Allen v. Wright

Justice Stevens,

with whom Justice Blackmun joins, dissenting.

Three propositions are clear to me: (1) respondents have adequately alleged “injury in fact”; (2) their injury is fairly traceable to the conduct that they claim to be unlawful; and (3) the “separation of powers” principle does not create a jurisdictional obstacle to the consideration of the merits of their claim.

H-4

Respondents, the parents of black schoolchildren, have alleged that their children are unable to attend fully desegregated schools because large numbers of white children in the areas in which respondents reside attend private schools which do not admit minority children. The Court, Justice Brennan, and I all agree that this is an adequate allegation of “injury in fact. ” The Court is quite correct when it writes:

“The injury they identify — their children’s diminished ability to receive an education in a racially integrated school — is, beyond any doubt, not only judicially cognizable but, as shown by cases from Brown v. Board of Education, 347 U. S. 483 (1954), to Bob Jones University v. United States, 461 U. S. 574 (1983), one of the most serious injuries recognized in our legal system.” Ante, at 756.

This kind of injury may be actionable whether it is caused by the exclusion of black children from public schools or by an official policy of encouraging white children to attend nonpub-*784lie schools. A subsidy for the withdrawal of a white child can have the same effect as a penalty for admitting a black child.

II

In final analysis, the wrong respondents allege that the Government has committed is to subsidize the exodus of white children from schools that would otherwise be racially integrated. The critical question in these cases, therefore, is whether respondents have alleged that the Government has created that kind of subsidy.

In answering that question, we must of course assume that respondents can prove what they have alleged. Furthermore, at this stage of the litigation we must put to one side all questions about the appropriateness of a nationwide class action.1 The controlling issue is whether the causal connection between the injury and the wrong has been adequately alleged.

An organization that qualifies for preferential treatment under § 501(c)(3) of the Internal Revenue Code, because it is “operated exclusively for . . . charitable . . . purposes,” 26 *785U. S. C. § 501(c)(3), is exempt from paying federal income taxes, and under § 170 of the Code, 26 U. S. C. § 170, persons who contribute to such organizations may deduct the amount of their contributions when calculating their taxable income. Only last Term we explained the effect of this preferential treatment:

“Both tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income. Deductible contributions are similar to cash grants of the amount of a portion of the individual’s contributions.” Regan v. Taxation With Representation of Washington, 461 U. S. 540, 544 (1983) (footnote omitted).

The purpose of this scheme, like the purpose of any subsidy, is to promote the activity subsidized; the statutes “seek to achieve the same basic goal of encouraging the development of certain organizations through the grant of tax benefits.” Bob Jones University v. United States, 461 U. S. 574, 587, n. 10 (1983). If the granting of preferential tax treatment would “encourage” private segregated schools to conduct their “charitable” activities, it must follow that the withdrawal of the treatment would “discourage” them, and hence promote the process of desegregation.2

*786We have held that when a subsidy makes a given activity more or less expensive, injury can be fairly traced to the subsidy for purposes of standing analysis because of the resulting increase or decrease in the ability to engage in the activity.3 Indeed, we have employed exactly this causation analysis in the same context at issue here — subsidies given private schools that practice racial discrimination. Thus, in Gilmore v. City of Montgomery, 417 U. S. 556 (1974), we easily recognized the causal connection between official policies that enhanced the attractiveness of segregated schools and the failure to bring about or maintain a desegregated public school system.4 Similarly, in Norwood v. Harrison, *787413 U. S. 455 (1973), we concluded that the provision of textbooks to discriminatory private schools “has a significant tendency to facilitate, reinforce, and support private discrimination.” Id., at 466.

The Court itself appears to embrace this reading of Gilmore and Norwood. It describes Gilmore as holding that a city’s policy of permitting segregated private schools to use public parks “would impede the integration of the public schools. Exclusive availability of the public parks ‘significantly enhanced the attractiveness of segregated private schools ... by enabling them to offer complete athletic programs.’” Ante, at 762, n. 27 (quoting 417 U. S., at 569). It characterizes Norwood as having concluded that the provision of textbooks to such schools would impede court-ordered desegregation. Ante, at 763. Although the form of the subsidy for segregated private schools involved in Gilmore and Norwood was different from the “cash grant” that flows from a tax exemption, the economic effect and causal connection between the subsidy and the impact on the complaining litigants was precisely the same in those cases as it is here.

*788This causation analysis is nothing more than a restatement of elementary economics: when something becomes more expensive, less of it will be purchased. Sections 170 and 501(c)(3) are premised on that recognition. If racially discriminatory private schools lose the “cash grants” that flow from the operation of the statutes, the education they provide will become more expensive and hence less of their services will be purchased. Conversely, maintenance of these tax benefits makes an education in segregated private schools relatively more attractive, by decreasing its cost. Accordingly, without tax-exempt status, private schools will either not be competitive in terms of cost, or have to change their admissions policies, hence reducing their competitiveness for parents seeking “a racially segregated alternative” to public schools, which is what respondents have alleged many white parents in desegregating school districts seek.5 In either event the process of desegregation will be advanced in the same way that it was advanced in Gilmore and Norwood— the withdrawal of the subsidy for segregated schools means the incentive structure facing white parents who seek such schools for their children will be altered. Thus, the laws of economics, not to mention the laws of Congress embodied in §§ 170 and 501(c)(3), compel the conclusion that the injury respondents have alleged — the increased segregation of their children’s schools because of the ready availability of private schools that admit whites only — will be redressed if these schools’ operations are inhibited through the denial of preferential tax treatment.6

*789J — < I — i HH

Considerations of tax policy, economics, and pure logic all confirm the conclusion that respondents’ injury in fact is fairly traceable to the Government’s allegedly wrongful conduct. The Court therefore is forced to introduce the concept of “separation of powers” into its analysis. The Court writes that the separation of powers “explains why our cases preclude the conclusion” that respondents’ injury is fairly traceable to the conduct they challenge. Ante, at 759.

The Court could mean one of three things by its invocation of the separation of powers. First, it could simply be expressing the idea that if the plaintiff lacks Art. Ill standing to bring a lawsuit, then there is no “case or controversy” *790within the meaning of Art. Ill and hence the matter is not within the area of responsibility assigned to the Judiciary by the Constitution. As we have written in the past, through the standing requirement “Art. Ill limit[s] the federal judicial power ‘to those disputes which confine federal courts to a role consistent with a system of separated powers and which are traditionally thought to be capable of resolution through the judicial process.’” Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U. S. 464, 472 (1982) (quoting Flast v. Cohen, 392 U. S. 83, 97 (1968)).7 While there can be no quarrel with this proposition, in itself it provides no guidance for determining if the injury respondents have alleged is fairly traceable to the conduct they have challenged.

Second, the Court could be saying that it will require a more direct causal connection when it is troubled by the separation of powers implications of the case before it. That approach confuses the standing doctrine with the justiciability of the issues that respondents seek to raise. The purpose of the standing inquiry is to measure the plaintiff’s stake in the outcome, not whether a court has the authority to provide it with the outcome it seeks:

“[T]he standing question is whether the plaintiff has ‘alleged such a personal stake in the outcome of the controversy’ as to warrant his invocation of federal-court jurisdiction and to justify the exercise of the court’s remedial powers on his behalf.” Warth v. Seldin, 422 U. S. 490, 498-499 (1975) (emphasis in original) (quoting Baker v. Carr, 369 U. S. 186, 204 (1962)).8

*791Thus, the ‘“fundamental aspect of standing’ is that it focuses primarily on the party seeking to get his complaint before the federal court rather than ‘on the issues he wishes to have adjudicated,”’ United States v. Richardson, 418 U. S. 166, 174 (1974) (emphasis in original) (quoting Flast, 392 U. S., at 99). The strength of the plaintiff’s interest in the outcome has nothing to do with whether the relief it seeks would intrude upon the prerogatives of other branches of government; the possibility that the relief might be inappropriate does not lessen the plaintiff’s stake in obtaining that relief. If a plaintiff presents a nonjusticiable issue, or seeks relief that a court may not award, then its complaint should be dismissed for those reasons, and not because the plaintiff lacks a stake in obtaining that relief and hence has no standing.9 Imposing an undefined but clearly more rigorous standard for redressability for reasons unrelated to the causal nexus between the injury and the challenged conduct *792can only encourage undisciplined, ad hoc litigation, a result that would be avoided if the Court straightforwardly considered the justiciability of the issues respondents seek to raise, rather than using those issues to obfuscate standing analysis.10

Third, the Court could be saying that it will not treat as legally cognizable injuries that stem from an administrative decision concerning how enforcement resources will be allocated. This surely is an important point. Respondents do seek to restructure the IRS’s mechanisms for enforcing the legal requirement that discriminatory institutions not receive tax-exempt status. Such restructuring would dramatically *793affect the way in which the IRS exercises its prosecutorial discretion. The Executive requires latitude to decide how best to enforce the law, and in general the Court may well be correct that the exercise of that discretion, especially in the tax context, is unchallengeable.

However, as the Court also recognizes, this principle does not apply when suit is brought “to enforce specific legal obligations whose violation works a direct harm,” ante, at 761. For example, despite the fact that they were challenging the methods used by the Executive to enforce the law, citizens were accorded standing to challenge a pattern of police misconduct that violated the constitutional constraints on law enforcement activities in Allee v. Medrano, 416 U. S. 802 (1974).11 Here, respondents contend that the IRS is violating a specific constitutional limitation on its enforcement discretion. There is a solid basis for that contention. In Norwood, we wrote:

“A State’s constitutional obligation requires it to steer clear, not only of operating the old dual system of racially segregated schools, but also of giving significant aid to institutions that practice racial or other invidious discrimination.” 413 U. S., at 467.

Gilmore echoed this theme:

“[A]ny tangible State assistance, outside the generalized services government might provide to private segregated schools in common with other schools, and with all citizens, is constitutionally prohibited if it has ‘a significant tendency to facilitate, reinforce, and support private discrimination.’ Norwood v. Harrison, 413 U. S. 455, 466 (1973). The constitutional obligation of the State ‘requires it to steer clear, not only of operating the old dual system of racially segregated schools, but also of giving significant aid to institutions that practice racial *794or other invidious discrimination.’ Id., at 467." U. S., at 568-569.

Respondents contend that these cases limit the enforcement discretion enjoyed by the IRS. They establish, respondents argue, that the IRS cannot provide “cash grants” to discriminatory schools through preferential tax treatment without running afoul of a constitutional duty to refrain from “giving significant aid” to these institutions. Similarly, respondents claim that the Internal Revenue Code itself, as construed in Bob Jones, constrains enforcement discretion.12 It has been clear since Marbury v. Madison, 1 Cranch 137 (1803), that “[i]t is emphatically the province and duty of the judicial department to say what the law is.” Id., at 177. Deciding whether the Treasury has violated a specific legal *795limitation on its enforcement discretion does not intrude upon the prerogatives of the Executive, for in so deciding we are merely saying “what the law is.” Surely the question whether the Constitution or the Code limits enforcement discretion is one within the Judiciary’s competence, and I do not believe that the question whether the law, as enunciated in Gilmore, Norwood, and Bob Jones, imposes such an obligation upon the IRS is so insubstantial that respondents’ attempt to raise it should be defeated for lack of subject-matter jurisdiction on the ground that it infringes the Executive’s prerogatives.13

In short, I would deal with the question of the legal limitations on the IRS’s enforcement discretion on its merits, rather than by making the untenable assumption that the granting of preferential tax treatment to segregated schools does not make those schools more attractive to white students and hence does not inhibit the process of desegregation. I respectfully dissent.

The question whether respondents have adequately alleged their standing must be separated from the question whether they can prove what has been alleged. It may be that questions concerning the racial policies of given schools, and the impact of their tax treatment on enrollment, vary widely from school to school, making inappropriate the nationwide class described in respondents’ complaint. A case in which it was proved that a segregated private school opened just as a nearby public school system began desegregating pursuant to court order, that the IRS knew the school did not admit blacks, and that the school prospered only as a result of favorable tax treatment, might be very different from one in which the plaintiff attempted to prove a nationwide policy and its effect. However, as Justice Brennan observes, ante, at 770-771, n. 3, 780-781, n. 9, that goes to whether respondents can prove the nationwide policy they have alleged, and whether the factual issues they raise are sufficiently national in scope to justify the certification of a nationwide class. I rather doubt that a nationwide class would be appropriate, but at this stage respondents’ allegations of injury must be taken as true, see Warth v. Seldin, 422 U. S. 490, 501 (1975), and hence we must assume that respondents can prove the existence of a nationwide policy and its alleged effects.

Respondents’ complaint is premised on precisely this theory. The complaint, in ¶¶ 39-48, describes a number of private schools which receive preferential tax treatment and which allegedly discriminate on the basis of race, providing white children with “a racially segregated alternative to attendance” in the public schools which respondents’ children attend. The complaint then states:

“There are thousands of other racially segregated private schools which operate or serve desegregating public school districts and which function under the umbrella of organizations which have received, applied for, or will apply for, federal tax exemptions. Moreover, many additional public school districts will in the future begin desegregating pursuant to court order or [government] regulations and guidelines, under state law or vol*786untarily. Additional racially segregated private schools may be organized or expanded, many of which will be operated by organizations which have received, applied for, or will apply for federal tax exemptions. As in the case of those representative organizations and private schools described in paragraphs 39-48, swpra, such organizations and schools provide, or will provide, white children with a racially segregated alternative to desegregating public schools. By recognizing these organizations as exempt from federal taxation, defendants facilitate their development, operation and expansion and the provision of racially segregated educational opportunities for white children avoiding attendance in desegregating public school systems. Defendants thereby also interfere with the efforts of federal courts, [the Federal Government] and local school authorities to eliminate racially dual school systems.” App. 38 (emphasis supplied).

Thus, like Justice Brennan, ante, at 774-775,1 do not understand why the Court states that the complaint contains no allegation that the tax benefits received by private segregated schools “make an appreciable difference in public school integration,” ante, at 758, unless the Court requires “intricacies of pleading that would have gladdened the heart of Baron Parke.” Chayes, The Role of the Judge in Public Law Litigation, 89 Harv. L. Rev. 1281, 1305 (1976).

See Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U. S. 59, 74-78 (1978); United States v. SCRAP, 412 U. S. 669, 687-689 (1973); see also Barlow v. Collins, 397 U. S. 159 (1970).

We agreed with the District Court’s following reasoning:

“Montgomery officials were under an affirmative duty to bring about and to maintain a desegregated public school system. Providing recreational facilities to defacto or de jure segregated private schools was inconsistent ■with that duty because such aid enhanced the attractiveness of those *787schools, generated capital savings that could be used to improve their private educational offerings, and provided means to raise other revenue to support the institutions, all to the detriment of establishing the constitutionally mandated unitary public school system.” 417 U. S., at 563.

We went on to write:

“Any arrangement, implemented by state officials at any level, which significantly tends to perpetuate a dual school system, in whatever manner, is constitutionally impermissible. ‘[T]he constitutional rights of children not to be discriminated against. . . can neither be nullified openly and directly by state legislators or state executive or judicial officers, nor nullified indirectly by them through evasive schemes for segregation whether attempted “ingeniously or ingenuously.” ’ This means that any tangible state assistance, outside the generalized services government might provide to private segregated schools in common with other schools, and with all citizens, is constitutionally prohibited if it has ‘a significant tendency to facilitate, reinforce, and support private discrimination.’” Id., at 568 (quoting Cooper v. Aaron, 358 U. S. 1, 17 (1958), and Norwood v. Harrison, 413 U. S. 455, 466 (1973)).

It is this “racially segregated alternative” to public schools — the availability of schools that “receive tax exemptions merely on the basis of adopting and certifying — but not implementing — a policy of nondiscrimination,” App. 17-18, which respondents allege white parents have found attractive, see id., at 23-24, and which would either lose their cost advantage or their character as a segregated alternative if denied tax-exempt status because of their discriminatory admissions policies.

This causation analysis explains the holding in the ease on which the Court chiefly relies, Simon v. Eastern Kentucky Welfare Rights Organiza*789tion, 426 U. S. 26 (1976). There, the plaintiffs — indigent persons in need of free medical care — alleged that they were harmed by the Secretary of the Treasury’s decision to permit hospitals to retain charitable status while offering a reduced level of free care. However, while here the source of the causal nexus is the price that white parents must pay to obtain a segregated education, which is inextricably intertwined with the school’s tax status, in Simon the plaintiffs were seeking free care, which hospitals could decide not to provide for any number of reasons unrelated to their tax status. See id., at 42-43, and n. 23. Moreover, in Simon, the hospitals had to spend money in order to obtain charitable status. Therefore, they had an economic incentive to forgo preferential treatment. As the Court observed:

“It is equally speculative whether the desired exercise of the Court’s remedial powers in this suit would result in the availability to respondents of such services. So far as the complaint sheds light, it is just as plausible that the hospitals to which respondents may apply for service would elect to forgo favorable tax treatment to avoid the undetermined financial drain of an increase in the level of uncompensated services. . . . [Cjonflicting evidence supports the commonsense proposition that the dependence upon special tax benefits may vary from hospital to hospital.” Id., at 43.

In contrast, the tax benefits private schools receive here involve no “financial drain” since the schools need not provide “uncompensated services” in order to obtain preferential tax treatment. Thus, the economic effect of the challenged tax treatment in these cases is not “speculative,” as the Court concluded it was in Simon. Here the financial incentives run in only one direction.

See also Warth v. Seldin, 422 U. S., at 498; Schlesinger v. Reservists Committee to Stop the War, 418 U. S. 208, 222 (1974).

See also Los Angeles v. Lyons, 461 U. S. 95, 101-102 (1983); Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U. S., at 72; Simon v. Eastern Kentucky Welfare Rights Organization, 426 U. S., at 38; Schlesinger v. Reservists Committee to Stop the War, 418 U. S., at 220-221; United States v. Richardson, 418 U. S. 166, 179 (1974); O’Shea *791v. Littleton, 414 U. S. 488, 493-494 (1974); Roe v. Wade, 410 U. S. 113, 123 (1973); Sierra Club v. Morton, 405 U. S. 727, 731-732 (1972); Flast v. Cohen, 392 U. S. 83, 99 (1968).

The Flast Court made precisely this point:

“When the emphasis in the standing problem is placed on whether the person invoking a federal court’s jurisdiction is a proper party to maintain the action, the weakness of the Government’s argument in this case becomes apparent. The question whether a particular person is a proper party to maintain the action does not, by its own force, raise separation of powers problems related to improper judicial interference in areas committed to other branches of the Federal Government. Such problems arise, if at all, only from the substantive issues the individual seeks to have adjudicated. Thus, in terms of Article III limitations on federal court jurisdiction, the question of standing is related only to whether the dispute sought to be adjudicated will be presented in an adversary context and in a form historically viewed as capable of judicial resolution. It is for that reason that the emphasis in standing problems is on whether the party invoking federal court jurisdiction has ‘a personal stake in the outcome of the controversy,’ and whether the dispute touches upon ‘the legal relations of parties having adverse legal interests.’” Id., at 100-101 (emphasis supplied) (citations omitted) (quoting Baker v. Carr, 369 U. S. 186, 204 (1962), and Aetna Life Insurance Co. v. Haworth, 300 U. S. 227, 240-241 (1937)).

The danger of the Court’s approach is illustrated by its failure to provide any standards to guide courts in determining when it is appropriate to require a more rigorous redressability showing because of separation of powers concerns, or how redressability can be demonstrated in a case raising separation of power concerns. The only guidance the Court offers is that the separation of powers counsels against recognizing standing when the plaintiff “seek[s] a restructuring of the apparatus established by the Executive Branch to fulfill its legal duties.” Ante, at 761. That cannot be an appropriate test; the separation of powers tolerates quite a bit of “restructuring” in order to eliminate the effects of racial segregation. For example, in Bolling v. Sharpe, 347 U. S. 497 (1954), we held that the Fifth Amendment prohibits the Executive from maintaining a dual school system. We have subsequently made it clear that the courts have authority to restructure both school attendance patterns and curriculum when necessary to eliminate the effects of a dual school system. See, e. g., Columbus Board of Education v. Penick, 443 U. S. 449 (1979); Milliken v. Bradley, 433 U. S. 267 (1977); Swann v. Charlotte-Mecklenburg Board of Education, 402 U. S. 1 (1971). At the same time, standing doctrine has never stood as a barrier to such “restructuring.” In the seminal case of Baker v. Carr, 369 U. S. 186 (1962), the Court accorded voters standing to challenge population variations between electoral districts despite the fact that the legislative reapportionment sought would and eventually did have dramatic “restructuring” effects. Only two Terms ago, in Watt v. Energy Action Educational Foundation, 454 U. S. 151, 160-162 (1981), the Court accorded California standing to challenge the Secretary of the Interior’s methods for accepting bids on oil and gas rights, despite the fact that this would affect the manner in which the Executive Branch discharged “[its] duty to ‘take Care that the Laws are faithfully executed,’” ante, at 761.

See also INS v. Delgado, 466 U. S. 210, 217, n. 4 (1984).

In Bob Jones we clearly indicated that the Internal Revenue Code not only permits but in fact requires the denial of tax-exempt status to racially discriminatory private schools:

“Few social or political issues in our history have been more vigorously debated and more extensively ventilated than the issue of racial discrimination, particularly in education. Given the stress and anguish of the history of efforts to escape from the shackles of the ‘separate but equal’ doctrine of Plessy v. Ferguson, 163 U. S. 537 (1896), it cannot be said that educational institutions that, for whatever reasons, practice racial discrimination, are institutions exercising ‘beneficial and stabilizing influences in community life,’ Walz v. Tax Comm’n, 397 U. S. 664, 673 (1970), or should be encouraged by having all taxpayers share in their support by way of special tax status.
“There can thus be no question that the interpretation of § 170 and § 501(c)(3) announced by the IRS in 1970 was correct. That it may be seen as belated does not undermine its soundness. It would be wholly incompatible with the concepts underlying tax exemption to grant the benefit of tax-exempt status to racially discriminatory educational entities, which ‘exer[t] a pervasive influence on the entire educational process.’ Norwood v. Harrison, [413 U. S.], at 469. Whatever may be the rationale for such private schools’ policies, and however sincere the rationale may be, racial discrimination in education is contrary to public policy. Racially discriminatory educational institutions cannot be viewed as conferring a public benefit within the ‘charitable’ concept discussed earlier, or within the congressional intent underlying § 170 and § 501(c)(3).” 461 U. S., at 595-596.

It has long been the rule that unless a claim is wholly insubstantial, it may not be dismissed for lack of subject-matter jurisdiction. See Bell v. Hood, 327 U. S. 678 (1946).