UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

KEVIN J. MURRAY

CIVIL NO. 08-15147

Plaintiff,

HON. LAWRENCE P. ZATKOFF

-vs- MAG. JUDGE MONA K. MAJZOUB

TIMOTHY F. GEITHNER, Secretary, U.S. 

Department of Treasury, and BOARD OF

GOVERNORS OF THE FEDERAL 

RESERVE SYSTEM,

Defendants.

 /

BRIEF IN REPLY TO PLAINTIFF’S OPPOSITION TO

DEFENDANTS’ MOTION TO DISMISS

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INTRODUCTION

Plaintiff’s opposition fails to demonstrate that plaintiff has suffered a cognizable injuryin-fact due to his status as a federal taxpayer, and therefore plaintiff lacks standing to invoke this

Court’s jurisdiction. In addition, plaintiff has failed to allege a plausible Establishment Clause

claim. Accordingly, this case must be dismissed.

ARGUMENT

I. PLAINTIFF FAILS TO DEMONSTRATE HIS STANDING UNDER ARTICLE III

Plaintiff has failed to demonstrate that he has suffered a cognizable injury-in-fact

sufficient to allow him to invoke this Court’s jurisdiction. Plaintiff does not purport to contest

that his interest as a federal taxpayer in the $40 billion provided to AIG pursuant to the

Secretary’s authority under the Emergency Economic Stabilization Act of 2008 (“EESA”), 12

U.S.C. § 5201, et seq., “is shared with millions of others” and “comparatively minute and

indeterminable.” Hein v. Freedom from Religion Fdn., 551 U.S. 587, 127 S.Ct. 2553, 2563

(2007) (quoting Frothingham v. Mellon, 262 U.S. 447, 487 (1923)). Accordingly, there is no

dispute that under the Supreme Court’s ordinary “case or controversy” jurisprudence he would

have “no basis . . . for an appeal to the preventative powers of a court of equity.” Id. Instead,

plaintiff relies on the “narrow exception to the general constitutional prohibition against taxpayer

standing” that is derived from the Supreme Court’s decision in Flast v. Cohen, 392 U.S. 83

(1986). Id. at 2564. This reliance is misplaced.

Plaintiff’s view that Flast, and the Supreme Court’s decision in Bowen v. Kendrick, 487

U.S. 589 (1988), is the “controlling authority” for purposes of deciding whether plaintiff has

standing is telling. Plaintiff attempts to extend Flast to the logical limits of its holding, but since

Flast was decided the Supreme Court has consistently “‘limit[ed] the expansion of federal

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 See Flast, 392 U.S. at 85 (“Appellants filed suit in the United States District Court for

the Southern District of New York to enjoin the allegedly unconstitutional expenditure of federal

funds under Titles I and II of the Elementary and Secondary Education Act of 1965, 79 Stat. 27,

20 U.S.C. ss 241a et seq., 821 et seq. (1964 ed., Supp. II).”); Elementary and Secondary

Education Act of 1965, Pub. L. No. 89-10, tit. I, § 202, 79 Stat. 27 (1965) (“The Commissioner

shall, in accordance with the provisions of this title, make payments to State educational

agencies for basic grants to local educational agencies. . . .”) (emphasis added); id. at tit. I,

§ 207(a)(1), 79 Stat. 32 (“The Commissioner shall, . . . , from time to time pay to each State, in

advance or otherwise, the amount which the local educational agencies of that State are eligible

to receive under this title.”) (emphasis added); id. at tit. II, § 204(a), 79 Stat. 38 (“From the

amounts allotted to each state under section 202 the Commissioner shall pay to that State an

amount equal to the amount expended by the State in carrying out its State plan.”) (emphasis

added).

2

 Plaintiff’s attempt to distinguish Hein by arguing that the EESA “mandated” the

Secretary to purchase assets from financial institutions and that the Secretary “could not use

funds to buy office furniture,” Pl. Opp. at 14, is wrong on both counts. See 12 U.S.C. § 5211

(giving Secretary discretion to purchase troubled assets); 12 U.S.C. § 5228 (appropriating funds

for the payment of administrative expenses, including the purchase of office furniture).

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taxpayer and citizen standing in the absence of specific statutory authorization to an outer

boundary drawn by the results in Flast.’” Hein, 127 S.Ct. at 2569 (quoting United States v.

Richardson, 418 U.S. 166, 196 (1974) (Powell J., concurring)). And, “[i]t is significant that, in

the four decades since its creation, the Flast exception has largely been confined to its facts,” see

id. at 2568-69, because this case is distinguishable from Flast in important respects. 

First, unlike the statute at issue in Flast, which mandated the expenditure of federal

money,1

 the expenditure of funds under the EESA, including the $40 billion dollar purchase of

AIG preferred stock, is within the discretionary authority of the Secretary. See 12 U.S.C. § 5211

(“The Secretary is authorized to . . . make and fund commitments to purchase, troubled assets

from any financial institution . . . .”). This difference is critical because “in the four decades

since Flast was decided, [the Supreme Court has] never extended its narrow exception to a

purely discretionary Executive Branch expenditure,” like the expenditure challenged here. Hein,

127 S.Ct. at 2572.2 Second, unlike the 89th Congress, which the Supreme Court reasonably

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 Cf. Rosenberger v. Rector and Visitors of the Univ. of Va., 515 U.S. 819, 825-26, 843

(1995) (holding that a student organization was “not a religious institution” notwithstanding the

fact that it “was established to publish a magazine of philosophical and religious expression, to

facilitate discussion which fosters an atmosphere of sensitivity to, and tolerance of Christian

viewpoints, and to provide a unifying focus for Christians of multicultural backgrounds,” and

had a “two-fold mission: to challenge Christians to live, in word and deed, according to the faith

they proclaim and to encourage students to consider what a personal relationship with Jesus

Christ means.” (internal quotation marks omitted)).

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presumed to have known that “the great majority of nonpublic elementary and secondary schools

in the United States were associated with a church” when it enacted the Elementary and

Secondary Education Act at issue in Flast, it is simply not plausible to claim that the 110th

Congress that enacted the EESA would have “surely understood that much of the aid mandated

by the statute would find its way to religious [institutions].” Hein, 127 S.Ct. at 2565 n.3. The

Secretary’s authority to purchase troubled assets pursuant to the EESA is limited to purchases

from “financial institutions” – not religious institutions. 12 U.S.C. § 5211(a). And, while it may

be plausible to suggest that Congress may have contemplated that some of the funds

appropriated by EESA would be used to purchase troubled assets from AIG, that possibility is

irrelevant to the standing inquiry because AIG is not a religious institution.3

Plaintiff’s reliance on Kendrick is misplaced for the same reason. As the Supreme Court

recognized in Hein, central to the Supreme Court’s finding of standing to mount an as-applied

challenge in Kendrick was the fact that the statute at issue, the Adolescent Family Life Act,

“expressly contemplated that some of [the appropriated funds] might go to projects involving

religious groups.” Hein, 127 S.Ct. at 2567 & n.6 (noting that the statute expressly emphasized

that funds should be made available to religions organizations). The EESA does not contemplate

that the Secretary will purchase troubled assets from religious institutions and, therefore,

plaintiff has failed to plausibly allege that “the challenged enactment exceeds specific

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 The Court may also dismiss the complaint for lack of prudential standing. See

Gladstone Realtors v. Vill. of Bellwood, 441 U.S. 91, 120 (1979) (“A plaintiff who alleges

sufficient injury to satisfy [Article III’s] limitations on federal jurisdiction may nonetheless be

barred from federal court under our prudential standing rules because he asserts a generalized

grievance shared in substantially equal measure by all or a large class of citizens. . . .”) (citing

Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208 (1974)).

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constitutional limitations imposed upon the exercise” of congressional power. Flast, 392 U.S. at

102-03. As a result, he fails to fit within Flast’s narrow exception to the general rule barring

taxpayer standing.4

II. PLAINTIFF’S ESTABLISHMENT CLAUSE CLAIM IS MERITLESS

Plaintiff also fails to state a plausible claim that Congress’s enactment of the EESA or

any action of the Secretary pursuant to the authority delegated by the EESA has “the ‘purpose’

or ‘effect’ of advancing or inhibiting religion.” Zelman v. Simmons-Harris, 536 U.S. 639, 648-

49 (2002) (quoting Agostini v. Felton, 521 U.S. 203, 222-23 (1997)). Plaintiff concedes that the

government’s purpose must be examined through the eyes of the “objective observer, one who

takes account of the traditional external signs that show up in the text, legislative history, and

implementation of the statute.” Pl. Opp. at 16 (quoting McCreary Country v. A.C.L.U., 545 U.S.

844, 862 (2005)). But, plaintiff is not an “objective observer,” see Compl. ¶ 3, and his

presumption that Congress both knew that AIG sold shariah-compliant insurance products when

it enacted the EESA, and was secretly motivated by this fact to authorize the Secretary to

purchase $700 billion in troubled assets in the hope that some of that money might find its way

to this business is objectively absurd. In fact, the text, the legislative history, and the exercise of

EESA’s delegated authority at issue in this case all clearly demonstrate an exclusively secular

purpose: to protect the American economy from the consequences of the sudden failure of a

systematically significant financial institution. See, e.g., 12 U.S.C. § 5201; 154 Cong. Rec.

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H10702-06 (Oct. 3, 2008); 154 Cong. Rec. H10712-02 (Oct. 3, 2008); SSFI Program Description

(Ex. M to Def. Br.). Thus, plaintiff alleges no facts from which it could plausibly be found that

Congress acted here with a “predominant purpose of advancing religion.” McCreary County,

545 U.S. at 860.

Plaintiff’s attempt to argue that the EESA has the effect of advancing the Islamic religion

is just as far-fetched. None of the three factors relevant to determining whether a government

aid program has the impermissible effect of advancing religion supports plaintiff’s claim. See

Mitchell v. Helms, 530 U.S. 793, 808 (2000); see also Pl. Opp. at 20. First, even if plaintiff had

made plausible allegations that AIG is engaged in “indoctrination” by offering Shariahcompliant insurance products – and, in fact, he hasn’t – any such indoctrination “could not

reasonably be attributed to governmental action” because the benefits of the EESA are “offered

to a broad range of [financial institutions] without regard to their religion.” Mitchell, 530 U.S. at

809 (citing cases); see also Johnson v. Econ. Dev. Corp. of County of Oakland, 241 F.3d 501,

513 (6th Cir. 2001) (concluding that county’s issuance of tax exempt bonds on behalf of

religious school does not result in government indoctrination). Second, plaintiff concedes that

the EESA does not define its recipients by reference to religion. Pl. Opp. at 20. Finally, plaintiff

has not plausibly alleged that the EESA results in an “excessive entanglement” between

government and religion, but actually alleges that the government cannot control the day-to-day

operations of AIG, let alone the day-to-day operation of AIG’s subsidiaries that offer Shariahcompliant insurance products. See Compl. ¶ 25. Accordingly, the “sovereign” is not engaging

in or “pervasive[ly] monitoring” religious activities, and plaintiff has failed to state a cognizable

Establishment Clause claim. Agostini, 521 U.S. at 233. This case must be dismissed.

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CONCLUSION

For the foregoing reasons, defendants respectfully request that this Court grant

defendants’ motion to dismiss.

Respectfully submitted,

Dated: April 8, 2009 MICHAEL F. HERTZ

Acting Assistant Attorney General

TERRENCE G. BERG

United States Attorney

JAMES J. GILLIGAN

Assistant Director

s/ John R. Coleman 

JOHN R. COLEMAN 

Trial Attorney, U.S. Department of Justice

Civil Division, Federal Programs Branch

20 Massachusetts Ave., N.W., Room 6118

Washington, D.C. 20530

Telephone: (202) 514-4505

Email: John.Coleman3@usdoj.gov

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CERTIFICATE OF SERVICE

I hereby certify that on April 8, 2009, I electronically filed the foregoing paper with the

Clerk of the Court using the ECF system, which will send notification of such filing to the

following: Robert J. Muise, David Yerushalmi.

s/ John R. Coleman 

JOHN R. COLEMAN (VA Bar # 70908)

Trial Attorney, U.S. Department of Justice

Civil Division, Federal Programs Branch

20 Massachusetts Ave., N.W., Room 6118

Washington, D.C. 20530

Telephone: (202) 514-4505

Facsimile: (202) 616-8460

Email: John.Coleman3@usdoj.gov

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