Laskowski, Joan v. Spellings, Margaret ( 2006 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-2749
JOAN LASKOWSKI and DANIEL M. COOK,
Plaintiffs-Appellants,
v.
MARGARET SPELLINGS, Secretary of Education,
Defendant-Appellee,
and
UNIVERSITY OF NOTRE DAME,
Intervenor-Defendant/Appellee.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:03-cv-1810-WTL—Larry J. McKinney, Chief Judge.
____________
ARGUED JANUARY 9, 2006—DECIDED APRIL 13, 2006
____________
Before POSNER, EVANS, and SYKES, Circuit Judges.
POSNER, Circuit Judge. This is a taxpayer suit, originally to
enjoin a grant by the Secretary of Education of money to the
University of Notre Dame to be used for a program called
Alliance for Catholic Education (ACE). A congressional
2 No. 05-2749
appropriation for fiscal year 2000 had earmarked $500,000
to be given Notre Dame for redistribution to several other
religious colleges in order to enable them to replicate the
ACE program on their own campuses. Consolidated
Appropriations Act, 2000, 113 Stat. 1501, 1501A-262 (Nov.
29, 1999). The complaint alleges that the grant violated the
First Amendment’s prohibition against Congress’s creat-
ing religious establishments, a prohibition that the Supreme
Court has interpreted to encompass any direct financial
support by the government of religious activities. Notre
Dame was permitted to intervene in the case in the district
court as a defendant.
ACE is a program for training teachers in Catholic
schools. It has three parts—professional development,
community life, and spiritual growth. The first part consists
of both teacher-training courses and field experience
teaching at Catholic elementary and secondary schools. The
second consists of the teachers’ residing in faith-based
communities while doing apprentice teaching in those
schools. The third is encouragement of the teachers to live
and work in accordance with the tenets of the Catholic faith.
Thus, the program has both secular and religious compo-
nents.
The district court dismissed the suit as moot because
Notre Dame had received and spent the grant, a one-time
grant in an appropriations bill. It was too late to enjoin the
expenditure and the likelihood of a future such earmark
was too remote to warrant injunctive relief. Diffenderfer v.
Central Baptist Church of Miami, Fla., Inc., 404 U.S. 412, 414-15
(1972) (per curiam); see also Lewis v. Continental Bank Corp.,
494 U.S. 472, 478, 481-82 (1990); Federation of Advertising
Industry Representatives, Inc. v. City of Chicago, 326 F.3d 924,
929-30 (7th Cir. 2003).
No. 05-2749 3
We agree that the claim for injunctive relief is moot, but
not that the entire case is moot. If $500,000 in federal money
was expended by the Secretary of Education (actually
slightly less, for reasons unnecessary to explain) in violation
of the establishment clause, that expenditure was, in the
contemplation of the law, an injury to objecting federal
taxpayers. Freedom from Religion Foundation, Inc. v. Chao, 433
F.3d 989, 991-92 (7th Cir. 2006), and cases cited there. As
explained in our opinion in that case, ordinarily federal
taxpayers do not have standing to complain about federal
expenditures, but the Supreme Court has carved an excep-
tion for cases in which a taxpayer complains that Congress
is spending money in violation of the First Amendment’s
establishment clause. That expenditure is deemed sufficient
injury to the taxpayer to allow him to maintain suit in
federal court. And so the plaintiffs’ case would be moot only
if the district court could make no order that would
compensate them in whole or in part for the injury consist-
ing of the improper expenditure. We say in whole or “in
part” because at argument Notre Dame’s lawyer pointed
out that insofar as the money has been spent for forbidden
purposes, say to indoctrinate teachers or students in Catho-
lic dogma, that injury cannot be rectified. What can be
rectified, however, is the depletion of the federal treasury by
the amount of the grant. It can be rectified simply by the
restoration of the money to the U.S. Treasury. That is
“meaningful relief,” as assumed in Roemer v. Board of Public
Works of Maryland, 426 U.S. 736, 767 n. 23 (1976) (plurality
opinion), which is all the relief that need be possible to avert
a finding of mootness. Church of Scientology v. United States,
506 U.S. 9, 12-13 (1992); Calderon v. Moore, 518 U.S. 149, 150
(1996) (per curiam); In re Resource Technology Corp., 430 F.3d
884, 886-87 (7th Cir. 2005); In re Envirodyne Industries, Inc., 29
F.3d 301, 303-04 (7th Cir. 1994).
4 No. 05-2749
If Congress created a continuing program of expenditures
challenged as violating the establishment clause—
a program, say that consisted of annual $1 million grants
to the Scottish Episcopal Church to pay the salaries of its
ministers—it could be enjoined and in that way injury
averted. But suppose Congress by an amendment to an
appropriate bill earmarked $100 million for the Scottish
Episcopal Church and the money was disbursed by the
Department of the Treasury the following day. An injunc-
tion against the disbursement would come too late to
provide any relief to the complaining taxpayers. The
only feasible relief would be monetary. We cannot think
of any reason why such relief should not be possible.
Restitution is a standard remedy and one ordered in public-
law as well as private-law cases. See, e.g., Wyandotte Trans-
portation Co. v. United States, 389 U.S. 191, 203-05 (1967);
United States v. P/B STCO 213, 756 F.2d 364, 374 (5th Cir.
1985).
This point has been obscured by a debate among the
parties over whether the Secretary of Education can be
made to order Notre Dame to restore the money to the
Treasury. The Secretary is authorized to seek repayment of a
grant diverted to sectarian purposes in violation of the
Constitution and a Department of Education regulation.
34 C.F.R. § 75.532; see 31 U.S.C. §§ 3701(b)(1)(C), 3711(a)(1);
34 C.F.R. § 74.73(a). But courts are not authorized to re-
view a decision not to take an enforcement action; such
decisions are within the absolute discretion of the enforce-
ment agency. Heckler v. Chaney, 470 U.S. 821, 831-33 (1985);
see also City of Chicago v. Morales, 527 U.S. 41, 62 n. 32
(1999). Otherwise courts would take over the prosecutorial
function, making decisions, well outside judi-
cial competence, about the best allocation of limited en-
forcement resources.
No. 05-2749 5
The suggested procedure of ordering the Secretary to
order Notre Dame to repay the grant money is not only
unauthorized but also needlessly complex. If the plain-
tiffs prevail on the merits, the district court can simply order
Notre Dame to return the money to the treasury. Notre
Dame objects that as a private entity it is incapable of
violating the establishment clause, which like most pro-
visions of the Constitution is a limitation on the power of
government, not of private entities. But if as the plain-
tiffs claim the Department of Education wrongfully took
their tax money and gave it to Notre Dame, the court
can order Notre Dame to return the money to the U.S.
Treasury. It would be like a case of money received by
mistake and ordered to be returned to the rightful owner.
Such orders are routine instances of restitution. Great-West
Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213-14
(2002); ConFold Pacific, Inc. v. Polaris Industries, Inc., 433 F.3d
952, 957-58 (7th Cir. 2006); Moriarty v. Larry G. Lewis Funeral
Directors Ltd., 150 F.3d 773, 777 (7th Cir. 1998); Landmark
Land Co., Inc. v. FDIC, 256 F.3d 1365, 1378 n. 5 (Fed. Cir.
2001); Douglas Laycock, “The Scope and Significance of
Restitution,” 67 Tex. L. Rev. 1277, 1284 (1989) (a “defendant
may be unjustly enriched without having committed any
other civil wrong”). And restitution is among the remedies
that a federal court can order for a violation of federal law.
See, besides the cases cited earlier, Mitchell v. Robert DeMario
Jewelry, Inc., 361 U.S. 288, 290-91 (1960); Porter v. Warner
Holding Co., 328 U.S. 395, 398-99 (1946); United States v. Lane
Labs-USA Inc., 427 F.3d 219, 225 (3d Cir. 2005); see generally
Franklin v. Gwinnett County Public Schools, 503 U.S. 60, 68
(1992).
Against all this it can be argued that the plaintiffs have
forfeited any claim to restitution by asking only for injunc-
tive relief. But the argument is incorrect on three grounds.
6 No. 05-2749
First, the plaintiffs made clear in the district court that they
want the money that was given to Notre Dame and by
it funneled to the other Catholic schools returned to the U.S.
Treasury. They want the funnel to be an order to the
Secretary of Education, but that is merely a detail. Second,
Rule 54(c) of the civil rules provides that “every final
judgment shall grant the relief to which the party in whose
favor it is rendered is entitled, even if the party has not
demanded such relief in the party’s pleadings.” See, e.g.,
Holt Civic Club v. City of Tuscaloosa, 439 U.S. 60, 65-66 (1978);
Old Republic Ins. Co. v. Employers Reinsurance Corp., 144 F.3d
1077, 1081-82 (7th Cir. 1998); Felce v. Fiedler, 974 F.2d 1484,
1501-02 (7th Cir. 1992); Powell v. National Board of Medical
Examiners, 364 F.3d 79, 85-86 (2d Cir. 2004); Z Channel Ltd.
Partnership v. Home Box Office, Inc., 931 F.2d 1338, 1340-
41 (9th Cir. 1991) (“if Z Channel is entitled to collect dam-
ages in the event that it succeeds on the merits, the case does
not become moot even though declaratory and injunctive
relief are no longer of any use”); 10 Charles Alan Wright,
Arthur R. Miller & Mary Kay Kane, Federal Practice and
Procedure § 2664 (3d ed. 1998). The reason for this sensible
rule is that in the course of a litigation circumstances may
change and what initially seemed adequate relief may cease
to be so. See Minyard Enterprises, Inc. v. Southeastern Chemical
& Solvent Co., 184 F.3d 373, 385-86 (4th Cir. 1999); Z Channel
Ltd. Partnership v. Home Box Office, Inc., supra, 931 F.2d at
1340-41. But third, the plaintiffs are not actually seeking
monetary relief, in the usual sense, against Notre Dame.
When a plaintiff seeks monetary relief, he is seeking pay-
ment by the defendant to himself, not to another. These
plaintiffs are asking that the district court order Notre Dame
to repay the U.S. Treasury. Originally they wanted the
district court to order the Secretary of Education to order
Notre Dame to repay the U.S. Treasury. Now they are
No. 05-2749 7
cutting out the middleman. The change in the form of relief
sought has no practical significance.
A genuine curiosity is that Notre Dame became a party on
its own motion rather than having been named as a defen-
dant by the plaintiffs; and it might seem that to
seek restitution from someone other than the alleged
wrongdoer does not fit within the scope of Rule 54(c). But
remember that the plaintiffs’ theory of the case first pro-
pounded in the district court was that Notre Dame would
have to pay back the grant that it had received, though upon
an order issued by the Secretary of Education. Once Notre
Dame entered the case to preserve its right to the grant
money, the natural remedy, to avoid needless circuity, was
an order against it rather than against the Secretary to order
Notre Dame to repay the money. For the application of Rule
54(c) in such a context, see Pension Benefit Guaranty Corp. v.
East Dayton Tool & Die Co., 14 F.3d 1122, 1127-28 (6th Cir.
1994).
There are defenses to restitution. The recipient of the
money sought to be recovered may not have known or have
had reason to know that it was receiving money by mistake,
and may have relied to its detriment on its honest and
reasonable belief that it was legally entitled to the money.
Notre Dame did rely to its detriment—it gave the money
away. Whether it relied reasonably is a separate question. If
it was merely an innocent conduit, neither knowing nor
having reason to know that it was receiving an unlawful
grant, it would not have to make restitution. Fidelity National
Title Ins. Co. v. Howard Savings Bank, 436 F.3d 836, 840 (7th
Cir. 2006); 1 Dan B. Dobbs, Law of Remedies: Damages-Equity-
Restitution § 4.6, pp. 656-58 (2d ed. 1993); see, e.g.,
Westamerica Securities, Inc. v. Cornelius, 520 P.2d 1262, 1269-
70 (Kan. 1974); Anita Valley, Inc. v. Bingley, 279 N.W.2d 37,
40-41 (Iowa 1979). But that remains to be determined.
8 No. 05-2749
In denying that the district court can ever order restitution
in a case such as this, Notre Dame overreads two decisions
in which the Supreme Court denied restitution as a remedy
for a violation of the establishment clause: Roemer v. Board
of Public Works, supra, and Lemon v. Kurtzman, 411 U.S. 192(1973) (“Lemon II,” as it is known). The ground in both cases
was that the religious institution had reasonably relied, to
its detriment, on the grant’s being legal. Reasonable reliance,
as we just noted, is a recognized defense to a suit for
restitution against someone who is not himself a wrongdoer
and who innocently received and spent money to which it
turned out he had no right. Fidelity National Title Ins. Co. v.
Intercounty National Title Ins. Co., 412 F.3d 745, 751 (7th Cir.
2005); Harnischfeger Corp. v. Harbor Ins. Co., 927 F.2d 974,
978 (7th Cir. 1991); Equilease Corp. v. Hentz, 634 F.2d 850,
853-54 (5th Cir. 1981).
But as is plain from the rather tortured opinions (neither
of which commanded a majority) in Roemer and especially
Lemon II, and as is even plainer from the opinion in
New York v. Cathedral Academy, 434 U.S. 125, 130, 133-34
(1977), which rejected a reliance defense in another estab-
lishment clause case, there is no per se rule that the recipient
of illegal funds who has spent them cannot be forced to
repay them, either in establishment clause cases or in any
other class of cases. See, e.g., Messersmith v. G.T. Murray &
Co., 667 P.2d 655, 657-58 (Wyo. 1983); Equilease Corp. v.
Hentz, supra, 634 F.2d at 854. In any event, the defense of
reasonable reliance is not a jurisdictional doctrine, but rather
a remedial doctrine that comes into play after liability has
been established; and in this case the district court, having
dismissed the suit as moot, never reached the merits.
The plaintiffs ask us to do so. They say there’s suf-
ficient documentation in the record to prove that the
No. 05-2749 9
grant to Notre Dame has been used to fund religious
activities. They emphasize the home pages of the four
religious colleges to which Notre Dame disbursed the
“replication” grant; the pages describe a program having a
strong sectarian component. The defendants respond
that those pages are hearsay, since the recipients are not
parties (if they were, their home pages would not be
hearsay, but party admissions). It is a curious argument
for several reasons, the most obvious of which is that
Notre Dame concedes as it must that the ACE program,
its own and its replicators’, has a substantial religious
component. Moreover, Notre Dame cited the home
pages, and therefore presumably vouched for their accu-
racy, in its reports to the Department of Education on its use
of the grant. Even now Notre Dame does not contest the
accuracy of the home pages; this makes its objection to their
admissibility hollow.
But though admissible, the home pages cannot carry
the day for the plaintiffs. All they show is that these institu-
tions, like Notre Dame itself, indeed have an ACE program,
and that, as the name implies (“Alliance for Catholic
Education”) and Notre Dame concedes, the program has a
significant religious component. The issue is whether the
religious component was financed in whole or part by the
grant from the Department of Education. That issue cannot
be resolved by reference to the home pages. The ACE
programs at the various schools are funded by private
donations as well as by the Department of Education. As
long as the religious component is financed entirely by the
private donations, there is no violation of the establishment
clause, which has been interpreted as not forbidding grants
of public money to religious institutions as long as the
grants are limited to the institutions’ secular activities E.g.,
Bowen v. Kendrick, 487 U.S. 589, 608-09 (1988); Hunt v.
10 No. 05-2749
McNair, 413 U.S. 734, 742-43 (1973); Tilton v. Richardson, 403
U.S. 672, 679 (1971) (plurality opinion). This is the critical
question and it is not answered by the materials in the
record.
Other issues as well may become critical on remand.
Suppose it turns out that some part of the grant to Notre
Dame was used to defray the cost of religious activities
at the other schools. Several possibilities would then
heave into view. One is that the grant was entirely proper
because it contained adequate safeguards against the
use of the money for religious activities, e.g., Bowen v.
Kendrick, supra, 487 U.S. at 614-15; Freedom from Religion
Foundation, Inc. v. Bugher, 249 F.3d 606, 612-13 (7th Cir.
2001); American Jewish Congress v. Corporation for National &
Community Service, 399 F.3d 351, 358 (D.C. Cir. 2005);
Columbia Union College v. Oliver, 254 F.3d 496, 506 (4th Cir.
2001)—including safeguards that would prevent the
direct recipient, Notre Dame, from allowing the money to be
used by the recipient institutions for religious activi-
ties—and the grant was simply misused by Notre Dame or
the recipient institutions. In that event there would be no
violation of the establishment clause and again the case
would be at an end, though the Department of Education
might have a claim against Notre Dame and the other
institutions for violating the terms of the grant, Committee for
Public Education & Religious Liberty v. Nyquist, 413 U.S. 756,
776-77, 780 (1973); even a qui tam action would be conceiv-
able.
We do not think that Agostini v. Felton, 521 U.S. 203 (1997),
abolished the requirement that there be safeguards to
prevent the diversion of grants to religious institutions from
secular to sectarian activities. In that case a federal program
paid for public school teachers to be sent into parochial
No. 05-2749 11
schools (as well as other private schools) to teach special-
education classes. The teachers were not chosen for this
duty on the basis of their religious beliefs or affiliations, and
the Court thought the risk that they would smuggle reli-
gious instruction into their classes, merely because of the
parochial-school setting, was remote. The Court would not
“presume that public employees will inculcate religion
simply because they happen to be in a sectarian environ-
ment. Since we have abandoned the assumption that
properly instructed public employees will fail to discharge
their duties faithfully, we must also discard the assumption
that pervasive monitoring of Title I teachers is required.
There is no suggestion in the record before us that unan-
nounced monthly visits of public supervisors are insuffi-
cient to prevent or to detect inculcation of religion by public
employees.” Id. at 234 (emphasis in original); cf. Mitchell v.
Helms, 530 U.S. 793, 818-20 (2000) (plurality opinion).
Similarly in Zelman v. Simmons-Harris, 536 U.S. 639 (2002),
the school-voucher case, the parents selected the school, so
there was no risk that the voucher money would be steered
by a religious institution to a religious use. The steering was
done by parents, and parents are not religious institutions.
Witters v. Washington Dept. of Services for the Blind, 474 U.S.
481 (1986), is a similar case.
The situation in Nyquist was different. The program at
issue there provided, among other things, public funds
for the maintenance and repair of private schools, most of
them sectarian. The funding was sufficiently generous that a
school might be able to finance its entire maintenance and
repair expense out of it, in which event there could be no
argument that the funds were being used to defray merely
the secular activities of the school. Likewise in this case,
where money was being given to a religious program with
a secular component, it was important that there be some
12 No. 05-2749
mechanism for limiting the use of the money to the secular
component. It is unclear from the record whether there was
an adequate mechanism and if so whether it was used to
prevent a diversion to forbidden purposes. Freedom from
Religion Foundation, Inc. v. Bugher, supra, 249 F.3d at 612-14.
Mindful that to insist on too elaborate a monitoring
mechanism could inject the government too deeply into
the affairs of religious institutions (the dread “entangle-
ment” of which the cases speak), we do not suggest that
the Department of Education or Notre Dame was re-
quired to institute and operate an elaborate scheme of audits
and on-site visits. But given the well-known temptation of
educational institutions to divert grants made for one
purpose to another that the institution considers more
pressing, just writing a check for the support of an explicitly
religious program that has a secular component is not
enough. See id. at 613. This is not to say that reli-
gious institutions require greater supervision than other
federal grantees. The only relevance of the religious con-
text is that religion is an example of an activity that a
grant of federal moneys may not be used to support.
Suppose the grant was to Harvard University to support
biochemical research. The grantor would want to make
the limited scope of the grant clear. It would not just write a
check to Harvard, because it would worry that Harvard
might arbitrarily allocate a portion of the grant to general
university overhead. The grantor would insist that the grant
contract contain language designed to prevent such a
diversion.
Still another possibility is that the grant was improper
because it lacked adequate safeguards but that Notre
Dame reasonably believed it proper and was not com-
plicit in any religious spending by the recipient organiza-
No. 05-2749 13
tions; such a showing would go far toward establishing
the defense of reasonable reliance that we discussed earlier.
And perhaps Notre Dame will want to bring the re-
cipient institutions into the case, since they obtained a
more direct benefit than Notre Dame from the allegedly
unlawful grant. (Which is not to say that Notre Dame
derived no benefit; it doubtless obtains favorable pub-
licity from the replication of its program by other schools. It
probably requested the earmark.) All are matters to be
sorted out on remand. The suit was dismissed prematurely.
VACATED AND REMANDED.
SYKES, Circuit Judge, dissenting. This case is moot. The
majority keeps it alive by declaring the availability of a form
of restitutionary relief that was not sought by the plaintiff
taxpayers and is inconsistent with the doctrine of taxpayer
standing under Flast v. Cohen, 392 U.S. 83 (1968), a limited
exception to the general rule that citizens lack standing to
sue in federal court on generalized grievances about the
conduct of government. The Supreme Court has steadfastly
refused to expand Flast and has never recognized private
party repayment to the Treasury as an appropriate remedy
for an Establishment Clause violation in a suit based on
taxpayer standing. See, e.g., Bowen v. Kendrick, 487 U.S. 589,
621-22 (1988); Valley Forge Christian Coll. v. Ams. United for
Separation of Church & State, 454 U.S. 464, 479-82 (1982);
Roemer v. Bd. of Pub. Works, 426 U.S. 736, 767 n.23 (1976);
Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208,
14 No. 05-2749
228 (1974); United States v. Richardson, 418 U.S. 166, 175
(1974); Lemon v. Kurtzman, 411 U.S. 192, 208-09 (1973)
(“Lemon II”).
Against this backdrop, the majority holds that a re-
cipient of a federal grant may be ordered to repay the grant
as a remedy in a taxpayer lawsuit alleging that the gov-
ernment violated the Establishment Clause in making or
insufficiently monitoring the grant. The majority achieves
this result by importing the common law doctrine of
restitution—a private law concept—into the public law
realm of Establishment Clause litigation, vesting tax-
payers with a unique sort of qui tam-like authority to sue
private parties for reimbursement of the Treasury when
the government is alleged to have committed an Estab-
lishment Clause violation. And the majority does this
even though the claim against the government’s rep-
resentative is itself moot, making the newfangled remedy
against the grant recipient the sole basis for the taxpayers’
standing to pursue the Establishment Clause claim. This is a
dramatic expansion of taxpayer standing, and there is no
authority for it. I must respectfully dissent.
In December 2003 the plaintiff taxpayers brought this
suit against the Secretary of the Department of Education
seeking to enjoin payment of a congressional grant awarded
in 2000 to the University of Notre Dame for a teacher
training program. Called the Alliance for Catholic Education
(“ACE”), the program trained teachers to work in Catholic
schools serving underprivileged students in poor neighbor-
hoods; it was replicated by Notre Dame at four partner
colleges and universities. The taxpayers alleged the ACE
grant violated the Establishment Clause and sought injunc-
tive relief enjoining the Secretary to withdraw the Depart-
ment’s approval for it. They did not move for a preliminary
No. 05-2749 15
injunction. Notre Dame was permitted to intervene as a
defendant, but the plaintiffs did not amend their complaint
to assert any alternative or additional form of relief against
Notre Dame. More specifically to the point here, the plain-
tiffs did not sue for any form of monetary relief.
In 2004, while the suit was still pending in district court,
the grant appropriation expired by its own terms. Because
it was a one-time only congressional earmark, now ex-
pired, and Notre Dame had received and either spent or
disbursed the entire grant amount to its ACE partner
universities, an ongoing alleged constitutional violation
no longer existed. The taxpayers had sued only for prospec-
tive injunctive relief, but there was nothing left to enjoin.
The district court dismissed the case as moot.
On appeal, the taxpayers concede that their original claim
to enjoin the Secretary to withdraw approval for the grant
is moot. See Burke v. Barnes, 479 U.S. 361, 363 (1987) (a
challenge to the validity of a statute is mooted when the
statute expires by its own terms); Diffenderfer v. Cent. Baptist
Church of Miami, Fla., Inc., 404 U.S. 412, 414-15 (1972); Fed’n
of Adver. Indus. Representatives, Inc. v. City of Chicago, 326
F.3d 924, 929 (7th Cir. 2003). They insist, however, that the
case is not moot because another form of injunctive relief is
available should they prevail on the merits. They contend
the district court can enjoin the Secretary to seek recoup-
ment of the grant under the Federal Claims Collection Act
and Department of Education regulations empowering the
Secretary to recover grant money spent in a manner incon-
sistent with the constitutional and regulatory requirements
governing the grant. See 31 U.S.C. §§ 3701(b)(1)(C),
3711(a)(1); 34 C.F.R. §§ 74.73(a), 75.532. They assert that this
form of relief—an injunction requiring the Secretary to seek
recoupment of a misspent grant—is meaningful relief
16 No. 05-2749
sufficient to avert a finding of mootness. See Church of
Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992).
The majority rejects this contention, for good reason. The
court has no authority to order the Secretary to seek recoup-
ment from Notre Dame. An agency’s decision not to take an
enforcement action is within the discretion of the agency
and is not reviewable. See Heckler v. Chaney, 470 U.S. 821,
831-33 (1985). In addition, federal regulations specifically
provide that the Federal Claims Collection Act does not
create a private right of action. See 31 C.F.R. § 900.8.
The majority thus holds, and I agree, that the taxpayers’
claim for injunctive relief is indeed moot. Maj. op. at 3.
This should end the matter, because the taxpayers did
not sue or argue for any other relief. It is well-settled that
when a plaintiff challenges the validity of a statute and
seeks only prospective injunctive relief, the repeal or expira-
tion of the statute “ends the ongoing controversy.” Fed’n of
Adver. Indus. Representatives, 326 F.3d at 930. In the absence
of a damages claim or some basis for application of the
voluntary cessation doctrine (not at issue here), the entire
case is moot. Id. at 929-30. But the majority goes on to hold
that the mootness of the injunctive claim does not moot the
entire case because “the district court can simply order
Notre Dame to return the [grant] money to the treasury”
and that such an order would be a “routine instance[ ] of
restitution.” Maj. op. at 5. To the contrary, such an order
would be neither simple nor routine. In the context of a
taxpayer suit alleging an Establishment Clause violation,
such an order would be extraordinary and unprecedented.
First, it bears repeating that the plaintiff taxpayers did not
make a restitution-based argument, either in the dis-
trict court or on appeal; no monetary claim, restitutionary or
No. 05-2749 17
otherwise, was made in this case. A waived claim “cannot
supply the residual live controversy necessary to prevent
[the plaintiffs’] entire claim from being moot.” Brown v.
Bartholomew Consol. Sch. Corp., No. 05-1526, 2006 WL 784953,
at *9 (7th Cir. Mar. 29, 2006). Needless to say, declaring the
existence of a novel compensatory remedy against a private
party in a taxpayer lawsuit alleging an Establishment Clause
violation is a judicial act of significant import. It should not
be undertaken in the absence of an actual claim for this form
of relief and full briefing by the parties. See McNeil v.
Wisconsin, 501 U.S. 171, 181 n.2 (1991) (“What makes a
system adversarial rather than inquisitorial is . . . the
presence of a judge who does not (as an inquisitor does)
conduct the factual and legal investigation himself, but
instead decides on the basis of facts and arguments pro and
con adduced by the parties.”). Under these circumstances,
Notre Dame would be justified to think itself sandbagged;
it had no notice and no reason to expect when it moved to
intervene that this injunction action might morph into a
claim for restitutionary monetary relief on appeal.1
1
The majority responds that the Federal Rules of Civil Procedure
generally permit the court to substitute other forms of relief for
those originally sought in the pleadings. Maj. op. at 6. This misses
the point. To repeat the chronology: the plaintiffs sued the
Secretary of Education, not Notre Dame. When Notre Dame
intervened to protect its interest in the ongoing grant, the
plaintiffs did not seek any form of relief against Notre Dame.
When the grant expired, raising the mootness question, the
plaintiffs argued only that they are entitled to an injunction
ordering the Secretary to seek recoupment of the grant, not that
they are entitled to an order of restitution against Notre Dame.
The majority asserts that although the plaintiffs “originally”
(continued...)
18 No. 05-2749
Moreover, and perhaps more importantly, adapting the
common law doctrine of restitution to fashion a remedy in a
taxpayer suit for an alleged Establishment Clause violation
is like trying to pound the proverbial square peg into a
round hole. Restitution is a private law equitable doctrine
that orders liability and remedies between private individu-
als based on unjust enrichment; it has no application in a
suit by taxpayers raising an Establishment Clause challenge
to a congressional appropriation. It certainly cannot operate
as the sole basis for standing in an otherwise moot taxpayer
suit.
The Supreme Court has characterized the doctrine of
mootness as “the doctrine of standing set in a time frame:
The requisite personal interest that must exist at the com-
mencement of the litigation (standing) must con-
tinue throughout its existence (mootness).” Friends of the
Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 189
(2000) (internal quotations and citations omitted). The Court
has also made it clear that “a plaintiff must demonstrate
standing separately for each form of relief sought.” Id. at
185. Although the plaintiff taxpayers did not seek or argue
1
(...continued)
sought a remedy against the Secretary alone, in reality they have
been pursuing a remedy against Notre Dame all along and are
now just “cutting out the middleman” by “chang[ing] . . . the
form of relief sought.” Maj. op. at 7. This is untrue. The plain-
tiffs never argued that they are entitled to a restitutionary remedy
against Notre Dame. The majority has sua sponte injected the
theory of restitution into this case, unbidden by the plaintiffs and
utterly without support in the taxpayer standing case law. See
infra pp. 20-28. The rules of procedure do not permit the court to
invent a new remedy in favor of plaintiffs who have not re-
quested it in a case that is otherwise moot.
No. 05-2749 19
for restitution, the majority holds that Notre Dame can be
ordered to return the grant money to the Treasury, and the
availability of this restitutionary remedy fore-
stalls mootness. Implicit in this holding is a subsidiary one:
that taxpayers have standing to sue a private federal grant
recipient for restitution where the government is alleged
to have committed an Establishment Clause violation in
making or monitoring the grant. Taxpayer standing under
Flast has never been understood to encompass such a claim.
Constitutional standing requires, “at an irreducible
minimum,” that the party invoking the court’s authority
“show that he personally has suffered some actual or
threatened injury as a result of the putatively illegal conduct
of the defendant, and that the injury fairly can be traced to
the challenged action and is likely to be redressed by a
favorable decision.” Valley Forge, 454 U.S. at 472 (internal
quotations and citations omitted); see also Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560-61 (1992). These Article III case-
or-controversy requirements serve to “limit 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, 454
U.S. at 472 (quoting Flast, 392 U.S. at 97).
Generalized grievances by citizens or taxpayers are
insufficient to establish standing to challenge a statute in
federal court. Frothingham v. Mellon, 262 U.S. 447 (1923). The
party invoking the power of judicial review “must be able
to show, not only that the statute is invalid, but that he has
sustained or is immediately in danger of sustaining some
direct injury as the result of its enforcement, and not merely
that he suffers in some indefinite way in common with
people generally.” Id. at 488. A taxpayer’s “interest in the
20 No. 05-2749
moneys of the treasury . . . is shared with millions of others
[and] is comparatively minute and indeterminable,” and the
effect of a challenged statute on an individual citizen’s tax
burden is too “remote, fluctuating and uncertain” to
constitute a cognizable injury for standing purposes. Id. at
487.
The Supreme Court has deviated from the general rule
against taxpayer standing only once, holding in Flast that “a
taxpayer will be a proper party to allege the unconstitution-
ality only of exercises of congressional power under the
taxing and spending clause of Art. I, § 8 of the Constitu-
tion,” and only when the taxpayer can “show that the
challenged enactment exceeds specific constitutional
limitations imposed upon the exercise of the con-
gressional taxing and spending power and not simply
that the enactment is generally beyond the powers dele-
gated to Congress by Art. I, § 8.” Flast, 392 U.S. at 102-03.
Because the Establishment Clause is a specific limitation on
congressional taxing and spending authority, the Court held
in Flast that the taxpayer plaintiffs had a sufficient stake in
the outcome of the litigation to support standing. Id.The Supreme Court has subsequently characterized Flast
as having created a “narrow exception” to the Frothingham
bar against taxpayer standing, Kendrick, 487 U.S. at 618,
and has repeatedly declined to expand its scope. See
Valley Forge, 454 U.S. at 476-82; Schlesinger, 418 U.S. at 228;
Richardson, 418 U.S. at 175. Valley Forge makes the important
point that Flast did not relax the injury-in-fact and
redressability requirements for constitutional standing in
Establishment Clause cases and should not be read as a
general authorization of all taxpayer claims in the Establish-
ment Clause context. Valley Forge, 454 U.S. at 488-90. The
Court specifically rejected the argument that “enforcement
No. 05-2749 21
of the Establishment Clause demands special exceptions
from the requirement that a plaintiff allege distinct and
palpable injury to himself . . . that is likely to be redressed
if the requested relief is granted.” Id. at 488 (internal
quotations and citations omitted).
The majority opinion does not directly address the
standing question. Instead, it simply asserts that restitution
is appropriate relief here because it would rectify the
depletion of the federal Treasury that occurred when the
Secretary disbursed the grant money to Notre Dame in
alleged violation of the Establishment Clause. Maj. op. at 3.
But taxpayer standing under Flast is not premised upon
injuries to the public fisc; taxpayers in these suits are
not vindicating losses sustained by the Treasury. Flast left
the general principles of Frothingham in place: the effect of
a congressional enactment on an individual citizen’s tax
burden is too minute, and a taxpayer’s interest in money
in the Treasury is too diffuse, to support standing to sue
in federal court. Taxpayers have standing under Flast to
raise Establishment Clause challenges to actions by Con-
gress under the taxing and spending power of Article I,
Section 8 for the purpose of halting the unconstitutional
exercise of that power. The Flast exception to the
Frothingham bar against taxpayer suits extends no far-
ther than this.
The majority also does not explain how the putative
availability of restitutionary relief against a private par-
ty intervening defendant can supply standing in a tax-
payer suit under Flast when the entire case against the
government’s representative is moot. There is no longer a
live controversy against the Secretary of Education for an
Establishment Clause violation because there is no
remedy that can be ordered against her. The concrete
22 No. 05-2749
adversity that existed between the taxpayers and the
Secretary when the grant was ongoing evaporated with the
expiration of the grant, making the question of the grant’s
constitutionality a completely academic matter. The taxpay-
ers’ standing to pursue their Establishment Clause challenge
is now based on—what? A common law claim against Notre
Dame for unjust enrichment based on the government’s
alleged Establishment Clause violation?
Such a claim is unknown to the law, probably because
private parties cannot be held liable for Establishment
Clause violations. The majority dismisses this rather
fundamental objection, asserting that if the taxpayers
can prove that “the Department of Education wrongfully
took their tax money and gave it to Notre Dame, the district
court can order Notre Dame to return the money to the
U.S. Treasury.” Maj. op. at 5. The majority characterizes this
as a “routine instance[ ] of restitution,” id., but the doctrine
of restitution is entirely incompatible with the limited Flast
exception to the Frothingham bar against taxpayer standing.
Restitution is an elastic doctrine that has both remedial
and substantive aspects: it is remedial when invoked as a
measure of recovery for an independent civil wrong and
substantive when it is the sole source of a defendant’s
liability. 1 DAN B. DOBBS, THE LAW OF REMEDIES § 4.1, at 552
(2d ed. 1993); Douglas Laycock, The Scope and Significance of
Restitution, 67 TEX. L. REV. 1277, 1284-85 (1988-1989). Either
way, restitution is premised upon unjust enrichment: the
conferral of a benefit by the plaintiff on the defendant under
circumstances in which the retention of the benefit would be
unjust.
As applied to a private party defendant in a Flast taxpayer
lawsuit, restitution could be classified only as a substantive
claim for relief, not merely a type of remedy. Because a
No. 05-2749 23
private party cannot violate the Establishment Clause,
unjust enrichment would be the only source of the private
party’s liability in this context. But a federal taxpayer does
not by paying his taxes confer a benefit on a federal grant
recipient in any meaningful sense; the connection between
an individual citizen’s tax payment and any given federal
grant recipient is nonexistent, or at least far too attenuated
to support an unjust enrichment cause of action or provide
a basis for standing to sue a private party defendant on an
Establishment Clause claim. See Lujan, 504 U.S. at 560-61(“[I]njury in fact” for standing purposes must be “concrete
and particularized,” not “conjectural or hypothetical”;
“fairly trace[able] to the challenged action of the defendant”;
and it must be “likely, as opposed to merely speculative,
that the injury will be redressed by a favorable decision.”
(alterations in original) (internal quotations and citations
omitted)). The conceptualization suggested by the majority
is inapt; this is not at all “like a case of money received by
mistake and ordered to be returned to the rightful owner.”
Maj. op. at 5. A taxpayer in an Establishment Clause lawsuit
based on Flast standing does not possess qui tam-like
authority to force private parties to return federal
grant money to the Treasury.
The majority states categorically that “restitution is among
the remedies that a federal court can order for a violation of
federal law.” Maj. op. at 5. But Notre Dame is not alleged to
have violated any federal law. This is a taxpayer suit
seeking to enjoin a congressional enactment alleged to
violate the Establishment Clause. The majority also asserts
that restitution is a “standard remedy” that can be ordered
in “public-law as well as private-law cases.” Maj. op. at 4.
But the two cases cited for this proposition involved suits by
the United States to recover costs incurred by the federal
government to remediate a private party’s violation of a
24 No. 05-2749
statutory environmental clean-up duty. See Wyandotte
Transp. Co. v. United States, 389 U.S. 191, 203-05 (1967) (suit
by the United States against shipping company to recover
costs incurred by the government in recovering and remov-
ing a sunken vessel from a navigable waterway pursuant to
33 U.S.C. § 409, the Rivers and Harbors Act of 1899); United
States v. P/B STCO 213, 756 F.2d 362, 374 (5th Cir. 1985) (suit
by the United States against barge owner to recover costs
incurred by the government to clean up an oil spill pursuant
to 33 U.S.C. § 1321(f)(1), the Federal Water Pollution Control
Act). These cases do not support the majority’s theory that
an individual federal taxpayer can pursue a restitutionary
remedy against a private party for repayment of the Trea-
sury in a lawsuit alleging an Establishment Clause violation
by the government.
The majority suggests that the Supreme Court’s opin-
ions in Roemer, Lemon II, and New York v. Cathedral Academy,
434 U.S. 125 (1977), demonstrate that there is “no per se rule
that the recipient of illegal funds who has spent them cannot
be forced to repay them, either in establishment clause cases
or in any other class of cases.” Maj. op. at 8. This rather
overstates the question; in any event, the cases cited do not
demonstrate the absence of a rule inhibiting the result the
majority achieves here.
Lemon II and Cathedral Academy simply do not address
the question of whether a recipient of government funds can
be forced to repay them on a later determination in a
taxpayer lawsuit that the appropriation was unconstitu-
tional. In Lemon II, private sectarian schools in Pennsylvania
incurred expenses in connection with a statutory provision
allowing the state to reimburse the schools for certain
secular educational services. The expenses at issue were
incurred by the schools but had not yet been paid by the
No. 05-2749 25
state. The statute was held unconstitutional in Lemon v.
Kurtzman, 403 U.S. 602 (1971) (“Lemon I”), and the question
in Lemon II was whether to enjoin Pennsylvania from paying
the reimbursement claims as a retrospective remedy for the
Establishment Clause violation declared in Lemon I. The
Supreme Court, in a four-justice plurality opinion (with a
fifth justice concurring in the judgment), declined to enjoin
payment, affirming the district court’s order allowing the
state to pay the schools’ reimbursement claims. Lemon II, 411
U.S. at 208-09. Lemon II thus permitted a government
payment to be made in spite of a constitutional infirmity;
this hardly provides a basis for requiring the return of
money already paid.
Cathedral Academy involved a claim by a sectarian
school for reimbursement of expenses incurred under a New
York statute that had been declared unconstitutional under
the Establishment Clause; an injunction prohibiting the
payments had been issued by the district court, and the
New York legislature responded by adopting a statute
permitting payment notwithstanding the injunction.
Cathedral Acad., 434 U.S. at 127-28. The school brought
suit for reimbursement on the authority of the new stat-
ute, and the Supreme Court struck it down on Establish-
ment Clause grounds and disallowed payment of the claim.
Id. at 133-34. Cathedral Academy does not support the
majority’s position; a decision enjoining a government
payment not yet made is not authority for requiring the
return of a government grant already disbursed and spent.
Finally, Roemer was a three-justice plurality opinion,
and the discussion of the plaintiff taxpayers’ claim that
private sectarian colleges should be forced to refund
amounts paid under an unconstitutional pre-Lemon I
Maryland statute was relegated to a footnote. Roemer, 426
26 No. 05-2749
U.S. at 767 n.23. The Court simply affirmed the lower court’s
application of Lemon II and declined to order the schools to
repay the state, noting that “the separation of church and
state may well be better served by not putting the State of
Maryland in the position of a judgment creditor of the
appellee colleges.” Id. The taxpayers’ claim that the colleges
must return amounts already paid was thus rejected in
Roemer; nothing in the plurality’s footnote can be read to
suggest that ordering private grant recipients to refund
spent grant money is an ordinary and accepted remedy in
Establishment Clause cases.
The more important point, however, is that the majority
misreads Lemon II, Cathedral Academy, and Roemer as deci-
sions about merits-based factual defenses premised upon
reasonable reliance. They were not. Lemon II addressed
whether Lemon I should be applied retroactively—a legal
issue that at the time turned on a balancing of equitable
interests, including reasonable reliance. Lemon II, 411 U.S. at
197-201; see also Chevron Oil Co. v. Huson, 404 U.S. 97 (1971).
Cathedral Academy and Roemer involved applications of
Lemon II. Retroactivity law has changed, see Harper v. Va.
Dep’t of Transp., 509 U.S. 86 (1993), but the material point for
our purposes is that Lemon I, Cathedral Academy, and Roemer
dealt with the legal issue of retroactivity and do not support
the majority’s holding that restitution from a private party
defendant is an available remedy in a taxpayer suit for an
Establishment Clause violation, subject only to a merits-
based reasonable reliance defense.
The majority posits the example of a $100 million congres-
sional earmark to the Scottish Episcopal Church for minis-
ters’ salaries, disbursed in full the day after its enactment.
Because an injunction “would come too late to provide any
relief to the complaining taxpayers” in this situation, the
No. 05-2749 27
majority “cannot think of any reason why [restitutionary]
relief should not be possible.” Maj. op. at 4. The hypothetical
is far-fetched. Assuming such a flagrantly unconstitutional
appropriation could escape notice during the entire Article
I lawmaking process, any congressman or senator who
voted for it would have some serious explaining to do in the
next election cycle after it was discovered. The checks and
balances of the ballot box are an effective disincentive
against such unlikely and obvious congressional misuses of
taxpayer money. Separation of powers requires the judicial
branch to assume the general competence of Congress to
enact laws that are constitutional. The law of taxpayer
standing under Flast does not now encompass a
restitutionary remedy against a private party in an Estab-
lishment Clause lawsuit. We need not create one as a hedge
against congressional mischief of the sort described in the
majority’s fanciful hypothetical.
The test for mootness is not an invitation to explore the
outer limits of the court’s creativity in fashioning a remedy.
It is, rather, a practical legal inquiry: within the confines
of the recognized causes of action and remedies for which
the plaintiff has standing, can the court grant meaningful
relief? Here, the answer is no. The majority has expanded
taxpayer standing under Flast far beyond its existing
boundaries and declared a form of relief that was not sought
by the plaintiff taxpayers and is not appropriate
in Establishment Clause cases. The expiration of the
ACE grant moots this case in its entirety. I would affirm
the district court’s order dismissing the lawsuit.
28 No. 05-2749
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-13-06