ST. MARTIN EVANGELICAL LUTHERAN CHURCH ET AL. v. SOUTH DAKOTA
No. 80-120
Supreme Court of the United States
May 26, 1981
Argued March 3, 1981
451 U.S. 772
Edward Thomas Schilling argued the cause for petitioners. With him on the briefs was Ernst J. von Briesen.
Mark V. Meierhenry, Attorney General of South Dakota, argued the cause for respondent. With him on the brief was Judith A. Atkinson, Assistant Attorney General.
Allen R. Snyder argued the cause for the State of Alabama et al. as amici curiae urging reversal. With him on the brief were Charles A. Graddick, Attorney General of Alabama, Richard H. Bryan, Attorney General of Nevada, Stuart Philip Ross, Peter W. Tredick, George Cocoris, and John A. Flangas.
Barry Sullivan argued the cause for the United States as amicus curiae urging affirmance. On the brief were Solicitor General McCree, Acting Assistant Attorney General Martin, Deputy Solicitor General Wallace, Alan I. Horowitz, Mark C. Rutzick, F. James Foley, Nathaniel Baccus III, Lois G. Williams, and Joseph M. Woodward.*
Briefs of amici curiae were filed by Nathan Z. Dershowitz for the American Jewish Congress and by Charles Alan Siegel for the Lutheran Church-Missouri Synod.
Petitioners, St. Martin Evangelical Lutheran Church (St. Martin), at Watertown, S. D., and Northwestern Lutheran Academy (Academy), at Mobridge in that State, claim exemption with respect to their school employees from taxes imposed by the Federal Unemployment Tax Act (FUTA),
A
FUTA appeared originally as Title IX of the Social Security Act of 1935, 49 Stat. 639, and was enacted in response to the widespread unemployment that accompanied the Great Depression. It called for a cooperative federal-state program of benefits to unemployed workers.3 The Act has undergone a series of amendments that progressively have expanded coverage of the Nation‘s work force.4
This case concerns one of the more recent of those amendments, namely, that effected by § 115 (b) (1) of the Unemployment Compensation Amendments of 1976, Pub. L. 94-566, 90 Stat. 2670. The Secretary of Labor has determined that this statute rendered nonprofit church-related primary and secondary schools subject to FUTA. The South Dakota authorities went along with that ruling in their interpretation of the State‘s amended statute. Petitioners are among those religiously affiliated schools so claimed to be required to pay the FUTA and South Dakota taxes. They contest this construction of the statutes. They argue also, however, that holding them subject to the taxes would violate both
B
Proper understanding of the effect of the 1976 amendment requires a review of FUTA‘s development. From 1960 to 1970, FUTA, by § 3306 (c) (8), unrestrictedly excluded from the definition of “employment” all “service performed in the employ of a religious, charitable, educational, or other organization described in section 501 (c) (3) which is exempt from income tax under section 501 (a).” Pub. L. 86-778, § 533, 74 Stat. 984.5 Under this definition, nonprofit church-related schools, of course, were exempt from the tax. A 1970 amendment, however, served to narrow that broad exemption of nonprofit organizations. See Employment Security Amendments of 1970, Pub. L. 91-373, § 104 (b) (1), 84 Stat. 697. The amendment generally required state coverage of employees of nonprofit organizations, state hospitals, and institutions of higher education. Simultaneously, however,
“This section shall not apply to service performed—
“(1) in the employ of (A) a church or convention or association of churches, or (B) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches;
“(2) by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order;
“(3) in the employ of a school which is not an institution of higher education. . . .”
No one, including the Secretary of Labor, disputes that church-run elementary and secondary schools remained exempt under this new § 3309 (b).
In 1976, Congress again amended the Act. Unemployment Compensation Amendments of 1976, Pub. L. 94-566, § 115 (b)(1), 90 Stat. 2670. The effect of the 1976 amendment, so far as pertinent to this case, was to eliminate completely the theretofore existing subsection (b) (3).7 Subsections (b)(1) and (b)(2), dealing specifically with religious employment, remained unchanged.8
“clearly intended to result in State coverage of church-related schools, whose employees constitute over 80 percent of the employees of all nonprofit schools. In light of the repeal of 3309 (b) (3), we think the only services performed in the schools that may reasonably be considered within the scope of the exclusion permitted by 3309 (b) (1) are those strictly church duties performed by church employees pursuant to their religious responsibilities within the schools.” Letter dated April 18, 1978, of Secretary Marshall to the Most Reverend Thomas C. Kelley, O. P., General Secretary, United States Catholic Conference.
The Secretary also ruled that neither § 3309 (b)(1)(A) nor § 3309 (b)(1)(B) was applicable to church-run schools. He notified the States, and they took steps for the collection of unemployment taxes from church-related schools. See Employment and Training Administration, U. S. Department of Labor, Unemployment Insurance Program Letter No. 39-78 (May 30, 1978), reprinted in [1978 Transfer Binder] CCH Unemp. Ins. Rep. ¶ 21,522.
II
Both St. Martin and the Academy are members of the Wisconsin Evangelical Lutheran Synod and, as such, are organizations exempt from federal income tax under
When South Dakota proposed to tax them under
On appeal, the Hughes County Circuit Court reversed, finding the Referee‘s decision clearly erroneous. App. to Pet. for Cert. A-25. The court ruled that both St. Martin and the Academy were exempt under
III
A statute, of course, is to be construed, if such a construction is fairly possible, to avoid raising doubts of its constitutionality. Crowell v. Benson, 285 U. S. 22, 62 (1932); Machinists v. Street, 367 U. S. 740, 749-750 (1961); United States v. Clark, 445 U. S. 23, 27 (1980). Accordingly, we turn first to the federal statute itself. From our reading of the legislation and of its history, we conclude that the only reasonable construction of
A
Section 3309 was added to FUTA in 1970. Although the legislative history directly discussing the intended coverage of its subsection (b) (1) is limited,11 the House Report had the following explanation:
“This paragraph excludes services of persons where the employer is a church or convention or association of churches, but does not exclude certain services performed for an organization which may be religious in orientation unless it is operated primarily for religious purposes and is operated, supervised, controlled, or principally supported by a church (or convention or association of churches). Thus, the services of the janitor of a church would be excluded, but services of a janitor for a separately incorporated college, although it may be church related, would be covered. A college devoted primarily to preparing students for the ministry would be exempt, as would a novitiate or a house of study training candidates to become members of religious orders. On the other hand, a church related (separately incorporated) charitable organization (such as, for example, an orphanage or a home for the aged) would not be considered under this paragraph to be operated primarily for religious purposes.” H. R. Rep. No. 91-612, p. 44 (1969).
Respondent would read this discussion, as the South Dakota Supreme Court majority did, to mean that Congress in 1970 intended to bring within mandatory state coverage all institutions of higher education, including those with no separate legal existence from the church or churches that operate them, except for the narrow category of seminaries and novitiates. From this, respondent extrapolates that Congress intended § 3309 (b) (1) to be read very narrowly, and that the later 94th Congress, in 1976, similarly intended to include within mandatory state coverage all primary and secondary educational institutions, including those entirely within the internal structure of churches.
The above quotation from the 1969 House Report, and its Senate counterpart, however, are susceptible of a simpler and more reasonable explanation that corresponds directly with the language of the subsection. Congress drew a distinction between employees “of a church or convention or association of churches,” § 3309 (b) (1) (A), on the one hand, and employees of “separately incorporated” organizations, on the other. See H. R. Rep. No. 91-612, at 44. The former uniformly would be excluded from coverage by § 3309 (b)(1)(A), while the latter would be eligible for exclusion under § 3309 (b) (1) (B) only when the organization is “operated, supervised, controlled, or principally supported by a church or convention or association of churches.”12 To hold, as re-
The distinction between church schools integrated into a church‘s structure, and those separately incorporated, is given further credence by the statute‘s use of specific words. The Department of Labor would interpret the term “church” in § 3309 (b) (1) as limited to the actual house of worship used by a congregation. See Brief for United States as Amicus Curiae 14-15.13 This reading, however, appears to us to deny several of FUTA‘s phrases their intended meaning. Section 3309 (b), exempting “service performed—(1) in the employ of (A) a church . . .,” is phrased entirely in terms of the nature of the employer, and not in terms of the work performed or the place at which the employee works. Congress further defined “employer” in § 3306 (a) as “any person who— . . . paid wages . . . or . . . employed at least one individual” (emphasis added). It defined “employee” as “any individual who, under the usual common law rules applicable in
incorporated church school (or other organization) must satisfy the requirements of § 3309 (b) (1) (B): (1) that the organization “is operated primarily for religious purposes,” and (2) that it is “operated, supervised, controlled, or principally supported by a church or convention or association of churches.”
Because we hold petitioners exempt under § 3309 (b) (1) (A), we leave the issue of coverage under § 3309 (b) (1) (B) for the future.
We conclude that, at the time of its enactment in 1970, § 3309 (b) (1) (A) was meant to apply to schools, like petitioners‘, that have no separate legal existence from a church, or, as in the Academy‘s case, from a “convention or association of churches.” As the Referee found, St. Martin directly finances, supervises, and controls its school‘s operations. The Synod similarly supports and controls the Academy. Only teachers trained and certified by the Synod may teach at either school, and, again as the Referee found, these teachers, both male and female, “receive a divine, life-long call” to the church. App. to Pet. for Cert. A-38. Male teachers (“teaching ministers“) have equal status in the church and an equal vote on Synod matters, including matters of doctrine, with preaching ministers. Id., at A-37. Neither school has a separate legal existence. Thus, the employees
B
The 1976 Amendments did not alter the scope of § 3309 (b) (1), either directly or by implication.17 Congress, in eliminating the old § 3309 (b) (3), made no change in § 3309 (b) (1). It did not discuss churches or church schools, and it intimated that § 3309 (b) (1) remained unchanged. See, e. g., H. R. Rep. No. 94-755, pp. 23, 41, 55-56 (1975) (explaining the then-current coverage of § 3309 (b) and the anticipated effect of the repeal, and containing no indication that the proposed amendments would alter § 3309 (b) (1)).
These references are simply too general and too ambiguous to bear the weight respondent would assign to them.19 There is no indication that Congress, in these references, had in mind the scope of § 3309 (b) (1) and religious organizations. Rather, all the evidence demonstrates that it was concerned solely with the then-existing § 3309 (b) (3) and secular educational institutions, particularly the public schools. Furthermore, the reported comments implying total coverage of all educational institutions, as a result of the repeal of the former § 3309 (b) (3), could not be taken as literally true because the 1970 Report expressly had noted that a college
Respondent also relies on a single statistic estimating the number of employees newly to be covered as a result of the repeal of the then § 3309 (b) (3). See S. Rep. No. 94-1265, at 8 (table). This statistical reference, to the effect that 242,000 employees of nonprofit organizations would be covered by the 1976 repeal of subsection (b) (3), is much too meager to sustain respondent‘s position. The Committee Report‘s table containing this figure is devoid of any explanation, source, or supporting data. The South Dakota Supreme Court relied on the figure, however, reasoning that because it “approximates the total number of teachers in all nonprofit elementary and secondary schools” in 1975,20 290 N. W. 2d, at 849, and n. 5, Congress must have included within that number religious-school teachers, who constitute more than half the staff of all private elementary and secondary schools in the United States. Yet, in repealing § 3309 (b) (3), Congress intended to include not just full-time teachers, but all employees of the newly covered nonprofit private elementary and secondary schools (custodians, cafeteria workers, nurses, part-time help, counselors, etc.). Thus, the inclusion of all employees in nonprofit private lower schools within the number of persons brought within FUTA by the repeal would far exceed the 242,000 contained in the Report‘s table, rendering it, in our view, of dubious significance for the present issue.
This legislative history does not reveal any clear intent to repeal § 3309 (b) (1) or to alter its meaning. The Court has
This makes it unnecessary for us to consider the First Amendment issues raised by petitioners.
The judgment of the Supreme Court of South Dakota is reversed, and the case is remanded to that court for further proceedings not inconsistent with this opinion.
It is so ordered.
JUSTICE STEVENS, concurring in the judgment.
The legislative history of the Unemployment Compensation Amendments of 1976, 90 Stat. 2667, persuades me that Congress did intend the repeal of
Despite this legislative history, I agree with the Court‘s conclusion that FUTA coverage does not extend to persons employed in petitioners’ schools. Although Congress’ intention to cover such employees was, in my judgment, clear, the 1976 Amendments simply failed to give effect to that intention. By repealing § 3309 (b) (3), Congress removed only one of the two statutory exemptions that, by their terms, applied to employees of parochial elementary and secondary schools. Congress left in place and did not qualify the scope of the separate exemption granted by § 3309 (b) (1). The clear expressions of congressional intent that appear in the legislative history of the Act that repealed § 3309 (b) (3)
statistic was factually inaccurate; it does not undercut respondent‘s reliance upon that statistic as a guide to congressional intent. Whether Congress believed that the figure 242,000 was an estimate of the number of additional teachers that would be covered by the Act as a result of the repeal of § 3309 (b) (3), or an estimate of the number of additional employees that would be so covered, the estimate would have had meaning only if at least some parochial school employees were represented among the 242,000 newly covered individuals.
It also should be noted that the Secretary of Labor, in his order declining to certify the unemployment compensation programs of the States of Alabama and Nevada under the FUTA, stated that the statistic had been supplied to Congress by the Department of Labor as the then-available best estimate of the total number of employees in all nonprofit, private elementary and secondary schools. See 44 Fed. Reg. 64378, 64380-64382, and n. 16 (1979). The Secretary also expressly stated that the estimate included employees of church-related elementary and secondary schools. See ibid.
When the Court is confronted with the task of construing legislation of this character, there is special force to the rule that the plain statutory language should control and that resort to legislative history is appropriate only when the statute itself is ambiguous. Congress has a special duty to choose its words carefully when it is drafting technical and complex laws; we facilitate our work as well as that of Congress when we adhere closely to the statutory text in cases like this.4 Failure to follow that approach led this Court into what I regard as manifest error in its recent summary, per curiam affirmance in HCSC-Laundry v. United States, 450 U. S. 1, a case in which the taxpayer‘s claim for exemption had equally strong support in the statutory text and, in my opinion, greater support in the legislative history than is true here. See id., at 19-23 (STEVENS, J., dissenting). Today, although I agree that the Court reaches the result required by the text of the FUTA, I write this separate statement to emphasize that this result is not supported by the legislative history of the 1976 Amendments, nor is it consistent with the Court‘s contrary resolution of the parallel tax exemption issue in HCSC-Laundry.
Accordingly, I concur in the Court‘s judgment.
Notes
“This section shall not apply to service performed—
“(1) in the employ of (A) a church or convention or association of churches, or (B) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches;
“(2) by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order. . . .”
The House Report states:“Section 115 (b) also has the effect of requiring the State to pay unemployment compensation on the basis of services performed for all educational institutions. Under existing law, the State is only required to provide coverage of services performed for institutions of higher education.” H. R. Rep. No. 94-755, p. 56 (1975).
See also id., at 2, 6, 41. Similarly, the Senate Report provides:
“The bill would require the States to extend the coverage of their unemployment compensation programs to employees of nonprofit elementary and secondary schools (present law requires coverage for employees of institutions of higher education).” S. Rep. No. 94-1265, p. 2 (1976).
See also id., at 7, 9-11.
In addition, the legislative history contains several references to the general congressional intention to extend the coverage of the FUTA to substantially all of the Nation‘s wage earners. See, e. g., H. R. Rep. No. 94-755, supra, at 1-2; 122 Cong. Rec. 22518-22519 (1976); id., at 22899-22900. While such general statements of legislative purpose cannot override plain statutory language, see ante, at 786, n. 19, they are nonetheless consistent with the more specific statements of purpose quoted above.
“For the purposes of §§ 61-1-10.2 and 61-1-10.3 the term ‘employment’ does not apply to service performed:
“(1) In the employ of
“(a) a church or convention or association of churches, or
“(b) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches; or
“(2) By a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order; or
“(3) In the employ of a school which is not an institution of higher education prior to January 1, 1978. . . .”
The Senate Report estimated that 242,000 additional employees of nonprofit organizations would be covered under the FUTA as a result of the repeal of § 3309 (b) (3). See S. Rep. No. 94-1265, supra, at 8. This figure approximated the number of full-time teachers in all private, nonprofit elementary and secondary schools in 1975. See ante, at 787, n. 20. Because well over one-half of these teachers were employed in parochial schools, respondent argues that this statistic, although perhaps slightly inaccurate, indicates that Congress intended to extend coverage to employees of parochial elementary and secondary schools. As the Court notes, the South Dakota Supreme Court accepted this argument. See ante, at 787; 290 N. W. 2d 845, 849, and n. 5 (1980).The Court finds that respondent‘s reliance upon this statistic is misplaced because, “in repealing § 3309 (b) (3), Congress intended to include not just full-time teachers, but all employees of the newly covered nonprofit private elementary and secondary schools.” Ante, at 787 (emphasis in original). The Court‘s observation, however, indicates only that the
“If Congress desires to change the established exemption of unemployment compensation coverage for elementary and secondary parochial school employees, it is well within its ability to amend the law to reflect that desire by drafting a clear statement to that effect. But, it is not the responsibility or function of this court to perform linguistic gymnastics in order to upset the plain language of Congress as it exists today.” 626 F. 2d, at 369.
“The bill does not require extension of coverage to all jobs in nonprofit organizations. . . . [C]overage would not have to be extended to the employees of a church or religious organization, to clergymen or members of religious orders, [or] to elementary and secondary schools. . . .” 116 Cong. Rec. 10575 (1970).
Subsection (b) (1) was not specifically mentioned in the debates.
“Section 115 (b) also has the effect of requiring the State to pay unemployment compensation on the basis of services performed for all educational institutions. Under existing law, the State is only required to provide coverage of services performed for institutions of higher education.”