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Texas Ruling Opens Route for Religious Carveouts to LGBT Rights

Nov. 3, 2021, 3:37 PM

A Texas federal judge recently laid a path allowing for-profit businesses to use religion as a shield against LGBT anti-discrimination claims, but attorneys and academics question whether it’ll survive appellate review or make its way to the U.S. Supreme Court.

District Judge Reed O’Connor’s opinion—weighing in on several questions left unanswered by the Supreme Court’s landmark 2020 decision in Bostock v. Clayton County, Ga.—found that the Religious Freedom Restoration Act and the First Amendment can protect Christian-run health-care businesses from LGBT bias liability. He also said churches and other nonprofits can similarly escape liability under Title VII of the 1964 Civil Rights Act’s religious organization exemption.

The Oct. 31 decision will likely be appealed to the U.S. Court of Appeals for the Fifth Circuit, observers said. But they disagreed on which parts of the 70-page ruling the appellate court, which is dominated by Republican-appointed judges, would keep or throw out.

“The appeal could go off on any one of several side issues,” said University of Virginia School of Law professor Douglas Laycock, a religious liberty legal scholar. “But if they reach the merits, I think the Fifth Circuit is likely to affirm.”

Others said the appeals court could take a different approach in the case, which was brought by health-care provider Braidwood Management Inc. and Bear Creek Bible Church, to challenge U.S. Equal Employment Opportunity Commission enforcement of Title VII following Bostock. The two entities sought carveouts from the expansion of civil rights protections for LGBT workers.

“While I firmly believe that the decision is so bad and contains so many errors that even the Fifth Circuit will reverse at least in part, what exactly they do, and the calculations thereafter are an unknown,” said Gregory Nevins, senior counsel for Lambda Legal, which litigates on behalf of the LGBT communities.

And while the Supreme Court in recent years has taken on clashes between religious rights and LGBT anti-discrimination protections, it’s not certain the justices would accept this particular case if it reaches them.

“There are some very familiar arguments that we have seen from conservative legal groups that have worked very hard to radically expand what religious freedom means under the law,” said Katy Joseph, director of policy and advocacy for the Interfaith Alliance, a group focused on keeping religion and government separate. “This is only the beginning.”

The EEOC declined to comment on the ruling. Attorneys representing Braidwood and Bear Creek didn’t respond to emailed requests for comment. Lawyers for the Justice Department, which represents the commission, also didn’t respond to inquiries.

Difficult to Predict

Laycock said it’s challenging to predict what the Supreme Court might do if it heard the case.

“The Supreme Court has been edging up to this issue,” he said in an email. “They may not take the case. If they do, I think the churches will win.”

The churches have an exemption under Title VII that “can easily be, and should be, interpreted to cover this case,” he said. For-profit businesses might be harder to predict, but have a chance as well.

The Religious Freedom Restoration Act can be raised by “closely held” businesses—those owned and operated by a small number of people—as a defense to government action that burdens their religious exercise.

“It doesn’t matter to RFRA whether the law is neutral and generally applicable. If it burdens the claimant’s religious exercise (and this clearly does), the question is whether the law serves a compelling government interest by the least restrictive means,” he said.

Compelling Interest

David Lopez, a law professor at Rutgers University and former EEOC general counsel, said it’s too early to say whether the Supreme Court would consider the issue—the Fifth Circuit must first weigh in.

“I thought it was too dismissive of the public interest, compelling interest, in terms of eradicating discrimination,” he said of O’Connor’s ruling. “That’s not a remarkable proposition—the court treated it as a remarkable proposition that needed to be defended.”

Lopez also pointed out that the Sixth Circuit previously dismissed the notion of a RFRA carveout, saying that “many people looked at the way they reasoned that as spot-on.”

The Sixth Circuit’s ruling came in an EEOC transgender discrimination lawsuit against a Michigan funeral home—one of the cases the Supreme Court eventually considered in Bostock. The Cincinnati-based appeals court found that the civil rights agency had a compelling interest to eradicate employment bias, and that its enforcement of Title VII was the least restrictive means of achieving that interest.

Bostock, however, didn’t address the RFRA issue. Absent controlling precedent, the question of whether the government has a compelling interest “irreducibly” boils down to a judge’s discretion, said Nathan Chapman, a law professor at the University of Georgia who focuses on religious liberty.

The closest Supreme Court precedent is its 1983 ruling in Bob Jones University v. U.S. that the government has a compelling interest in eradicating race discrimination in higher education, Chapman said. But that case involved the university losing tax-exempt status for its race-based policies, and lawyers for religious employers are sure to point out the distinction between that application and Title VII’s prohibitions, he said.

‘Motivated by Faith’

One of many “flaws” in O’Connor’s ruling, according to Lambda Legal’s Nevins, is how it defined a class of “Religious Business-Type Employers.”

The judge described those employers as being motivated by faith, but lacking a religious purpose in their incorporating documents. Certifying that class could open up the floodgates for businesses claiming to fall under that category, Nevins said.

“This will be a rich vein to tap for civil procedure professors for decades to come,” Nevins said.

Overall, Lopez doesn’t think the ruling is defensible.

“I think it creates a pretty big carveout that certainly wasn’t contemplated,” he said.

To contact the reporters on this story: Paige Smith in Washington at psmith@bloomberglaw.com; Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com