 1150; this judgment was affirmed by the Supreme Court 
sub nom. Coit v. Green, 404 U.S. 997 (1971).

In 1975 plaintiffs sought further injunctive relief, which 
was granted by the district court in unreported orders issued on 
May 5 and June 2, 1980. Thereafter, this Court thrice affirmed 
the denial of post-judgment intervention sought by various Mis­
sissippi churches. Green v. Regan, No. 80-1913 (D.C. Cir.
April 10, 1981); id., No. 81-1038 (D.C. Cir. Sept. 24, 1981); 
id., No. 81-2032 (D.C. Cir. Jan. 29, 1982). An appeal by plain­
tiffs from an unrelated order issued in 1982 was voluntarily 
dismissed, Green v. Regan, No. 82-1134 (D.C. Cir. June 22, 1983).

A stay of the order below pending disposition of this ap­
peal was denied by a panel of this Court, Green v. Regan, No. 
83-1831 (D.C. Cir. August 18, 1983), by Justice Brennan (on Sep­
tember 7, 1983), and by the entire U.S. Supreme Court sub nom. 
Clarksdale Baptist Church v. Green, 52 U.S.L.W. 3261 (U.S. Octo­
ber 3, 1983) .

In 1976 a nationwide class action was filed seeking relief 
similar to that sought by plaintiffs in the instant case. The 
district court's ruling dismissing that action, Wright v.
Miller, 480 F. Supp. 790 (D.D.C. 1979), was reversed by this 
Court sub nom. Wright v. Regan, 656 F.2d 820 (1981), cert. 
granted, ___ U.S. ___, 77 L. Ed. 2d 1365 (1983). A case involv­
ing somewhat similar issues is Prince Edward School Foundation

4



v. Commissioner, 478 F. Supp. 107 (D.D.C. 1979), aff1 d by unpub
lished order, No. 79-1622 (D.C. Cir. June 30, 1980) , cert, de­
nied, 450 U.S. 944 (1981).

STATUTES AND RULES INVOLVED

This case involves the First Amendment to the United States 
Constitution, 26 U.S.C. §§ 501(c)(3) and 7428, all of which are 
set forth in Appendix A to this brief.

REFERENCE TO PARTIES AND RULINGS

This is an appeal from an order of Judge George L. Hart,
Jr., of the United States District Court for the District of 
Columbia, entered July 22, 1983, denying a motion to modify in­
junctive relief previously granted. No separate opinion was 
issued. The court's order appears at pages 244-46 of the Appen­
dix.

The appellant is a Mississippi church which operates a pri­
vate school in Clarksdale that opened in 1964, the same year 
that public school desegregation in that city began, and that 
has never enrolled a black student nor employed a.black teacher.

The plaintiffs in the action are black parents 
and their minor children attending public schools in Missis­
sippi. The adult plaintiffs are William H. Green, Vernon Tom 
Griffin, John D. Wesley, Warren G. Booker, and Essie Bernice 
Austin.

5



Defendants in the action are the Secretary of the Treasury
of the United States and the Commissioner of Internal Revenue.

Persons previously allowed to intervene are Dan Coit and
-1/his minor children, Lauren and Linda Coit.

STATEMENT

A. Background of the Case; Initial Proceedings
This action was commenced in 1969 (A. 2) by black parents 

and their minor children attending public schools in Missis­
sippi, who sought to enjoin the Secretary of the Treasury and 
the Commissioner of Internal Revenue from according tax-exempt 
status to private schools in Mississippi which exclude students 
on the basis of race. See Green v. Connally, 330 F. Supp. 1150 
(D.D.C.), aff'd mem, sub nom. Coit v. Green, 404 U.S. 997 (1971). 
On January 21, 1970, representatives of the class of parents and
children who support or attend private, non-profit, theretofore

6/tax-exempt schools in Mississippi having an all-white enroll­
ment and established as a means of enabling white students to 
avoid desegregated public schools were permitted to intervene 
(A. 6). See 330 F. Supp. at 1155.

In January, 1970, the district court enjoined the IRS from 
approving any pending or future application by a Mississippi

4/ The current defendants are substituted for their predeces­
sors pursuant to F.R. Civ. P. 25(d)(1).
5/ See supra note 2.
6/ Applications to intervene by persons and schools outside 

the State of Mississippi were denied.

4/

6



private school for tax-exempt status unless it first affintia 
tively determinels] pursuant to appropriate directives and pro­
cedures satisfactory to this Court that the applicant school is 
not part of a system of private schools operated on a racially 
segregated basis as an alternative to white students seeking to 
avoid desegregated public schools." Green v . Kennedy, 309 F. 
Supp. 1127, 1140 (D.D.C.), appeal dismissed sub nom. Cannon v. 
Green, 398 U.S. 956 (1970).

The preliminary injunction was based upon the record of 
private school interference with desegregation which had been 
made in an earlier Mississippi federal court case, Coffey v. 
State Educ. Fin. Comm'n, 296 F. Supp. 1389 (S.D. Miss. 1969) 
(three-judge court), which successfully challenged the state's 
tuition grant program. See Green v. Kennedy, 309 F. Supp. at 
1134; Green v. Connally, 330 F. Supp. at 1174. Coffey involved 
church-related, as well as non-sectarian schools? at least one 
church—connected school is identified in the reported opinion, 
296 F. Supp. at 1393 ("S.W. Miss. Christian").

On June 26, 1970, the Green court entered a consent order 
which directed the "defendants to suspend the advance assurance 
of deductibility [of] contributions for segregated private 
schools in Mississippi which were . . . cited in the Coffey 
litigation . . . ," which included church-connected schools
(A. 8). In August and December, 1970, the Commissioner of IRS 
reported in sworn affidavits to the Green court that its orders 
were being carried out with respect to all Mississippi private 
schools, including those operated by churches. See infra notes 
7 and 8 and accompanying text.

- 7 -



On June 30, 1971, the district court issued a permanent 
injunction restraining the Secretary of the Treasury and the 
Commissioner of Internal Revenue from approving tax-exempt sta­
tus under Section 501(c)(3) of the Internal Revenue Code for any 
private school located in the State of Mississippi unless such 
school made a showing that it had adopted and publicized, in a 
manner, reasonably effective to bring the matter to the attention 
of minority students and parents, a racially non-discriminatory 
admissions policy; and unless the school supplied to the IRS 
information concerning the organization of the school and the 
racial composition of its student body. (See 330 F. Supp. at 
1179-80.)

As the District Court noted in its 1971 opinion, while the 
case was pending the Internal Revenue Service, on July 10, 1970, 
had itself announced in a press release that it would grant tax 
exemption only to schools having "racially non-discriminatory 
admission policies." See 330 F-. Supp. at 1172. However, the
three—judge court concluded that a detailed decree was necessary 
to insure that the IRS denied tax exemption (and the availabil­
ity of a charitable deduction to donors) to private schools 
which did not admit racial discrimination but which were in fact 
"'part of a system of private schools operated on a racially

7/ In a press release of July 19, 1970 explaining its an­
nouncement, the IRS added that its "statement of position on ra­
cially nondiscriminatory admissions policies would be applicable 
to all private schools, whether church related or not." Both 
press releases are attached to the August 21, 1970 affidavit of 
IRS Commissioner Randolph Thrower, filed in this case along with 
the government's Motion to Dismiss of that date, R. Doc. No. 100 
For the convenience of the Court, we have reproduced the news 
releases in Appendix B infra.

8



segregated basis as an alternative to white students seeking to
avoid desegregated public schools.'" 330 F. Supp. at 1174.

In an affidavit filed in this case on December 10, 1970,
_8/

before issuance of the permanent injunction, the Commissioner 
of Internal Revenue stated that the Service had mailed letters 
to approximately 5,000 private schools in the United States 
which had previously received favorable rulings on tax exemp-

_9/tion. Thereafter, IRS, through appropriate formal proceed­
ings , withdrew or denied federal tax exemption to private 
schools, both within Mississippi and in other States when the
schools refused to certify that they were nondiscriminatory or

10/
admittedly maintained racially exclusionary policies. How­
ever, numerous all-white private schools which had been founded 
or substantially expanded at the time of public school desegre­
gation in their communities remained exempt.

8/ The affidavit was attached, to the government's Memorandum 
of Points and Authorities in Opposition to Plaintiffs' Motion 
for Summary Judgment and Intervenors' Motion for Summary Judg­
ment, R. Doc. No. 115. It is reprinted in Appendix C infra.
9/ He also said:

It is estimated that there are, in addition, 
more than 10,000 private schools which are 
covered by group rulings, as through a ruling 
given to a church covering all of the church- 
owned private schools. Similar information 
is being obtained as to the admission policies 
of such schools.

10/ See, e.g., Prince Edward School Foundation v. Commissioner, 
478 F~ Supp. 107 (D.D.C. 1979), aff'd by unpublished order, No. 
79-1622 (D.C. Cir. June 30, 1980), cert, denied, 450 U.S. 944 
(1981).

9



B. The Supplementary Proceedings
In 1976, contending that the IRS had failed to comply with 

the 1971 orders of the district court, the plaintiffs moved for 
additional relief (A. 12). The motion arose in part out of de­
velopments in the case of Norwood v. Harrison, 413 U.S. 455 
(1973), in which the Supreme Court had held that Mississippi 
schools- which discriminated on the basis of race were ineligible 
to receive state-loaned textbooks.

On remand of that case (see 382 F. Supp. 921 [N.D. Miss. 
1974]), the District Court for the Northern District of Missis­
sippi ordered the establishment of a certification procedure 
whereby schools applying for textbooks were required to give 
information as to their organization and student body, including 
answers to questions about whether and how they had publicized a 
policy of nondiscrimination. (The form is attached as an appen­
dix to the District Court's opinion, 382 F. Supp. at 936-39.) 
Thereafter, in reviewing evidence as to schools whose eligibil­
ity was disputed, Chief Judge Ready held that a prima facie case 
of racial discrimination was shown by evidence that a "school's 
existence began close upon the heels of" public school desegre­
gation in the area, and that the school had never enrolled a

11/black student nor employed a black teacher or administrator.

11/ In 1971, the three-judge court had held (330 F. Supp. at 
1173-74) (emphasis supplied):

The history of state-established segrega­
tion in Mississippi, coupled with the founding

[footnote continued on next page]

10



(382 F. Supp. at 924-925.) He then listed illustrative factors
which could overcome the presumption, including publicity of a
nondiscriminatory policy, communication with black community
leaders, etc. (See 382 F. Supp. at 926.)

Judge Keady's opinion dealt specifically with Ilississiopi
religious schools, e.g., the South Haven Mennonite School, which

1he held ineligible for textbook loans (382 F. Supp. at 927-28) ;

[footnote continued from previous page]
of new private schools there at times reas­
onably proximate to public school desegregation 
litigation, leaves private schools in Missis­
sippi carrying a badge of doubt. The finding 
in the Coffey case, supra, which has not been 
controverted and which we accept, that the new 
schools were established as segregated schools 
leads us to declare that it is the duty of the 
Internal Revenue Service to seek out supplemen­
tary information, whether or not required for 
schools elsewhere, before granting final rul­
ings of tax-exempt status and deductibility of 
contributions to those private Mississippi 
schools applying for such benefits. The same 
condition of reasonable proximity to desegrega­
tion litigation applies not only to schools 
organized in contemplation of litigation about 
to start, but also to schools subsequently or­
ganized in the wake of a decree.

12/ Judge Keady's conclusion about this school was as follows:
(382 F. Supp. at 928):

Admittedly the factors for a prima facie 
case are here present. The only question is 
whether this school, sponsored by a close-knit 
Christian membership, has successfully rebut­
ted the inference of a racially discriminatory 
admissions policy. The school's reluctance, 
if not disdain, in presenting evidence to this 
court has not facilitated our task. Neverthe­
less, this court has undertaken to give this 
school utmost, careful consideration in view 
of its status as a church-sponsored school em­
phasizing religion. Despite contrary claims, 
however, we are driven to the conclusion that 
the South Haven school exists as a haven for 
perpetuating white, segregated education.

11



the Christ Episcopal Day School, which he found nondiscrimina- 
tory even though the step of adopting a nondiscriminatory policy 
was "taken as a direct result of Green v. Connally" (i.e., this 
case), (382 F. Supp. at 931-32); and the Presbyterian Day School
of Cleveland, which was approved only conditionally because, al­
though the church itself did not discriminate, the school had 
failed to publicize its willingness to accept black students 
(382 F. Supp. at 932-35).

Plaintiffs in this case discovered that a number of schools,
including several specifically attacked in the earlier phase of
this litigation, were still enjoying federal tax-exempt status
although they had been found ineligible to receive textbook
loans from the State of Mississippi because of their racially
discriminatory policies. The IRS had failed to act against
schools adjudicated discriminatory under the Norwood standards

13/in both Mississippi and Louisiana, apparently because there
14/were no IRS announcements setting forth such standards.. How­

ever, the IRS had, on May 22, 1975, issued Revenue Ruling 75-231, 
1975-1 Cum. Bull. 158, which proclaimed explicitly that organi­
zations "including churches, that conduct schools with a policy 
of refusing to accept children from certain racial and ethnic

13/ See Brumfield v. Dodd, 405 F. Supp. 338 (E.D. La. 1975); 
id., 425 F. Supp. 528 (E.D. La. 1976).
14/ For example, Rev. Proc. 75-50, 1975-2 Cum. Btlll. 587, 
adopted November 6, 1975, contained no reference to the rela­
tionship between a private school's establishment or expansion 
and public school desegregation.

12



groups will not be recognized as tax-exempt."
In response to the plaintiffs' motion for further relief,

the government moved to dismiss the action on the ground that
plaintiffs lacked standing to sue (A. 12). This request was

16/
denied by Judge Waddy on May 26, 1977 (A. 15). Subsequently

15/

15/ Subsequently, on November 6, 1975, the IRS issued Rev. 
Proc. 75-50, 1975--2 Cum. Bull. 587, setting forth the showing 
that had to be made to establish a school's nondiscriminatory 
policy. (But see supra note 14.) On March 19, 1976, the IRS 
issued Technical Information Release No. 1449, announcing that 
the annual certification of nondiscrimination required by Rev. 
Proc. 75-50 should be filed along with a school's Form 990 in­
formation return? and that for schools which did not file Form 
990 [such as church schools, see 26 C.F.R. §1.6033-2(g) (1983);
42 Fed. Reg. 767-68 (Jan. 4, 1977)], "a separate certification 
form is being developed . . . ." That form was issued in 1976 
and a copy is attached to this Brief as Appendix D.
16/ Judge Waddy explained his decision from the bench:

THE COURT'S FINDINGS AND CONCLUSIONS
THE COURT: With respect to the motion of the
Government and the Intervenor to dismiss —  
the Government only in Green to dismiss — • 
that motion is denied. The Court is clear in 
its own mind that so far as Green is concerned, 
the plaintiffs there have a right to proceed 
to determine whether or not there has been 
good-faith compliance with the Order of this 
Court and if not, then the Court has the duty 
and responsibility to amend or supplement its 
prior Decree in such manner as to affect [sic] 
the purposes of the original Decree.
The Court disagrees with counsel for the Gov­
ernment that there has been a change in the law, 
or a change of circumstances which dictate that 
Green be dismissed.
The motion of the Government to dismiss in Green 
is denied.

(Transcript of Hearing, May 17, 1977 (R. Doc. No. 168A)., at 106 
07.)

13



the IRS advised the district court, inter alia, that
Plaintiffs' 1976 motion reopening this lawsuit 
prompted the Service to review its procedures 
for determining whether private schools seeking 
or maintaining Section 501(c)(3) tax exemption 
have racially nondiscriminatory admissions pol­
icies as to students. After reviewing the 
Service's existing guidelines and the judicial 
authority in racial discrimination cases, the 
Service concluded that its existing procedures 
do not provide adequate guidance with respect 
to certain schools formed or substantially ex­
panded at the time of public school desegrega­
tion in the community. Defendants believe that 
the Service's existing procedures are ineffec­
tive in identifying such schools whose forma­
tion or expansion raise substantial doubts con­
cerning their practices, even though the 
schools may profess an open enrollment policy 
and comply with the yearly publication require­
ment of Rev. Proc. 75-50.17/

It therefore published, for comment, a proposed Revenue Proce­
dure providing additional guidelines to be used in reviewing 
private schools' eligibility for tax-exempt status. 43 Fed. 
Reg. 37296-98 (August 22, 1978). After receiving and reviewing 
numerous comments, the Service made substantial revisions and 
reissued the guidelines for comment on February 9, 1979, 44
Fed. Reg. 9451-55. The proposed Procedure has never been im- 

18/
plemented.

17/ Memorandum of Defendants in Response to Plaintiffs' Submis- 
iTon on the Merits (R. Doc. No. 210), filed November 27, 1979 
(A. 20), at 20-21.
18/ In 1979, 1980, and 1981, the Congress approved riders to 
Treasury Department appropriations measures prohibiting the use 
of funds to carry out"the guidelines. However, those riders 
expired and efforts to reinstate them were unsuccessful. See 
128 Cong. Rec. H8615-24 (daily ed., November 30, 1982); id. at 
S15423-28 (daily ed., December 18, 1982); 129 Cong. Rec. 
S15925-31 (daily ed., November 10, 1983). The riders therefore 
no longer are a factor in this case.

- 14 -
*



On May 5, 1980, following extensive documentary submissions
and on cross-motions for summary judgment, the district court

19/
entered a further injunctive order supolementing the 1971

~ 20/
permanent decree of the three-judge court. (A. 38-42.) As
amended and clarified on June 2, 1980, that order enjoins the 
IRS from granting or continuing the tax-exempt status of any 
Mississippi private school which either

(a) was held, in prior adversary or administra­
tive proceedings, to be racially discrimina­
tory, or

(b) was founded or expanded at the time of public 
school desegregation in the area it serves

unless the school can demonstrate "that [it does] not racially 
discriminate in admissions, employment, scholarships, loan pro­
grams, athletics, and extra-curricular programs." (A. 43.) The 
order instructs IRS that the existence of either one of the con­
ditions enumerated above creates- an inference of discrimination, 
which a school seeking exemption "may overcome by [furnishing] 
evidence which clearly and convincingly reveals objective acts 
and declarations establishing that such is not proximately

19/ The district court held that the IRS had not violated the 
order of June 30, 1971, but that the order required supplementa­
tion and modification (A. 38.)
20/ The three-judge court was dissolved by order entered Novem­
ber 19, 1976 inasmuch as no party to the action any longer 
sought to enjoin any conduct pursuant to a federal statute on 
the ground of its unconstitutionality. Cf. Green v. Kennedy,
309 F. Supp. 1127 (D.D.C. 1970).

15



(A. 39).caused by such school's policies and practices"
The court also modified the prior decree to require greater 

regularity in the schools' publicizing of nondiscriminatory pol­
icies and to require the IRS to collect additional information 
with respect to the organization and status of the schools. (A. 
41, 44.) Additionally, the district court's order required IRS
to conduct a survey to identify private schools in Mississippi,

22/
including church-related schools, as to which an inference of 
discrimination would arise based upon the conditions enumerated 
in the order, and to assess their qualification for federal tax 
exemption in accordance with the standards set forth in the or­
der (A. 41-42).

During the summer of 1980 IRS began to comply with the re­
vised decree by assembling a listing of all private schools, in­
cluding church-sponsored or church-related private schools, op­
erating in Mississippi. The agency then requested information

" 21/

21/ The quoted language from the order in this case was taken 
from the opinion in Norwood, 382 F. Supp. at 926.
22/ The reason that church-related schools are specifically 
mentioned in the court's order is that by statute, churches and 
their integrated auxiliaries are not required to apply for tax- 
exempt status, 26 U.S.C. § 508(c)(1), and by regulation IRS has relieved church schools of the requirement that they file an 
annual information return, 26 C.F.R. § 1.6033-2(g)(1)(vii)
(1983). Thus, in the absence of undertaking the survey required 
by the district court, IRS had no complete information regarding 
the existence of church-connected private schools in Mississippi. 
Plaintiffs in fact asserted that IRS had not made appropriate 
efforts after the issuance of the 1971 decree to obtain that in­
formation and had failed to review the eligibility of church- 
connected private schools for exemption as required by the de­
cree .

16



from these schools sufficient to determine whether an inference 
of discrimination attached because of the relationship between a 
school's founding or expansion and public school desegregation.
On June 30, 1980, the Clarksdale Baptist School, which is opera­
ted by the appellant herein, was sent a letter from IRS request­
ing such information, which it provided "under protest" on Aug­
ust 31, 1980. (See A. 144-48.) Thereafter, on September 17, 
1980, IRS wrote to the school, indicating that it fell within 
"paragraph (1)" of the district court's order (i.e., that cir­
cumstances giving rise to an inference of discrimination existed 
with respect to the school) and requesting additional informa­
tion, including any information "that you feel demonstrates that 
you do not racially discriminate in admissions, employment, 
scholarships, loan programs, athletics, and extra-curricular 
programs." The school furnished this information on October 31, 
1980. (See A. 149-55.)

C. Appellant's Entry Into This Case
IRS took no further action with regard to the Clarksdale 

Baptist School. On April 16, 1981 the Clarksdale Baptist Church 
and others sought to intervene in the case, alleging that the 
May 5 and June 2, 1980 orders were unlawful and unconstitutional, 
and that they infringed upon the religious liberties of the 
Church and its congregants. Following a hearing, the district 
court on May 14, 1981 permitted the Church to intervene as a de­
fendant (A. 26). On June 5, 1981 the Church moved to modify the

- 17



1980 orders so as to exclude church-connected private schools
23/from their operations. (A. 79-84.)

Plaintiffs moved for summary judgment in their favor on the 
Church's motion on June 30, 1981 (A. 86-87). At a status con­
ference in early July, 1981, the district court announced that 
it would permit the intervenor to present testimony by way of 
deposition prior to ruling on the Motion to Modify or the motion 
for summary judgment. However, on July 13, 1981 the district 
court also suspended the effect of its 1980 decrees as to
church-related private schools in Mississippi pending its ruling

24/ '
on the Clarksdale claims (A. Ill). Ultimately, in the July
22, 1983 order from which this appeal is taken, the district 
court lifted that suspension, granted plaintiffs' motion for 
summary judgment, alternatively denied the Church's motion to 
modify the injunction based upon the entire record, and rejected 
the constitutional claims raised by the Church {A. 244-46).

D. The Evidence
Most of the evidence relevant to the determination of the 

issues raised by the appellant appears in plaintiffs' Statement

23/ Although the appellant did not seek to represent a class of 
churches or church schools, the proposed order it submitted with 
its motion to modify the injunction covered all church schools 
in Mississippi (A. 85).
24/ On January 6, 1982, after all of the parties' evidence and 
briefs had been submitted, the district court stayed all further 
proceedings pending the ruling in Bob Jones University v. United 
States, U.S. , 76 L. Ed. 2d 157 (1983). See A. 156-57,
170.

18



of Material Facts Not in Dispute, filed with their Motion for25/
Summary Judgment, as amended (A. 88-98, 158-61). This evi­
dence may be placed into two categories for purposes of summary: (a) 
that concerning the procedures followed by IRS in carrying out 
the injunctive orders in this case, and (b) that concerning the 
background and operation of the Clarksdale Baptist School.

25/ The facts contained in plaintiffs' pleading as originally 
fried on June 30, 1981 were admitted, for the most part, by the 
appellant in answer to an interrogatory on this subject (see A. 
114-17). The appellant's corrections to four assertions therein 
were incorporated in amendments to the Statement of Material 
Facts which were filed on December 15, 1981 (A. 158-61). The 
Amended Statement also included four new factual paragraphs re­
flecting the results of further evidentiary developments and 
factual submissions (id.).

The appellant filed a pleading purporting to set out con­
tested factual questions which would prevent the granting of 
summary judgment. (A. 162-69.) In general, plaintiffs do not 
dispute many of these assertions and incorporated them in their 
statement. Compare, e.g., A. 162 (#1), A. 163 (#5, #6), A. 164 
(#7, #8, #9, #10) with A. 91 (#12), A. 92 (#15); A. 165 (#13) 
with A. 91 (#13). In other respects, appellant's factual claims 
are simply irrelevant (in plaintiffs' view) to the issues which 
were before the district court in this case. For example, the 
church has consistently maintained that it does not practice ra­
cial discrimination. (See, e.g., A. 165 (#12).) Plaintiffs 
have never sought to persuade the district court otherwise. The 
order entered below does not adjudicate whether the church or 
the school is operated on a discriminatory basis, nor whether it 
qualifies for an exemption under Section 501(c) (3). It deter­
mines merely that (a) the relationship between an all-white 
school's founding or expansion and the process of public school 
desegregation is a strongly relevant factor to be considered by 
the Internal Revenue Service in making the judgment whether a 
private school is operated on a discriminatory basis, (b) this 
factor is equally relevant whether the school in question is 
non-sectarian or church-connected, and (c) use of these eviden­
tiary standards with respect to church-connected schools does 
not violate the First Amendment. Clarksdale is still exempt today.

The limited effect of the 1980 decree on appellant's tax- 
exempt status was emphasized at the July 8, 1983 hearing in this 
matter by counsel for plaintiffs (A. 197-99) and by the district 
court (e.g., A. 212, 222 ["If you aren't practicing any discrim­
ination whatever, then, in all probability or all likelihood, 
you will get an exemption"]). Should IRS subsequently decide to 
withdraw the Clarksdale Baptist School's exemption, the school 
may seek judicial review of this determination under 26 U.S.C.
§ 7428 by filing a declaratory judgment proceeding, as other 
Mississippi private schools have done (see A. 173, 186).

19



(a)The 1980 injunctive orders in this case require that, in 
carrying out its statutory obligation to deny exemption to pri­
vate schools which practice racial discrimination, Bob Jones 
University v. United States, the IRS draw a rebuttable inference 
of discrimination from facts indicating that a school was 
founded or substantially expanded about the time of public 
school desegregation and that it has remained all white. Thus, 
IRS first seeks, from a school wishing to be recognized as exempt 
from federal taxation, information that enables the Service 
to decide whether the inference applies to the school. The 
Service has developed a standard questionnaire for this purpose, 
which was sent to the appellant on June 30, 1980 (A. 144-48).
The information sought is entirely factual and historical and 
does not relate to the religious character or activities of the 
school (see A. 147-48).

If the answers to the first questionnaire indicate that 
the school is subject to the inference of discrimination because 
of the relationship between its operations and public school in­
tegration, then the Service requests further information on a 
second questionnaire, as was done in appellant's case on Sep­
tember 17, 1980 (A. 149-55). While the questions on this docu­
ment are more detailed and specific than those on the first, 
they focus entirely on the history of the school's operations, 
the racial character of its staff and enrollment, and the exam­
ples of conduct which might serve to rebut the inference of dis­
crimination that were outlined in Norwood and in the 1980 in­
junctive orders in this case (see supra p. 11) (A. 152-55). No

20



inquiry is made with respect to curricular or religious prac­
tices of the school or any sponsoring organization such as a 
church. Moreover, the second questionnaire specifically seeks 
any information which a school can provide indicating that it is 
not operated on a discriminatory basis (A. 154):

(8) Provide any other similar evidence cal­
culated to show that the doors of the 
private school and all facilities and 
programs therein are indeed open to stu­
dents or teachers of both the black and 
white races upon the same standard of 
admission or employment.

(9) Provide any other information that you 
feel demonstrates that you do not racially 
discriminate in admissions, employment, 
scholarships, loan programs, athletics, 
and extra-curricular programs.

(10) If, despite your school's stated policy of 
racial nondiscrimination, you have still 
been unable to enroll significant numbers 
of black students, describe any facts and 
circumstances you feel would explain your 
inability to attract these students.

Based upon all of the information submitted by the school, IRS 
must then determine whether or not the inference of discrimina­
tion has been rebutted by clear and convincing evidence of non­
discrimination .

(b)Appellant Clarksdale Baptist Church operates a state- 
accredited private school presently offering instruction in 
grades 1-8. The school opened in the fall of 1964 (A. 92) -- 
immediately after the summer extraordinary legislative session 
which enacted the state tuition grant legislation invalidated 
in Coffey v. State Educ'l Fin. Comm'n, see 296 F. Supp. at 1391. 
The 1964-65 school year was also the start of public school

21



desegregation in Clarksdale. Pursuant to federal court order, 
only grades 1 and 2 were to be desegregated during that year; 
Clarksdale Baptist School served the same two grades in 1964- 
65 (A. 92). As "freedom of choice" was extended to higher 
grades in the Clarksdale public schools, so the Clarksdale Bap­
tist School added one grade each year between 1965-66 and 
1968-69 (A. 93, 147).

In 1969 and 1970, the United States Supreme Court and the 
Court of Appeals for the Fifth Circuit issued rulings requiring
prompt and more effective public school desegregation in Missis-

26/
sippi, including Clarksdale. At the same time, enrollment
in the Clarksdale Baptist School substantially increased; the 
school also added grades 7 and 8 in the middle of the 1969-70 
school year (A. 93-94). The new pupils were white students who 
previously attended the Clarksdale public schools (A. 94), which 
suffered a substantial loss of white enrollment (A. 159). 
Clarksdale Baptist School also tripled the size of its teaching 
staff in 1969 and 1970 by hiring white teachers from the public 
school system (A. 94, 159-60). It had no black students or 
staff then, and it has no black students or staff now (A. 94, 
152-53; R. Doc. No. 271 [Exhibits to Leventhal affidavit]).

The school participated in the Mississippi textbook program 
until after Norwood was filed (A. 94, 152; R. Doc. No. 271 [Lev-

26/ See Henry v. Clarksdale Municipal Separate School Dist.,
409 F.2d 682 (5th Cir. ) , cert, denied, 396 U. S. 94"0 (196 9) ;
id., 433 F.2d 387 (5th Cir. 1970); Alexander v. Holmes Countv Bd.
of Educ., 396 U.S. 19 (1969). * “

- 22



enthal affidavit]). It published a notice of the nondiscrim- 
inatory admissions policy which it claims to follow only in 
1981, upon advice of counsel (A. 160). The Board of Trustees 
of the school, drawn entirely from the church's congregation, 
has no black members; there are none in the congregation (A. 153). 
Although the Church views the provision of educational training 
to its adherents as part of its religious mission (A. 92), 
enrollment in the school has never been limited to members of 
the congregation of the Clarksdale Baptist Church and today, 
less than one-third of the school's students come from the fami­
lies of church members (A. 92, 158).

Summary of Argument 

I
The decree entered by the district court in 1980 requires 

the Internal Revenue Service to draw the inference that a pri­
vate school in Mississippi is operated on a racially discrim­
inatory basis if the school was founded or expanded at the time 
of local public school desegregation and has an all-white or 
virtually all-white staff and student body. Unless such a 
school rebuts the inference by presenting objective evidence 
which clearly and convincingly establishes that it is nondis- 
criminatory, the Service may not recognize the school as quali­
fied for federal tax exemption under 26 U.S.C. § 501(c)(3).

A. These evidentiary principles are well settled and de­
rive from numerous federal court rulings in cases challenging

23



state aid to discriminatory private schools which were estab­
lished to provide an alternative for white students seeking to 
avoid public school integration. They are applicable to both 
nonsectarian and church-connected institutions and are equally 
rational in their application to both. Nothing in the Religion 
Clauses of the First Amendment proscribes their use in deter­
mining whether a church-related private school is eligible for 
exemption.

B. The decree's requirements that the Internal Revenue 
Service (a) collect the necessary information to determine 
whether the inference of discrimination applies to particular 
church-connected schools, and (b) thereafter assess any and all 
evidence supplied by such schools to determine whether the in­
ference of discrimination has been rebutted, do not create an 
"excessive entanglement" between the government and churches 
which violates the Religion Clauses of the First Amendment.
Under the decree the IRS makes no inquiry about religious be­
liefs and seeks to trace the uses of no funds; its inquiry is 
focused narrowly upon the admissions and employment policies of 
Mississippi private schools and is directly and cogently rele­
vant to determining whether those schools are nondiscriminatory. 
Since "[e]ither course, taxation of churches or exemption, occa­
sions some degree of involvement with religion," Walz v. Tax 
Comm'n, 397 U.S. 664, 674 (1970), the First Amendment does not 
prohibit the government from taking appropriate steps to insure 
that a private school operated by a church meets the statutory

24



requirement of nondiscrimination to qualify for tax exemption,
see id. at 673; Bob Jones University v. United States, __ U.S.
___, 76 L. Ed. 2d 157 (1983) .

C. Appellant inexplicably and drastically misconstrues the 
decree in suggesting that it requires a church to take any par­
ticular action even if that action is inconsistent with its doc­
trinal tenets. Although the decree provides examples -- drawn 
from the opinion in Norwood v. Harrison, 382 F. Supp. 921 (N.D. 
Miss. 1974) —  of the types of evidence and actions which would 
tend to rebut an inference of discrimination arising from a pri­
vate school's history and relationship to public school integra­
tion, neither the decree nor the Service's implementation of it 
require that a private school do any particular act in order to 
qualify for exemption. The decree specifically and explicitly 
directs the IRS to consider any and all evidence tendered by a 
school to demonstrate that it is nondiscriminatory. But even 
were appellant's construction a more defensible one, the decree 
would nevertheless be completely consistent with the Free Exer­
cise Clause of the First Amendment because it is amply justified 
by the "compelling interest" in avoiding federal support for 
racially discriminatory educational institutions. Bob Jones 
University v. United States.

II
The district court correctly refused to permit appellant 

to relitigate the issue of plaintiffs' standing to sue, which

25



has been favorably determined in 1971 and affirmed by the Su­
preme Court of the United States. Both the "law of the case" 
doctrine and the established law of this Circuit, Wright v .
Regan, 656 F.2d 820 (D.C. Cir. 1981), cert, granted, ___U.S.
___, 77 L. Ed. 2d 1365 (1983), limit the authority of the trial
court to revisit the question of plaintiffs' standing at this 
point in the case. This in no sense deprives appellant of any 
rights, since an intervener takes the case in the posture in 
which it finds it and may not reopen issues which have been 
decided.

26



ARGUMENT

In the trial court and in its Brief, appellant has fired 
a blunderbuss of charges at the district judge's 1980 injunctive 
decree. See, e.g., A. 79-83; App't Br. 15-19. The issues are 
easily simplified, however, since only a few fundamental ques­
tions are raised. Appellant does not contest the propriety of 
the district court's decree insofar as it applies to nonsectarian 
private schools in Mississippi. The initial question, therefore, 
is whether the logical basis for the presumption of discrimination 
flowing from a school's all-white character and its founding or 
expansion coincident to public school desegregation is somehow 
absent in the case of a private school which is operated by a 
church. If the "badge of doubt" concept is equally applicable, 
the Court must determine whether the information-gathering require- 
ments of the decree produce an "excessive entanglement" between
the IRS and church schools which is prohibited by the First Amend- 

27/
ment and if the decree otherwise interferes with any Free

28/
Exercise Clause rights of the Church. Finally, the Court must

27/ If the Court were to conclude that the steps which the dis­
trict court has required IRS to undertake (to insure that the 
federal government does not furnish tax benefits to racially 
discriminatory schools) cause "excessive entanglement," it would 
be required to fashion a remedy which would eliminate that entan­
glement without causing IRS to violate another constitutional 
provision. See 330 F. Supp. at 1164-65. This might require the 
elimination of any opportunity for churches which operate schools 
to secure the benefits of tax exemption. Compare Roemer v. Board 
of Public Works, 426 U.S. 736, 764 (1976)(plurality opinion).
28/ Appellant's claims that the decrees require church schools to 
take action antithetical to their religious beliefs in order to 
rebut the "badge of doubt" rest upon a misreading of the decree. 
Except for making publicly known its adherence to a policy of 
racial nondiscrimination, the items to which appellant objects 
are exemplary, not mandatory nor exclusive. See infra pp. 41-46.

27



decide whether intervenor may raise the issue of plaintiffs' 
standing at this point in the case.

I
The District Court's Decree May Properly 
Be Applied To Church-Sponsored Private 

Schools Without Violating The First Amendment
A. Application of the "Norwood Presumption" to 

Church-Related Schools Is Not Irrational
Appellant appears to contend that the evidentiary princi­

ples developed over the years by federal courts, in order to 
determine whether private schools follow principles of nondiscrim 
ination, see, e.g., United States v. Mississippi, 499 F.2d 425, 
430 (5th Cir. 1974)(en banc); Brumfield v. Dodd, 425 F. Supp. 528 
531-32 (E.D. La. 1975); Norwood, 382 F. Supp. at 924; Gilmore v. 
City of Montgomery, 337 F. Supp. 22, 24 n.2, 25 (M.D. Ala. 1972), 
aff'd in relevant part, 473 F.2d 832 (5th Cir. 1973), aff'd in 
relevant part, 417 U.S. 556 (1974); Green v. Connally, 330 F. 
Supp. at 1173 (private schools founded at time of public school
desegregation in states with history of officially mandated dis-

29/
crimination carry "badge of doubt"), may not be applied to 
church-operated schools. As a general matter, of course, evi­
dentiary rules are equally applicable to religious and non­
religious institutions. See Jones v. Wolf, 443 U.S. 595, 607-09 
(opinion of the Court), 615-16 (dissenting opinion)(1979)(courts 
may apply rebuttable presumption that majority of congregation

29/ Appellant suggests that this part of the Green v. Connally 
ruling was not intended to apply to church-connected schools; 
that prior to 1980 such schools were not covered by the case 
(App't Br. 14). This is clearly wrong. Church schools have 
been covered by the case since its inception. See supra pp. 7- 
9; Appendices B & C infra.

- 28



represents local church entity in dispute over right to church 
property); Synanon Foundation, Inc, v. California,. 444 U,S. 1307, 
1307-08 (1979)(Rehnquist, J., Circuit Justice) (churches are not 
entitled to different treatment from other charitable trusts in 
state courts); cf. United States v. Freedom Church, 613 F.2d 316, 
322 (1st Cir. 1979) (district court may infer existence of rec­
ords and possession by minister of church).

The inference of discrimination which arises by virtue of 
the close relationship between a private academy's founding or 
expansion and public school desegregation in the area is hardly 
without a "rational connection between the fact proved and the 
fact presumed," Leary v. United States, 395 U.S. 6 , 33 (1969), 
quoting from Tot v.-United States, 319 U.S. 463, 467 (1943). The 
Mississippi private schools which refused to adopt policies of 
nondiscrimination after the three-judge court issued the prelim­
inary injunction in Green v. Kennedy, and which consequently lost 
their entitlements to federal tax exemptions, were almost all
founded "in the wake of" public school desegregation. See Cof-30/
fey v. State Educ'l Fin. Comm'n; Norwood v. Harrison. Thus,
application of the rebuttable "Norwood presumption" to church- 
connected schools founded or expanded in the wake of desegre­
gation is proper. Jones v. Wolf, 443 U.S. at 607; United

30/ The phenomenon of the founding or expansion of private, all- 
white schools at the time of public school desegregation in their 
communities is well documented. In addition to the cases previ­
ously cited, see, e.g., Cook v. Hudson, 365 F. Supp. 855, 860 
(N.D. Miss. 1973), aff'd per curiam, 511 F.2d 744 (5th Cir. 1975), 
cert, dismissed, 429 U.S. 165 (1976); D. Nevin & R. Bills, The 
Schools That Fear Built —  Segregationist Academies in the South 
(1976) ; U.S. Commission on Civil Rights, School Desegregation in 
Ten Communities 17, 29, 36, 80 (1973); Note, Section 1981 and 
Discrimination in Private Schools, 1976 Duke U. L.J. 125, 125-26 
& nn. 4, 8 and authorities cited therein; Note, Segregation Acad- 
emies and State Action, 82 Yale L.J. 1436 (1973).

29



States v. Freedom Church, 613 F.2d at 322.
Moreover, a number of federal courts have specifically- 

found, after full hearings, that church-connected schools to 
which the presumption applied did in fact maintain discrimin­
atory practices which disqualified them for governmental assis­
tance. E.g., Brumfield v. Dodd, 425 F. Supp. at 534-35 (Grawood 
Christian School); Norwood v. Harrison, 382 F. Supp. at 927-28
(South Haven Mennonite School) ,* Gilmore v. City of Montgomery,

31/
337 F. Supp. at 24 (St. James School). This buttresses the
rationality of applying the "Norwood presumption" to church 
schools just as it is applied to nonsectarian schools. See, e.g., 
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 20-31 (1976).

There is also no valid basis for appellant's objection that 
the decree shifts the burden of establishing a policy of non­
discrimination to the schools subject to the inference. In 
this area, as in any other tax matter, the burden of proof rests 
upon any person or group claiming exemption to establish its 
qualification. Prince Edward School Foundation v. Commissioner. 
Prior to 1970, a school could meet this burden by demonstrating 
that it was operated for educational purposes. Since that time, 
it must also show that it follows nondiscriminatory admissions 
and employment policies. In this context, the decree may in fact 
properly be regarded as not shifting the burden of proof at all,

31/ See also Norwood v. Harrison, 382 F. Supp. at 928 (County 
Day School, held ineligible for textbooks, started in facilities 
provided rent-free by Presbyterian Church); A. 97-98 (1M[ 41, 42).

30 -



see Lavine v. Milne, 424 U.S. 577, 582-85 (1976) (sustaining
rebuttable presumption that individual who applies for welfare 
benefits within 75 days of voluntarily terminating employment 
left job for purposes of qualifying for assistance). Further, 
since the fact of coincidence between an academy's founding or 
expansion and public school desegregation is probative of dis­
crimination, even as to church schools, shifting the burden is 
unexceptionable. See Dayton Bd. of Educ. v. Brinkman, 443 U.S. 
526, 535-37 (1979); Columbus Bd. of Educ. v. Penick, 443 U.S. 
449, 467-68 (1979); Keyes v. School Dist. No. 1, Denver, 413 
U.S. 189, 207-11 (1973) and cases cited.

Both as a matter of law, and as a matter of fact, the 
district court was right to reject appellant's novel contention 
that its evidence

establishes a reverse (and constitutionally 
compelled presumption: namely, that religious 
schools are founded and operated [solely] out 
of religious necessity and from [religious] 
motivations [so that n]o inference of discrim­
ination is in any way supportable given that 
proper presumption

(App't Br. 13). The same is true of appellant's related 
contention that a court may never "direct a government agency 
to presume anything about the motivation behind the founding 
of a sincerely religious school, other than that it was 
founded [solely] for religious reasons" (App't Br. 15).

31



As a matter of law, the "religious" character of an 
institution does not preclude the possibility that it is also 
racially discriminatory. See Bob Jones University v. United 
States. A religious school, like any other, retains the 
obligation of demonstrating its eligibility for exemption.
United States v. Holmes, 614 F.2d 985 (5th Cir. 1980);
Christian Echoes Nat'l Ministry v. United States, 470 F .2d 
849 (10th Cir. 1972), cert, denied, 414 U.S. 864 (1973); cf.
26 U.S.C. § 7605(c).

In any event, appellant has failed to show that it was
clearly erroneous for the district court to find that appellant
had failed to prove facts essential to its claimed presumption.
Indeed, the sum total of appellant's evidence was woefully
inadequate. Rev. Marion's affidavit (A. 60-69) attempted to
explain the opening of the school in 1964 on non-racial grounds,
but said nothing about the school's substantial expansion when
desegregation of the Clarksdale public schools quickened in 1969 

32/and 1970. On the other hand, a white teacher called by
appellant testified that she was hired by the Clarksdale Baptist 
School in the fall of 1970 after she left the public school system
at the moment her classes would have been desegregated, and fol­
lowing her one semester's employment by another private school 
in Clarksdale which was racially discriminatory and lost its 
tax exemption for this reason. (A. 131, 134-35, 160; see also

32/ Appellant declined to make Rev. Marion available for cross- 
examination for stated reasons of health. See Transcript of 
Gladden deposition (R. Doc. No. 291G), at 46; Transcript of
Treloar deposition (R. Doc. No. 291H), at 18.

- 32 -



A. 137). The other witnesses presented by appellant had no
personal knowledge of the school's history relative to public
school desegregation in Clarksdale, having only more recent

33/connections with the school. In sum, the district court
was right to find the facts against and to reject appellant s 
novel presumption.

B. The District Court's Decree Does not .....Create an "Excessive Entanglement" between 
Government and Religious Organizations which 
Violates the Free Exercise Clause 34/_____ __

In considering the claim of "excessive entanglement," it
is useful to start with the recognition that government cannot
avoid —  nor does the First Amendment require it to avoid —
all contact with religious entities. "Either course, taxation
of churches or exemption, occasions some degree of involvement35,
with religion." Walz v. Tax Comm'n, 397 U.S. 664, 674 (1970). 
Verification of a religious organization's entitlement to 
exemption is thus a necessary part of the course of governmental

33/ See Transcript of Wofford deposition (R. Doc. No. 291F),
ift 3” T3-14? Transcript of Gladden deposition (R. Doc. No. 291G) ,
at 3-4, 20-21.
34/ Appellant contends (Br. at 23-26) that the decree below 
Creates an "excessive entanglement" between IRS and church 
schools which violates the Establishment Clause. While the 
"entanglement" concept was developed in Establishment Clause 
cases, e.g. , Walz v. Tax Comm'n, 397 U.S. 664 (1970); Meek v_._ 
Pittenger, 421 U.S. 349 (1978), appellant's claim is properly 
one under the Free Exercise Clause. United States v. Holmes,
614 F.2d at 989 & n.7 (appellant "does not want to^end the tax 
exemptions but merely to enjoy them without supervision ).
35/ In Walz, despite the urgings of amici (see Brief for the^ 
National Council'of Churches as Amicus Curiae, at 4-15; Brief for 
the Synagogue Council of America and its Constituents as Amici 
Curiae, at 9—14), the Supreme Court did not suggest that tax 
exemptions for churches were necessary to avoid Free Exercise 
Clause violations.

33 -



neutrality upheld in Walz, for as the Court noted (id. at 673):
Qualification for tax exemption is not per­
petual or immutable; some tax-exempt groups 
lose that status when their activities take 
them outside the classification and new enti­
ties can come into being and qualify for ex­
emption.

The touchstone is avoidance of "excessive entanglement," Roemer
v. Board of Public Works, 426 U.S. at 766 (plurality opinion).

There can be no valid objection to the district court's
orders insofar as they require the IRS to limit tax exemptions

36/
to only qualifying groups, including churches. The only

36/ In contexts other than that of nondiscrimination, it has 
consistently been held, notwithstanding First Amendment argu­
ments similar to those of appellant, that religious organiza­
tions are subject to general governmental regulations. E.g.,
Cap Santa Vue, Inc, v. NLRB, 424 F.2d 883, 887-90 (D.C. Cir.
1970) (religious organization may be required to bargain in good 
faith with representative of its employees despite religious 
tenet that union activity is wrong); Mitchell v. Pilgrim Holi­
ness Church Corp., 210 F.2d 879 (7th Cir.), cert, denied, 347 
U.S. 1013 (1954) (religious press and publishing house subject 
to minimum wage requirements of Fair Labor Standards Act); see 
also, e.g., United States v. Lee, 455 U.S. 252 (1982) (Amish 
farmer may be required to pay social security taxes on wages of 
Amish employees); Gray v. Gulf, Mobile & O.R. Co., 429 F.2d 
1064, 1071-72 (5th Cir. 1970), cert, denied, 400 U.S. 1001 
(1971) (despite religious belief that union activity is wrong, 
employee in "union shop" may be required to pay fees and assess­
ments to labor organization); United States v. Kissinger,
250 F.2d 940 (3d Cir.), cert, denied, 356 U.S. 958 (1958) (mar­
keting restrictions of Agricultural Adjustment Act apply to 
farmer who claims religious convictions forbid him to limit 
production of foodstuffs) (alternative holding).

Similarly, the applicability to religious organizations of 
antidiscrimination measures and their enforcement processes has 
consistently been upheld against First Amendment challenges.
Bob Jones University v. United States; EEOC v. Pacific Press 
Publishing Ass'n, 676 F.2d 1272 (9th Cir. 1982), aff1g 482 F. 
Supp. 1291 (N.D. Cal. 1979); EEOC v. Southwestern Baptist Theo­
logical Seminary , 651 F.2d 277 (5th Cir. 1981), cert, denied,
456 U.S. 905 (1982); EEOC v. Mississippi College, 626 F.2d 477 
(5th Cir. 1980), cert, denied, 453 U.S. 1272 (1981); King's Gar­
den, Inc, v. FCC, 498 F.2d 51 (D.C. Cir.), cert, denied, 419 
U.S. 996 (1974); Ritter v. Mount St. Mary's College, 495 F. Supp.

[footnote continued on next page]
34



relevant inquiry, therefore, is whether the district court has 
required IRS to undertake an investigation more extensive than 
necessary to fulfill its statutory and constitutional obliga­
tions .

The district court's orders require the Service to gather
statistical data and objective facts about a private school's

37/historical development. IRS makes no inquiry about religious
beliefs, and it seeks to trace the uses of no funds. Compare 
Meek v. Pittenger, supra n.34; McCormick v. Hirsch, 460 F. Supp. 
1337, 1357 (M.D. Pa. 1978). Unlike the situation in Surinach

[footnote continued from previous page]
724 (D. Md. 1980); Dolter v. Wahlert High School, 483 F. Supp.
266 (N.D. Iowa 1980); see also Marshall v. Pacific Union Conf. 
of Seventh-Day Adventists, 14 Empl. Prac. Dec. 1! 7806 (C.D. Cal. 
1977) .

In the district court, the government recognized that "the 
modification of [the district court's] orders sought by Clarks- 
dale (which seeks to exclude religious or church-related schools 
from inquiry into their policies and practices to determine if 
racially based discrimination exists) lacks a supportable basis 
in the Religion Clauses of the First Amendment" (A. 180).
37/ The information sought by the Service pursuant to the dis­
trict court's orders is focused narrowly upon the admissions and 
employment policies of Mississippi private schools and is di­
rectly and cogently relevant to determining whether non-discrim- 
inatory policies are in effect. Bob Jones University v. United
States, 639 F.2d 147, 155 (4th Cir. 1980), aff'd, ___ U.S. ,
76 L. Ed. 2d 157 (1983); Goldsboro Christian Schools, Inc, v. 
United States, 436 F. Supo. 1314, 1320 (E.D.N.C. 1977), aff'd
mem., 464 F.2d 879 (4th Cir. 1981), aff'd, ___ U.S. ___, 76 L.
Ed. 2d 157 (1983). Cf. EEOC v. Mississippi College, 626 F.2d at 
466-68. Far more extensive examination of churches — • including 
requests for data about beliefs as well as activities -- has 
been sustained under the First Amendment as necessary to estab­
lish eligibility for tax-exempt status. See, e.g., United States 
v. Holmes; United States v. Freedom Church; Christian Echoes 
Nat'l Ministry, Inc, v. United States; Founding Church of Scien- 
tology v. United States, 412 F.2d 1197 (Ct. Cl. 1969), cert. 
denied, 397 U.S. 1009 (1970).

- 35



v. Pesquera de Busquets, 604 F.2d 73 (1st Cir. 1979), relied 
upon by appellant, the Service's inquiries are not designed to 
support a program of constant surveillance of religious institu­
tions , see 604 F.2d at 78; EEOC v. Mississippi College, 626 F.2d 
at 487 ("hypothetical concerns"). Nor do they remotely approach 
the comprehensiveness of the demand by the Puerto Rican Secre­
tary of Consumer Affairs in Surinach, see 604 F.2d at 74, 79.
Indeed, accreditation audits (Clarksdale Baptist School is ac­
credited by the Mississippi State Department of Education) could“ 38/
easily be more intrusive (see A. 119-22, 139-41).

Intervenor suggests that the district court's orders at 
least create significant potential for "excessive entanglement" 
by vesting "unlimited subjective discretion" in the Service 
(App't. Br. 18). For a number of reasons, this problem is at 
best a hypothetical one, and the district court was quite right 
in refusing to modify its injunction because of appellant's 
fears about the possible future conduct of IRS. First, a review 
of the reports filed by IRS with the court (A. 46-59) , 99-110,. 171-76, 
183-91; see also A. 73-74) amply reveals the great care which the 
Service traditionally exercises in dealing with religious insti­
tutions. Second, the focus of the inquiries and judgments which 
the Service must make is upon the existence of racial discrim­
ination. Through extensive legal and judicial development in 
the years since Brown v. Board of Education, 347 U.S. 483 (1954),

38/ See Roemer v. Board of Public Works, 426 U.S. at 764 (plur- 
ality~opinion); EEOC v. Pacific Press Publishing Ass'n, 482 F. 
Supp. at 1312; Marshall v. Pacific Union Conf. of Seventh-Day 
Adventists, 14 Empl. Prac. Dec. at 5958.

36



the meaning of the term is well established. The role of sta­
tistical data and of objective facts and occurrences in making 
the determination whether discrimination took place has long ago 
been defined and elaborated by the courts. Third, the occasion 
for the exercise of any judgment by the Service is triggered by 
objective events which many courts have recognized as establishing a 
prima facie showing of discrimination (see supra, p. 28).
Fourth, the rulings of the federal courts in Norwood v. Harrison,
382 F. Supp. 921; Brumfield v. Dodd, and other cases will be 
available as guidance and background for the Service. Fifth,
the Service can be expected —  as it did following entry of the

39/
initial three-judge court orders in this case -- to review
all determinations under the district court's decrees at the
National Office level to assure correctness and consistency of
interpretation. Sixth, the guidelines provided by the district
court to clarify and supplement the original decree are far more
specific and comprehensive than many statutory terms which the

40/
Service has proved perfectly capable of administering. ‘ Fi­
nally, we have no doubt that, if a problem or question should 
arise, the Service will not hesitate to consult the district

39/ See affidavits of IRS Commissioner Randolph Thrower, August 
21, 1970 (R. Doc. No. 100) and September 30, 1970 (R. Doc. No. 
105); Rev. Proc. 72-4, 1972-1 Cum. Bull. 706 § 9.
40/ See, e.g., 26 U.S.C. § 511 (tax on income from "unrelated 
trade or business" of certain exempt organizations. The quoted 
term is defined at 26 U.S.C. § 513 as a "trade or business the 
conduct of which is not substantially related . . .  to the exer­
cise or performance" of the organization's exempt purposes. IRS 
must give content to the words "not substantially related").

37 -



court. (See A. 69-78, 232-34, 240-41 ).11/

41/ Appellant seeks, by selective quotation of the district 
court's remarks (App't Br. 21), to create the impression that 
the district court refused, at the July 8, 1983 hearing, to con­
sider a government request for guidance in the interpretation of 
its decree. The facts are as follows: In a memorandum taking
the position that appellant's First Amendment claims were fore­
closed by the decision in the Bob Jones case, the government sug­
gested that "it may be appropriate to consider how a religious 
or church-related school can demonstrate a policy of racial 
nondiscrimination while adhering to a policy of religious pref­
erence" (A. 182). The government never filed a motion or other 
pleading seeking a modification of the 1980 decree. Nevertheless 
at the July 8, 1983 hearing, the government's counsel brought 
up the problem of a private school which (unlike appellant Clarks 
dale) limited its enrollment to, or gave a preference to, pros­
pective students of its faith (A. 233-34). The government's 
attorney did not suggest how the order should be amended to deal 
with this supposed problem (see A. 234). The district court 
responded to the matter directly (A. 235):

The Court: Well, they may give religious pref­
erence, but they can't bar somebody else just because 
they're black that may believe the same thing and 
have the same ideas.

The government's attorney expressed agreement with this state­
ment (A. 235) and then moved on to reiterate his arguments about 
standing (id. at 235-38). Plaintiffs' counsel urged the dis­
trict court not to further delay implementation of the 1980 
decree (which had been suspended for two years as to church 
schools) (A. 238-40):

. . . We have already had two years of delay at 
the instance of the government in this case, and I 
think the abstract hypothetical problem about whether 
a school which has a religious preference for its 
students should be required to take students outside 
the faith in order to rebut an inference of discrim­
ination, that is not a problem I am aware has ever 
arisen. And it seems to me that until that arises, 
there is certainly no warrant to take it up in this 
case; and I am not at all certain that it should be 
taken up in this case in any event.

Under the Bob Jones decision, the Internal Revenue 
Service has an obligation to deny tax-exempt status to 
racially discriminatory schools, those which are not

[footnote continued on next page]

38



As several courts have remarked, making qualification for 
exemption turn upon the existence of racially nondiscriminatory

[footnote continued from previous page]
church-connected and those which are church-connected.
And it seems to me that this is a problem for the In­
ternal Revenue Service, not a problem for this Court.
I think the Court was entirely correct in suggesting 
that the Service should deal with anything that is not 
at this moment encompassed within the terms of the 
Court’s Order. And if it gets to be an administrative 
problem, I suppose the government could come back and 
move to modify the Order; but they haven't done that, 
and they have no basis for doing it.

Application of the Order as to church-connected 
schools in Mississippi has been suspended since July,
1981, so I think it is fair to say that the Service 
has not come across this problem in any concrete way 
yet, and it is just something that the government's 
attorneys have made up in an effort to delay the pro­
ceedings .

The government subsequently raised the matter again (A. 241):
We think it would be helpful, your Honor, if. 

you believe that religious preference is a legitimate 
factor to be taken into account by the administrator, 
that you would consider saying so. But we agree that 
they are the ones to administer.

We think that you would not need to get into how 
they would apply that criterion. We believe that that, 
like all the other varied issues in these cases, will 
be developed case-by-case as they address the particu­
lar facts in each case.

The Court: Well, I don't think I need to out it in
...I J —    .     — —  ,, -         mrmrnmSmmmmmm  ,  —my Order. I don't think there is any question about the 

fact that the IRS can consider religious affiliation.
But to how far they can consider them, to what extent 
they consider them, to what extent they are controlling, 
that's an entirely difference [sic] matter, and I can't 
decide it.

(Emphasis supplied.) Thus, the district court did not take the 
problems of applying the decree to church-connected schools

[footnote continued on next page]

- 39 -



policies establishes an objective, not a subjective, standard 
which minimizes the potential for unlawful entanglement. Bob 
Jones University v. United States, 639 F.2d at 155; Goldsboro 
Christian Schools, Inc, v. United States, 436 F. Supp. at 1320.

For all of these reasons, appellant's "excessive entangle­
ment" claims are without merit.

C. The Specific Provisions of the District Court's 
Decree Do not Burden Appellant's Free Exercise 
of Religion in Violation of the First Amendment

Appellant contends alternatively that various provisions 
of the decree interfere with the free exercise of its religious 
beliefs by compelling the school or the church to undertake 
specific actions contrary to those beliefs. Even assuming that 
such burdens are in fact imposed by the decree, it should never­
theless be sustained because the provisions in question serve a 
compelling state interest and are as narrowly drawn as possible; 
a much more direct burden upon asserted religious belief was 
sustained in Bob Jones University.v. United States.

Preliminarily, it is important to recognize that we deal 
here with asserted restrictions upon religious practice, not 
belief, since the racially nondiscriminatory policy required for

[footnote continued from previous page]
lightly, nor refuse to give guidance to the Internal Revenue 
Service. It merely determined that no modification of its 
Order was required at this time, and that the Service should 
determine, on a case-by-case basis, the weight to be accorded 
any particular school's religious preference in admissions as 
a factor tending to rebut the inference of discrimination which 
might otherwise arise with respect to the school.

40



tax exemption is not contrary to the religious tenets of the 
appellant (App’t Br. 7). "[The First] Amendment embraces two 
concepts —  freedom to believe and freedom to act. The first is 
absolute, but in the nature of things, the second cannot be. 
Conduct remains subject to regulation for the protection of 
society." Cantwell v. Connecticut, 310 U.S. 296, 303-04 (1940). 
In determining whether a given religious practice is constitu­
tionally protected, courts balance the governmental policy in­
terest with the nature and extent of the burden its implementa­
tion creates. Thomas v. Review Bd., 450 U.S. 707 (1981); Wis­
consin v. Yoder, 406 U.S. 205 (1972); Sherbert v. Verner, 374 
U.S. 398 (1963). The indirect nature of the burden is a factor 
to be considered in drawing the balance. See, e .g., Braunfeld 
v. Brown, 366 U.S. 599, 606 (1961) (upholding an "indirect bur­
den on the exercise of religion" which made a religious practice 
more expensive but not illegal).

With these principles in mind, we turn to an examination of 
appellant’s claims.

1. Appellant misconstrues paragraph (2) 
of the May 5 Order as requiring it to 
take particular steps in order to 
qualify for tax-exempt status.______ _

Despite the carefully crafted language of paragraph (2) of 
the district court's May 5, 1980 Order (A. 39), appellant per­
sists in interpreting the third sentence of that paragraph as a 
requirement that it undertake one or more of the specific ac­
tions enumerated therein in order to qualify for tax-exempt

41



status. This interpretation is totally wrong. There is, for 
example, no requirement that a school engage in recruitment as a 
necessary precondition to being recognized as tax-exempt, even 
if it was opened on the very day that public school desegrega­
tion began, drew its initial enrollment from among white stu­
dents who left the public system at that time, and has never 
employed a minority staff member nor enrolled a minority student. 
The district court's decree grants all Mississippi private 
schools —  including those affiliated with churches —  wide lat­
itude to present to the Internal Revenue Service any facts which
might be probative of their adherence to a policy of racial non-

42/
discrimination. The decree provides examples, drawn from the
Norwood remand opinion, of evidence which would tend to indicate 
that a school follows a nondiscriminatory policy. However, the 
determination is explicitly one for IRS, and the decree mandates 
that IRS consider "any other similar evidence calculated to show 
that the doors of the private school and all facilities and pro­
grams therein are indeed open to students or teachers of both 
the black and white races upon the same standard of admission or 
employment."

The words of the order are hardly ambiguous, but appellant 
steadfastly refuses to acknowledge that they do not enjoin any 
school to take any particular action. The decree instructs IRS 
that it may decide, after investigation and consideration, to 
recognize private schools subject to the inference of

42/ The Clarksdale Baptist School has availed itself of this 
opportunity (see A. 154).

42 -



discrimination as exempt so long as the agency is presented with 
evidence "which clearly and convincingly reveals objective acts 
and declarations establishing that such [that is, the conditions 
giving rise to the inference] is not proximately caused by such 
school's policies and practices." In an effort to provide addi­
tional guidance to IRS, and based in part upon Judge Ready!s 
experience on remand in Norwood, the decree then continues (A. 39)

Such evidence might include, but is not 
limited to, . . . .  and any other similar 
evidence . . . .

(Emphasis added.) The structure of this sentence leaves no room 
for doubt that the examples which follow the words "might in­
clude, but is not limited to" are only examples, and are not 

43/
prerequisites.

Moreover, at the July 8 hearing the district court rein­
forced this point. The United States suggested in oral argument 
(without previously having made a motion to alter the decree) 
that the orders be amended specifically to authorize IRS to take
into account the fact that a school might have a policy of giv-

44/
ing preference to adherents of a particular faith. The dis­
trict court declined to modify the order but made it crystal 
clear that IRS was to consider anything bearing upon whether or

43/ A correct reading of the decree which recognizes the flexi­
bility it affords is reinforced by the individualized treatment 
of challenged schools in Norwood v. Harrison, upon which the 
district court's orders herein are reasonably grounded. See 382 
F. Supp. at 930-31 (French Camp Academy held eligible for aid 
despite failure to include written policy of nondiscrimination 
in literature and brochures).
44/ See supra note 41.

43



It is, therefore, disingen-not a school was discriminating, 
nous at the very least for the Church to continue to represent 
that it is being enjoined to take specific actions contrary to 
its doctrinal beliefs in order to keep its tax-exempt status.
All that the decree requires is that the Church do more than re­
main silent in the face of the circumstantial evidence giving 
rise to an inference that its school was founded or expanded 
for racially discriminatory reasons and continues to function 
on that basis.

2. The Internal Revenue Service could 
require churches to take the actions 
enumerated in paragraph (2) without 
violating the Free Exercise Clause.

When examined individually, none of the phrases in para­
graph (2) of the decree to which appellant objects, nor the 
strengthened publication requirement of paragraph (3), would 
impermissibly burden the church's religious activities. Not 
only does appellant distort the content of these portions of the 
district court's decree, but in any event the burdens upon its 
religious beliefs and activities which would result from treat­
ing each of them as mandatory is far outweighed by the govern­
ment's compelling interest in avoiding any support for racial 
discrimination.

Appellant's contention, for example, that the decree re­
quires it "to conduct recruitment of students and teachers not 
necessarily of its religious faith" (Br. at 16) is an absurd

45/

45/ Id. (quoting from A. 241).

- 44 -



misreading of the order. Nothing in the ruling below nor in the
history of this case in any way suggests that the Clarksdale
Baptist School may not limit its student admissions or faculty
employment on a religious basis, since racial segregation is not

46/
a religious tenet of the church. The church also errs in
equating the decree's references to recruitment, publication, 
and communications with black community representatives with 
"evangelizing" in "the secular community" (see App't Br. 16).
As the district court put it in Norwood v. Harrison, 382 F. Supp. 
at 935:

It will not do for the respondent school 
simply to say that since the Presbyterian 
Church does not proselyte for members, 
the school also must remain passive in its 
dealings with the parents of black stu­
dents at Cleveland; for while restraint 
may be good and commendable church polity 
[sic] for Presbyterians as a denomination, 
it hardly satisfies constitutional mandates 
if this all-white school is to continue 
receiving state textbook aid, that it not 
discriminate on the ground of race.

The Clarksdale Baptist School must hire staff and inform poten­
tial students of its existence and admissions requirements in 
some manner. Requiring that the school include information 
about its commitment to racial non-discrimination and make ef­
forts to ensure that this knowledge reaches possible sources of 
minority-race teachers or students simply does not amount to

46/ Cf. EEOC v. Mississippi College, 626 F.2d at 484-86; Ritter 
v. Mount St. Mary's College, 495 F. Supp. at 729; DoIter v. Wah- 
lert High School, 483 F. Supp. at 269; EEOC v. Pacific Press Pub­
lishing Ass'n, 482 F. Supp. at 1306, 1310; see also Marshall v. 
Pacific Union Conf. of Seventh-Day Adventists, 14 Empl. Prac.
Dec. at 5958.

45



proselytizing for new adherents to its religious faith.
Finally, the publication requirement for continuing quali­

fication does not mean, as appellant contends, that a school
must advertise? rather, it must simply make known its adherence

48/
to a policy of racial nondiscrimination.

Even if these aspects of the decree, correctly construed, 
are treated as "requirements" which impinge to some degree upon 
appellant's religious practices, the legal issue is whether the 
decree violates the Free Exercise Clause of the First Amendment. 
In deciding Free Exercise claims a court must balance the extent 
of the burden and the governmental interests asserted (see supra 
p. 41). Here the interference with appellant's practices is far 
less substantial than appellant claims, as we have shown. Addi­
tionally, the district court's Orders are supported by a "com­
pelling state interest," Wisconsin v. Yoder, 406 U.S. at 221, of 
"sufficient magnitude to override the interest claiming protec­
tion under the Free Exercise Clause," id. at 214. Bob Jones
University v. United States, ___ U.S. at ___, 76 L. Ed. 2d at
181 ("That governmental interest substantially outweighs what­
ever burden denial of tax benefits places on petitioners'

47/

47/ See EEOC v. Mississippi College, 626 F.2d at 485 n.10. Ap­
pellant claims that the district court's decree requires it to 
"engage in public communication with respect to its doctrinal 
beliefs" since racial nondiscrimination is part of its religious 
faith (Br. at 17). Nothing in the order compels this, however; 
whatever the source of appellant's commitment to nondiscrimina­
tion, it need announce only that it operates in harmony with the 
legal requirements for § 501(c)(3) organizations. Gray v. Gulf, 
Mobile & O.R. Co., supra n.36; Cap Santa Vue, Inc, v. NLRB, 
supra n.36.
48/ Appellant's witnesses could not meaningfully articulate how 
the decree impinged upon their religious tenets except by rnis- 
characterizing its requirements. (See A. 126-28, 132-34, 139-43.)

46 -



exercise of their religious beliefs”). In Bob Jones the Su­
preme Court sustained a requirement for tax exemption (nondis­
crimination) which was directly contrary to the professed relig­
ious tenets of the schools involved in that case. A fortiori, 
the non-exclusive procedural and evidentiary requirements of the 
district court's 1980 decree in this case do not violate any 
Free Exercise Clause rights of a church which professes no re­
ligiously based commitment to segregation.

II

The District Court Correctly Refused 
To Reopen The Question Of Plaintiffs'

Standing T.o Maintain This Suit

In the district court, appellant —  which had voluntarily 
intervened in this lawsuit —  sought to have the entire case 
dismissed on the ground that plaintiffs lacked standing. The 
district court held that it was bound by the "law of the case” 
doctrine since the issue had previously been decided in plain­
tiffs' favor and was affirmed by the Supreme Court of the United 
States. Appellant now argues that this was reversible error.

The question of plaintiffs' standing to sue had been deter­
mined in this case long before the Clarksdale Baptist Church 
sought to intervene. The three-judge court sustained plaintiffs' 
standing in Green v. Kennedy, 309 F. Supp. at 1132. Thereafter, 
on appeal from the final judgment in 1971 in Green v. Connally.

49/

49/ Accord, Brown v. Dade Christian Schools, Inc., 556 F.2d 310, 
322-23 (5th Cir. 1977) (Goldberg, J., concurring), cert, denied, 
434 U.S. 1063 (1978) .

- 47 -



apoellants-intervenors Coit, et al. raised the issue of plain-50/
tiffs' standing as one of the questions presented. The Su­
preme Court summarily affirmed. 404 U.S. 997 (1971). Thus, 
plaintiffs' right to proceed was firmly established as the "law 
of the case," and that determination could not be relitigated 
in this case absent "an intervening change in the law by au­
thoritative declaration of the authoritative court," Page v.
St. Louis Southwestern Ry. Co., 349 F.2d 820, 821 (5th Cir.
1965) , or additional relevant factual circumstances not consid­
ered in 1970 or 1971. See Johnson v. Board of Educ. of Chicago, 
457 U.S. 52, 53-54 (1982) (per curiam); Fogel v. Chestnutt,
668 F.2d 100, 108-12 (2d Cir. 1981) (Friendly, J.), cert, denied,
___ U.S. ___, 74 L. Ed. 2d 66 (1982); Morrow v. Dillard, 580
F .2d 1284, 1289-90 (5th Cir. 1978) (alternative holding).

The late U.S. District Judge Joseph Waddy recognized and 
applied these principles when, in 1977, he denied the Motion to 
Dismiss for want of standing filed by the United States when 
plaintiffs reopened this case (see supra p. 13 & n.16). After 
the Clarksdale Baptist Church entered the case in 1981 and both 
it and the United States again argued that plaintiffs lacked 
standing, the district court again ruled that it was bound by 
the "law of the case" on the issue (A. 193, 230-31, 236):

The Court: All right.
As to the issue of standing, I don't consider 
that to be a question that is any longer in 
the case.
*  *  *

30/ See Jurisdictional Statement in Coit v. Green, No. 71-425, at 11.
48



Mr. Gavin: The standing issue, Your Honor. It 
was pressed in this case in 1976, as you know —
The Court: Yes. But the Supreme Court has af­
firmed that, and X canft reverse the Supreme 
Court.
Mr. Gavin: Well, Your Honor, if I may beg to
make a few observations on that.
. . . Now the Supreme Court has granted certi- 
orary Isic] in Wright, and if the Supreme Court 
were to overturn Wright, then we would submit 
that there would be a basis for reevaluating and 
reconsidering the situation in this case.
*  *  *

The Court: Well, I feel that I am barred from
considering standing at this time. I considered 
standing one time, and I got reversed on it, in 
another case. In this case, the original three- 
judge panel found standing; it went to the Supreme 
Court, and the Supreme Court affirmed it without 
discussing it. And, certainly, that means to me 
that they affirmed the standing issue. And I am 
not going to reverse the Supreme Court.

The district court was clearly correct in this ruling. Un­
like the situation in Thompson v. Sawyer, 678 F.2d 257 (D.C.
Cir. 1982), cited by appellant (Br. at 26), this case involved 
more than a possible "reconsideration of erroneous decisions" 
by the same court which, arguendo, rendered them, 678 F.2d at 
270. The ruling on plaintiffs' standing, which is jurisdic­
tional under Article III, had gone to the Supreme Court of the 
United States and had been affirmed. Under these circumstances, 
as the court below properly recognized, a trial court is bound 
by the Supreme Court's mandate in the absence of a change in the 
law by that Court. See IB J. Moore, J. Lucas & T. Currier, 
Moore's Federal Practice 1f 1f 0.404 [1], text at n.8 , 0.40 4 [10].

49



(2d ed. 1983); cf. Fogel v. Chesnutt, 668 F.2d at 109-12.
The only* remaining question is whether the Church is bound 

by the "law of the case" doctrine because it was not a party to 
this action when that law was established. As to this issue, 
the law is well settled. An intervenor takes the case in the 
posture in which he finds it and may not reopen decided issues. 
Knowles v. Board of Public Instruction of Leon County, 405 F.2d 
1206, 1207 (5th Cir. 1969); United States v. School Dist. of 
Omaha, 367 F. Supp. 198, 201 (D. Neb. 1973); Moore v. Tangipahoa 
Parish School Bd., 298 F. Supp. 288, 293 (E.D. La. 1969); Stell 
v. Savannah-Chatham County Bd. of Educ., 255 F. Supp. 88, 92 
(S.D. Ga. 1966); see United States v. California Cooperative 
Canneries, 279 U.S. 553, 556 (1929) (Brandeis, J.)(referring to 
"settled rule of practice that intervention will not be allowed 
for the purpose of impeaching a decree already made").

Moreover, quite apart from the "law of the case" doctrine, 
it would have been improper for the court below to have ruled 
that plaintiffs lacked standing. This Court's decision in 
Wright v. Regan, 656 F.2d 820 (D.C. Cir. 1981), cert, granted,
___ U.S. , 77 L. Ed. 2d 1365 (1983) establishes the law of

51/

51/ This case is also quite different from Parklane Hosiery Co. 
v. Shore, 439 U.S. 322 (1979), also cited by appellant (Br. at 
26). In the absence of its voluntary decision to intervene in 
this litigation, no judgment of any kind, and on any subject 
(including plaintiffs' standing) would be binding upon appellant, 
which could have chosen to raise its constitutional claims de­
fensively in a summons enforcement action (see A. 74-75) or in a 
§ 7428 action (see, e.g., A. 104), for example.

50



this Circuit which must be followed by trial courts. The
holding in Wright is that black parents and schoolchildren
in plaintiffs' position do have standing to sue these very
defendants in order to ensure that indirect tax benefits are
not provided racially discriminatory private schools. Whatever
the Supreme Court's ultimate disposition in Wright, until
the Supreme Court acts on the merits in that matter, it would
have been not only improvident but improper as a matter of law
for the district court here to have held that the plaintiffs 

52/
lack standing.

52/ We do not disagree with appellant that "a reversal in Wright 
would signal an 'intervening change of controlling law' in the 
12 years since the Green affirmance, and thus warrant reconsid- 
eration of the standing of the Green plaintiffs" (Br. at 27)(emph- 
sis supplied). (Whether, upon any such reconsideration, there 
should be a modification of the earlier rulings in this case on 
plaintiffs' standing would, of course, depend upon the precise 
holding of the Supreme Court in Wright.) But, of course, those 
are not the circumstances which exist today, nor the circumstances 
which existed when the district court — • in the order appealed 
from —  declined to reconsider plaintiffs' standing. There is 
thus no basis for appellant's claim that the judgment below is 
due to be reversed. " Moreover, this Court's decision in Wright 
was based upon well-established principles applicable to this case

- 51



CONCLUSION

For the foregoing reasons, plaintiffs-appellees 
respectfully submit that the judgment below should be 
affirmed.

Respectfully submitted,

ROBERT H. KAPP 
JOSEPH M. HASSETT 
SARA-ANN DETERMAN 
DAVID S. TATEL 
WALTER A. SMITH, JR.
PATRICIA A. BRANNAN 

Hogan & Hartson 
815 Connecticut Ave., N.W. 
Washington, D.C. 20006 
(202) 331-4500

WILLIAM L. ROBINSON \
NORMAN J. CHACHKIN 
FRANK R. PARKER

Lawyers' Committee for 
Civil Rights Under Law 

733 15th Street, N.W.
Suite 520
Washington, D.C. 20005 
(202) 628-6700)

Attorneys for Plaintiffs-Appellees

- 52



APPENDIX A



The First Amendment to the Constitution of the United States
provides, in pertinent part:

Congress shall make no law respecting an 
establishment of religion, or prohibiting the 
free exercise thereof . . . .

Section 501(c)(3) of the Internal Revenue Code of 1954,
26 U.S.C. §501(c)(3), provides, in pertinent part:

Exemption from tax on corporations, certain 
trusts, etc.

(a) Exemption from taxation. — ■ An orga­
nization described in subsection (c) or (d) or 
section 401(a) shall be exempt from taxation 
under the subtitle unless such exemption is 
denied under Section 502 or 503. * * *

(c) List of exempt organizations. -- The 
following organizations are referred to in 
subsection (a):

*  *  *

3. Corporations, and any community chest, 
fund, or foundation, organized and operated 
exclusively for religious, charitable, scien­
tific, testing for public safety, literary, or 
educational purposes . . .  no part of the net 
earnings of which inures to the benefit of any 
private shareholder or individual, no substan­
tial part of the activities of which is carry­
ing on propaganda, or otherwise attempting, to 
influence legislation (except as otherwise 
provided in sucsection (h)), and which does 
not participate in, or intervene in (including 
the publishing or distributing of statements), 
any political campaign on behalf of any candi­
date for public office.

Section 7428 of the Internal Revenue Code of 1954, as 
amended in 1976 (90 Stat. 1717) and 1978 (92 Stat. 2924) , 
20 U.S.C. § 7428, provides, in pertinent part:



(a) Creation of remedy. In a case of actual 
controversy involving --

(1) a determination by the Secretary —
(A) with respect to the initial 
qualification or continuing quali- 
fication of an organization as an 
organization described in section 
501(c)(3) which is exempt from tax 
under section 501(a) . . . upon 
the filing of an appropriate plead­
ing, the United States Tax Court, 
the United States Court of Claims, 
or the district court of the United 
States for the District of Columbia 
may make a declaration with respect 
to such initial qualification or 
continuing qualification . . . .
For purposes of this section, a de­
termination with respect to a con­
tinuing qualification or continuing 
classification includes any revoca­
tion of or other change in a quali­
fication or classification.

(b) Limitations.

(2) Exhaustion of administrative remedies.
A declaratory judgment or decree under this 
section shall not be issued in any proceed­
ing unless the Tax Court, the Court of Claims 
or the district court of the United States 
for the District of Columbia determines that 
the organization involved has exhausted ad­
ministrative remedies available to it within 
the Internal Revenue Service . . . .



APPENDIX B



Attachm ent 1 t o  MS (ll)6G~58

News
Internal Revenue Service

( D ©

Tef. (202) WO 4-4021Per Releases 1:00 PM,ED1?' Fri.
July 10,. 1970

IRS Announces. Position on Private Schools

Washington, D.C. —  The Internal Revenue Service announced today that 
it has been concluded it can no longer legally justify allowing tax-exempt 
status to private schools which practice racial discrimination, nor can 
it treat gift*- to such schools, as charitable deductions for income tax 
purposes.

The- Internal Revenue Service will proceed without delay to make 
favorable rulings of exemption immediately available to private schools 
announcing racially nondiscriminatory admissions policies and to deny 
the benefit of tax-exempt status and deductibility of contributions to 
racially discriminatory private schools.

The Service said that favorable rulings given to private schools in 
the past will remain outstanding where the school is able to show that it 
has racially nondiscriminatory admissions policies..

All private schools with favorable rulings outstanding •'-fill receive 
a written inquiry from, the District Director of Internal Revenue and it 
is. anticipated that in most instances evidence of a  nondiscriminatory 
policy can be supplied by reference to published statements of policy or 
to- the racial constituency of the student body.

Where a school fails to establish that it has a. racially nondiscriminatory 
admissions policy, an outstanding ruling of exemption will be withdrawn. 
However, a school seeking to clarify or- change- its policies and practices 
will b e  given a  reasonable opportunity- to do so in order to retain its 
ruling of federal tax exemption. In any event, full, opportunity to present 
evidence and be heard will be provided in accordance with usual revenue 
procedures and the right to appeal to the courts will be available. Similar 
principles will be followed in acting upon requests made by new schools for 
rulings.

# #• #
1:00 EM, EDT 
7/10/70

Manual Supplement Official Use Only



Attachment 2 to M3" (ll)6G-5&

News m

Internal Revenue Servlee
W®©GqBdos$® e%  ®(§
T*M2Q2>W04-WmFar Bat— nr Sunday

July 19, 1970 IS-1052

Washington,, D- C. —  The Internal Revenue Service today announced it has 

issued, favorable rulings of exemption to six private schools that have an­

nounced. racially nondlscriminatory admissions policies- The schools are 

located in five different southern states.

The rulings were the first to he  issued- under the statement of position 

announced hy the IRS' on July 10 concerning; the tax status of private schools. 

Other applications for exempt ruling^. pending, at the time of the announcement, 

which, meet the stated, standards will be processed expeditiously, the IRS 

said-

The IRS- said- the written inquiry an admissions policies to be sent to 

all private schools that currently hold favorable tax exemption rulings is 

now- being developed. Inquiry letters are expected to be sent out by the 58 

IRS district directors within a few weeks.

The six schools to-- which new favorable rulings of exemption were issued 

had provided the IRS complete information that they had a racially nondiscri- 

minatory admissions policy announced within their respective communities.

The schools are:

Nathanael Green Academy, Inc. Desoto School, Inc.
Siloam, Georgia Helena, Arkansas

The Heritage School, Inc. Southeast Education, Inc..
Newnan, Georgia Dothan, Alabama
The Gaffney Day School 
Gaffney, South Carolina

Pamlico Community School 
Washington, North Carolina

(More)

Manual Supplement Official Use Only

-v fc r



Attachment 2— Cent., to MS (11)66-58

lit. response to questions it has: received',, the IRS-also issued a more 

detailed explanation of its July LQ statement of position on the tax status 

of private schools. In that statement the IRS' said, in the future, favorable 

rulings of tax. exemption would be available where schools announced racially 

nondiscriminatory admissions policies.

The IRS. said its July 10 statement does' not affect a school's ordinary 

admissions, policies which have no relation to race.. The IRS specifically 

added that a schoolrs ordinary academic standards will not be affected.

The- IRS. explained that its July 10 statement is applicable to all pri­

vate schools--throughout .the United' States,, except as limited by the-order of 

a three judge- Federal District Court in the District of Columbia, in 

Green v- Kennedy and Thrower. That court has. ordered that rulings be issued 

in. Mississippi only under terms, and conditions, approved- by the court-.

T it - its initial nationwide- review of the present status, of private schools, 

the IRS said, that where a school has. adopted and publicly announced a racially 

nondiscriminatory admissions policy, it will assume,, in accord with normal 

procedures, in requests for rulings,'that such policy has been adopted and will 

be maintained in good faith. If subsequent examination by an IRS field office 

indicates that a school has not administered such a policy in good faith, 

the tax exempt status of the school will be challenged.

The IRS also said, that, should an existing ruling of a private school be 
revoked as the result of such a challenge, persons contributing to the school 
will be- allowed to deduct contributiions made prior to the date of the public 
announcement by the IRS' of the revocation. This follows the usual IRS rules 
and. procedures on contributions.

The IRS added that its statement of position on racially nondiscriminatory 
admissions policies would be applicable to all private schools, whether 
church related or not. Selectivity of students, as by  a religious seminary, 
having no relation to racial discrimination would not be inconsistent with 
the IRS statement of position.

7/19/70

# # #

— — —  i—— ■Mrnr-T.-1—K-T5tmaBaaa» -

Official Us® OnlyManual Supplement



APPENDIX C



IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA

Plaintiffs
))))))

O

Civil Action 
No. 1355-6?

)
DAVID M. KENNEDY,, Secretary of. the )
Treasury of the' United States or America) 
and RANDOLPH W. THROWER, Commissioner ) 
of Internal Revenue, )))Defendants

3

1■J

Randolph W. Thrower, Commissioner of Internal Revenue, being 
duly s w a m  deposes a n d  3aysr

1. After receiving, copies, of affidavits filed by the 
plaintiffs with the Court on o r  about November 12, 1970, the
Internal Revenue Service conducted an inquiry with respect..
to various allegations contained in such affidavits. 
Representatives of the schools referred to in the affidavits 
were provided copies of, such affidavits and were given an 
opportunity to- respond. The same opportunity was provided to 
officials o f  Macon, Mississippi, referred to in one of 
plaintiffs ’ affidavits,., There are attached hereto, marked 
Exhibits A-I to 6, affidavits received from, representatives 
of the following schools:

A-l Central Holmes Academy, Lexington
Affidavit dated December 7, 1970 of S. W. Hooker,
J. S. Yates and Frank A. Jones

A-2 Copiah Educational Foundation, Hazelhurst
Affidavit dated December 5, 1970 of Hardy W. Graves

A-3 Indianala Educational Foundation, Indian©la
Affidavits dated December 7, 1970 of Glenn A. Cain,
James C. Robertson and Henry Paris
Letter from Richard M. Allen dated December 7, 1970

A-4 Lula-Rich Educational Foundation, Clarksdale
Affidavit dated December 5, 1970 of Leon C. Bramblett

A-5 Noxubee- Educational Foundation (Central Academy), Macon 
Affidavit, dated December 3, 1970 of Polk Farrar 
Affidavit dated December 4, 1970 of John L. Sarratt 
Affidavit dated December 5, 1970 of Jesse ?. Stennis

"S-5 Quitman County Educational Foundation, Marks
Affidavits dated December 4 and 5, 1970 of R. A. Carson



2,„ in- response to the allegations contained in the 
affidavit o f  Rev. John W. Hunter dated November 2, 1970, 
submitted by the plaintiffs, concerning a  meeting held on 
January 13 1970, between representatives or the black and whi.a
communities in Macon, Mississippi, the Internal Revenue Service 
dispatched two cf. its agents to interview the 'Ayor and Cnre^, 
of Police of A e o n ,  Mississippi and the affiant, Ray. Hunter. 
Attached hereto is a memorandum dated December i.S7u oy 
Internal Revenue Agent, W. Z. Sullivan (Exhibit 3-1) and the 
affidavits of Charles Fraley, Mayor and Richard Adams., C,.xar^ 
of Police, of A e o n ,  Mississippi (Exhibit 3-2 and 3-3 respectively)

3 Sto further inquiry was made with, respect to Saints 
Industrial and Literary School,. Lexington, because plaintiffs, 
raise d  no objection to the proposed continuance of advance 
assurance to that school,or to North Delta Schools, _Crenshaw, 
because it was not mentioned in plaintiffs attidavits.

4 Based upon the foregoing, and the further intormatian. 
set forth in affiant's affidavit dated October 14, 1970^ whica 
was previously submitted to this court, the affiant r e a r n r m s  the 
iss conclusion that it has- no reason to believe the the poLicy 
of  nondiscrimination. adopted and announced by the above-stated 
institutions was not adapted o r  will not b e  administered in 
good faith, and therefore, affiant A s  reaffirmed its determina­
tion that the advance, assurance of deductibility of contrioutions 
made to the above-stated, institutions should not he suspended 
but should be- approved subject to a  thorough field examination 
which w i l l  b e  made b y  representatives of the Internal Revenue 
Service at some time during, the course of IS months as stated
in the affidavit of. October 14-, 1970.

5„ During the course of. the inquiry by the Internal 
Revenue Service described above, information_came to jits _ 
attention from sources other than the plaintifrs artidavxts 
which raised auestions requiring clarification with respect 
ca the Deer Creek Educational Institute. The Internal Revenue 
Service is. continuing its- inquiry of this matter and its 
decision with respect-to the continuance of the advance assurance 
of deductibility for this schooL will depend upon the results 
of this inquiry.

6.. Subsequent to the date of the affidavit of October 14, 
T97Q the Internal Revenue. Service, through its o8 orfises or 
District Directors., A s  mailed letters to approximately 5,000 
private schools wit A n  the United States which A d  previously 
received favorable rulings of tax exemption. The latter asss 
each, school to state whether or not its policies of admission 
are discriminatory or nondiscriminatory and, if the latter, to 
submit evidence showing that: the policy is known, to the pub A c .  
It is estimated that there are, in addition, more than j.0,000_ 
private schools which are covered by group rulings, as througn 
a rulin’ given to a church covering, all of the church-owned 
private schools. Similar information is being obtained as to 
the admissions policies of such schools. The advance assurance 
of deductibility provided by these- favorable rulings wil1 oe 
withdrawn for any school failing to satisfy the requirement



that it adopt: and administer ia good faith a nondiscriminatory 
admissions policy. The entire- thrust of the policy is to make 
recognition of charitable status dependent, among other 
circumstance** upon availability of the educational offering 
to all students- without regard to race. This policy will 
be fully an d  fairly implemented- throughout all parts of the 
country.

Commissioner of Internal Revenue

Subscribed and sworn to
before me- this 10th day o f  December I97Q

Notary Public,. _ .
Aprit.lt. 197^ t



APPENDIX D



5S73
ier 1976)

lint of th* Treasury 
il Revenue Setvice

Annua* Certification of Racial NondiscrimL.jon 
for a Private School Exempt from Federal Income Tax

(For Use by Organizations That Do Not File Form 990)

This Form is Open 
to Public Inspection

For IRS 
use ONLY >

For the period beginning_______ _____________  , 19 , and ending ________________  , 19

Name o f o rgan iza tion  which operates, supe rv ises  a n d /o r  con tro ls  schoo l(s) (b) Em p loyer iden tifica tion  num ber 
(see in stru ction  F)

Iddress (num ber and street)

City or town. State and Z IP  code

Name o f centra l o rgan iza tion  ho ld ing  group exem ption le tte r covering  the schoo l(s). (If the sam e as the organi- 
lation in 1(a) above, w rite  "S am e" and com p le te  2(c).) If th e  o rgan iza tion  in 1(a) above ho ld s  an ind iv idua l 
«emption letter, w rite  "N o t  A pp lica b le ."

(b) Em p loyer iden tifica tion  num £»r

Iddress (num ber and street) (c) G roup  exem ption num ber (s«e 
instruction  G)

City or town, S ta te  and Z IP  code

Name of schoo l ( if  more than one schoo l, w rite "S ee  A tta ch ed ," and attach lis t  o f the nam es, addresses, Z IP  
:odes and em ployer iden tifica tion  num bers o f the schoo ls). If sam e as the  organ iza tion in 1(a) above, write 
Same."

(b) Em p loyer iden tifica tion  num ber, 
i f  any

Iddress (num ber and street)

Sty o r town. State and Z IP  code

ir penalties o f perjury, I hereby certify  that I am authorized to take officia l action on behalf of the above school(s) and tha t to  the best of my knowledge 
ilief the school(s) has (have) satisfied the app licab le  requ irem ents of sections 4.01 through 4.05 of Revenue Procedure 75-50 fo r the period covered by th is  
ration.

(Signature)

lotions
M ust F ile .— Every organ iza tion exem pt 

ting to be exem pt from  Federal incom e tax 
section 501 (c)(3 ) o f the  Code and operat- 
ipervising, a n d /o r con tro llin g  a private 
(or schoo ls) m ust f ile  a certif ica tion  o f ra- 
ndiscrim ination, If an organ iza tion is  re- 
to file  Form  990. Return of O rganization 
‘ from Income Tax, e ithe r as a separate 
or as part o f a group return, the certifica- 
II be m ade on Form  990  and not on th is  
Itie schoo l(s) covered by a certif ica tion  on 
m must be listed  as ind icated  in item  3. 
ethorized o ffic ia l o f a centra l organ iza tion 
lone form  to  ce rtify  fa r  the schoo l activ ities 
rtinates, that would o therw ise be required 
man ind iv idua l basis, on cond ition  that the 
organization has su ffic ien t contro l over the 
listed on the fo rm  to ensure the ir continu- 
Serence to a rac ia lly  nond iscrim inatory  
is to students..
lien to F ile .— A lthough Rev. Proc. 7 5 -5 0 .

C.B. 587, requ ires a certif ica tion  of 
ondiscrim ination to be filed annually, the 
tification w ill cover the period beg inn ing 
ler 6. 1975. and end ing w ith the organiza- 
tt ca lendar year or f isca l period beg inn ing 
Member 31, 1975. F ile  the form  by the 
ly of the fifth month fo llow ing the c lo se  o f 
iod.
[tere to  File.— F ile  the form  w ith the Inter­
n e  Service Center, P.O. Box 187, Corn- 
Bits, Ph ilade lph ia . Pennsy lvan ia 19020. 
fftification Requirem ent.— Section 4 .06  of 
•c, 7 5 -5 0  requ ires an ind iv idua l au thor­
is e  o ffic ia l action on behalf o f a school 
lrns to be rac ia lly  nond iscrim inatory  as to 
s to certify  annually, under penalties of 
that to the best of h is /h e r knowledge and 
J9 school has satisfied  the app licab le  re- 
Bs of section s 4 .01  through 4 .05  of the 
ire.

(T itle o r authority  o f signer)________________ ________  (Date)

Section  4 .01  requ ires a schoo l to  in c lud e  a 
sta tem ent in its  charter, bylaws, o r o ther govern­
ing instrum ent, o r in a reso lu tion  o f its  govern ing 
body, tha t it  has a ra c ia lly  nond iscrim ina tory  
po licy  as  to  students.

Section  4 .0 2  requ ires a schoo l to in c lude  a 
s ta tem ent of its  rac ia lly  nond iscrim ina tory  po licy 
as to  studen ts in all its  brochures and cata logues 
dea ling  w ith student adm iss ion s, program s, and 
scho la rsh ip s . Further, every schoo l m ust include 
a reference to its  ra c ia lly  nond iscrim ina to ry  po licy 
in o ther w ritten advertis ing  tha t it uses as a 
m eans o f in form ing  prospective studen ts o f its 
program s.

Section 4 .03  requ ires a schoo l to m ake its 
rac ia lly  nond iscrim ina to ry  po licy  known to a il seg­
ments of the general com m un ity  served by the 
schoo l. Further, a schoo l m ust be prepared to 
dem onstrate tha t it has pub lic ly  d isavowed or re­
pud iated any s ta tem ents purported to have been 
m ade on its behalf a fte r Novem ber S, 1975, that 
are contra ry  to  its  pub lic ity  o f a rac ia lly  nond is­
cr im ina tory  po licy  as to students, to the extent 
that the schoo l or its  p rin c ipa l o ffic ia ls  were aware 
of such sta tem ents.

Section 4 .0 4  requ ires a schoo l to  be ab le to 
show  that all o f its  program s and fa c ilit ie s  are 
operated in a ra c ia lly  nond iscrim ina to ry  manner.

Section 4 .05  requ ires that, as a general rule, 
all scho la rsh ip s  o r o ther com parab le  benefits pro­
curab le for use a t any given schoo l m ust be 
offered on a rac ia lly  nond iscrim ina to ry  basis. How­
ever, a financ ia l a ss is tance  program  favoring  mem ­
bers o f one o r m ore ra c ia i/e th n ic  g roups w ill not 
adverse ly affect exem pt sta tus if its operation 
does not s ign ifican tly  derogate from  the m a in ­
tenance o f a rac ia lly  nond iscrim ina tory  po licy as 
to students.

E. Defin ition o f Term s.— The te rm  "ra c ia lly  
nond iscrim ina tory  po licy  as to  s tuden ts" means 
the schoo l adm its the studen ts o f any race to ail 
the rights, p riv ileges, program s, and activ itie s  gen­
era lly  accorded or m ads ava ilab le  to  students at

US. GOVERNMENT POINTING OFFICE: IS 7 S - 0 - 5 7 V I84

tha t schoo l and tha t the  schoo l does no t d is c r im i­
nate on the bas is  o f race in adm in is tra tion  o f its 
educationa l po lic ies, adm iss ion s po lic ies, scho la r­
sh ip  and loan program s, and o ther schoo l-adm in ­
iste red  program s.

The Se rv ice  cons ide rs  d isc rim ina tio n  on the 
bas is  o f race to  in c lude  d isc rim ina tio n  on the 
b a s is  o f co lo r and nationa l o r e thn ic  o rig in .

The term  “ s ch o o l"  m eans an educationa l or­
gan ization wh ich no rm ally  m a in ta in s  a regu lar fa c ­
u lty  and cu rr icu lum  and no rm ally  has a regu la rly  
enro lled  body o f pup ils  o r studen ts in attendance 
at the p lace where its educationa l activ itie s  are 
regu larly  carried  on. The term  inc ludes prim ary, 
secondary, preparatory, o r high schoo ls, and co l­
leges and un ive rs it ies, whether operated as a 
separa te legal en tity  o r as an activ ity  o f a chu rch 
or o ther organ iza tion described in section 501 
(c)(3) of the Code. The term  also  inc ludes pre- 
schoo ls and any o ther organ iza tion that is  a 
schoo l as defined in section 1 7 0 (b )( l) (A ) ( ii)  of 
rhe Code.

A centra l organ iza tion is  an o rgan iza tion  
which has one o r more subord inates under its  
general supe rv is ion  o r contro l. A subo rd inate  is  
a chapter, loca l, post, o r o ther un it of a centra l 
o rganiza tion. A centra l organ iza tion m ay a lso  
be a subord inate, an exam p le  wouid be a sta te  
o rganiza tion which has subord inate un its  and is 
itse lf a ffiliated w ith a nationa l o rganiza tion.

F. Em p loyer Identification Num ber.— -The em ­
ployer identifica tion  num ber (E1N) is  a n ine-d ig it 
num ber issued by the Service to  identify  o rgan iza­
tions subject to  va riou s p rov is ions o f th e  tax law.

G. G roup Exem ption Num ber.— -The group 
exem ption num ber (GEN) is a four-d ig it num ­
ber issued to  a centra) organ iza tion (see in stru c ­
tion E above) by the Service to  identify  a centra l 
organ iza tion that has received a ru ling  from  the 
Serv ice  recogn iz ing  on a group bas is  the exem p­
tion from  Federal incom e tax o f the centra l o rgan i­
za tion  and its  covered subord inates.

575-184-1

- i  A-