Foothill Church v. Watanabe
2:15-cv-02165
E.D. Cal.Jul 11, 2016Background
- Three California churches (Foothill Church, Calvary Chapel Chino Hills, Shepherd of the Hills) sued the Director of the Department of Managed Health Care (DMHC) after the DMHC sent August 22, 2014 letters to seven private insurers requiring removal of limitations/exclusions for elective abortion coverage from plans regulated under the Knox-Keene Act.
- Plaintiffs allege they offered employee plans that excluded elective abortion coverage for religious reasons; after the letters insurers informed them such exclusionary plans would no longer be offered, forcing plaintiffs to purchase plans that cover abortions or face financial consequences under the ACA.
- Plaintiffs asserted Free Exercise, Establishment, Free Speech, and Equal Protection claims challenging the letters and DMHC enforcement (not a facial challenge to the underlying statutes).
- Defendant moved to dismiss under Rules 12(b)(1) and 12(b)(6). The court found plaintiffs have Article III standing (injury, causation, redressability) but dismissed several claims on the merits.
- Court dismissed Establishment and Free Speech claims with prejudice (futile to amend); dismissed Free Exercise and Equal Protection claims without prejudice and granted leave to amend those two claims within 21 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing (Article III) | Letters injure churches by forcing them to fund abortion coverage contrary to religious beliefs; insurers stopped offering exclusionary plans because of letters. | Injury stems from state law or insurers, not the Director’s letters; prudential limits might bar suit. | Court: Plaintiffs have standing (injury, traceability to letters, redressable); may amend despite prudential argument. |
| Free Exercise (First Amendment) | Letters target or coerce religious employers; DMHC acted with anti-religious intent and knew churches would be primarily affected. | Letters enforce a neutral, generally applicable health-law requirement to provide basic services; rational basis applies. | Court: Complaint fails to plausibly allege nonneutrality or lack of general applicability; claim dismissed but leave to amend granted. |
| Establishment Clause | Letters evidence hostility to religion and were motivated to suppress religious objections to abortion coverage. | DMHC actions have a secular purpose (ensuring access to basic care and nondiscrimination); no primary effect of endorsing or disapproving religion. | Court: Secular purpose and no primary religious message; Establishment claim dismissed with prejudice. |
| Free Speech | Being required to buy plans that cover abortion compels symbolic speech endorsing abortion. | Purchasing a plan is not expressive conduct; no particularized message compelled. | Court: Conduct not sufficiently expressive; Free Speech claim dismissed with prejudice. |
| Equal Protection | Letters and exemptions treat plaintiffs differently than similarly situated persons; selective exemptions (e.g., CalPERS) show unequal treatment. | Letters regulate plans not purchasers; no plausible factual showing exemptions were applied selectively based on religion. | Court: Complaint fails to plead plausible equal protection violation; claim dismissed but leave to amend granted. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires injury, causation, redressability)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards; conclusory allegations insufficient)
- Employment Division v. Smith, 494 U.S. 872 (neutral, generally applicable laws govern free exercise challenges)
- Church of Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520 (laws targeting religious practice lack neutrality and trigger strict scrutiny)
- Stormans, Inc. v. Wiesman, 794 F.3d 1064 (9th Cir.) (analysis of neutrality/general applicability and exemptions)
- Lemon v. Kurtzman, 403 U.S. 602 (Establishment Clause three-prong test)
- Rumsfeld v. Forum for Academic & Institutional Rights, Inc., 547 U.S. 47 (conduct required by law may not be expressive for First Amendment protection)
- City of Cleburne v. Cleburne Living Center, 473 U.S. 432 (equal protection principle that similarly situated persons be treated alike)