Fifth Circuit Amenable to Religious Carveouts to LGBT Rights (1)

A federal appeals court panel in New Orleans appeared open to upholding a lower court order shielding faith-based employers from having to comply with anti-LGBT discrimination laws, a move that would blunt the reach of a recent watershed US Supreme Court ruling.

During oral arguments Tuesday before the US Court of Appeals for the Fifth Circuit, two judges repeatedly pushed back on the federal government’s contention that a pre-enforcement lawsuit challenging the US Equal Employment Opportunity Commission’s administration of Title VII of the 1964 Civil Rights Act isn’t ripe for judicial review.

But there has to be “some limiting principle” to granting all private businesses a religious exemption from bias claims by LGBT workers under federal anti-discrimination laws, one of the judges said.

At issue is the scope of the Supreme Court’s 2020 decision in Bostock v. Clayton County, which said LGBT workers can sue their employers under Title VII for bias based on gender identity and sexual orientation. Texas-based health-care provider Braidwood Management Inc. and Bear Creek Bible Church, which brought the case, say Title VII as interpreted by Bostock and subsequent EEOC guidance documents violate their religious liberty by preventing them from operating in accordance with what they believe the Bible teaches about homosexuality.

This case gives the Fifth Circuit the chance to consider the scope of religious defenses to workplace discrimination liability, one of the key issues left unaddressed in Bostock.

Justice Department attorney Ashley Cheung Honold, who argued for the EEOC, insisted that the groups lack standing because “there’s no credible threat of enforcement” by the agency against any of the plaintiffs, and they haven’t identified any past or future decision that could subject them to Title VII liability.

“Plaintiffs may never face an EEOC action,” Honold said.

But Judges Cory T. Wilson and Jerry E. Smith said the case is based on hypothetical future religious liberty defenses, yet the plaintiffs seem to have a credible concern that they cannot comply with Title VII without violating their religious beliefs.

“The agency never claimed it wouldn’t try to enforce their guidance” documents addressing workplace discrimination against LGBT employees, Wilson said. That guidance says employers “cannot discriminate on the grounds raised by the plaintiffs. So if the plaintiffs have a credible fear that one day the EEOC might come knocking on their door, doesn’t that give them standing for declaratory relief?” he asked.

The EEOC has no interest in enforcing Title VII without concrete legal issues that are properly raised, Honold replied. And allowing the pre-enforcement action to proceed also undercuts the Supreme Court’s position that lawsuits—even those alleging constitutional rights violations—require a case-by-case, fact-specific inquiry and not a categorical approach, she added.

Smith, meanwhile, pressed Honold to explain how the EEOC would determine whether to carry out an enforcement action against an employer for firing a worker because of their sexuality.

The employer could invoke the Religious Freedom Restoration Act, which prohibits the federal government from burdening a person’s free exercise of religion, even if that burden stems from a neutral, generally applicable law, she said.

While factoring that in, the EEOC would probe the firing, show the agency has a compelling interest to eradicate employment bias, and that its enforcement of Title VII is the least restrictive means of achieving that interest, Honold explained.

Lower Court Holding

The EEOC wants the Fifth Circuit to vacate US District Judge Reed O’Connor’s October 2021 summary judgment order, which found that religious employers’ objections to dress codes, bathroom policies, or hiring of LGBT workers are protected by the RFRA and the First Amendment. Churches and other nonprofits can similarly escape liability under the religious organization exemption of Title VII, he said.

Also being challenged is O’Connor’s certification of two nationwide classes of employers: for-profit religious-type businesses—such as Braidwood, whose mission isn’t solely religion-based—and those that oppose “homosexual or transgender behavior” for whatever reason.

If the panel disagrees with the EEOC’s standing argument, it should grant decertification because both classes are “broad” and lack any specific factual development, Honold said.

Jonathan F. Mitchell of Mitchell Law PLLC, who argued for the religious groups, urged the Fifth Circuit to affirm O’Connor’s ruling except for two parts: That Bear Creek is a religious organization not burdened by Title VII, and that the statute can bar policies regarding bisexual conduct, gender reassignment surgery, and hormone treatment.

‘Limiting Principle’

The groups’ claim that Bostock and the EEOC’s enforcement of Title VII impose a chilling effect on businesses’ objections to LGBT rights faced some rebuke from Smith.

Mitchell, a former Texas solicitor general, alleged that the groups are exposed to possible prosecution by the EEOC and “would be forced” to act in a manner contrary to their religious beliefs if relief isn’t granted.

But Wilson seemed wary of granting a blanket religious exemption to businesses.

Under Mitchell’s argument, “basically anyone who says ‘I’m opposed to this’ can opt out of what the Supreme Court has said” in Bostock, the judge said. “How do we do that?”

“If we allow this, what is the limiting principle?” the judge inquired.

Judge Edith Brown Clement, who also sat on the panel, didn’t ask any questions during oral arguments.

The case is Braidwood Mgmt. v. EEOC, 5th Cir., No. 22-10145, oral argument held 2/7/23.