Court Opinion

ID: 9956223
Source: CourtListenerOpinion
Date Created: 2024-04-01 16:00:35.636935+00
Date Added: 2024-06-11T08:15:13.726220
License: Public Domain

USCA4 Appeal: 23-1453         Doc: 75         Filed: 03/27/2024   Pg: 1 of 14

                                                 PUBLISHED

                                   UNITED STATES COURT OF APPEALS
                                       FOR THE FOURTH CIRCUIT

                                                  No. 23-1453

        DONNA BUETTNER-HARTSOE; N.H., by and through her Parent and Next
        Friend Donna Buettner-Hartsoe,

                                Plaintiffs - Appellees,

                        v.

        BALTIMORE LUTHERAN HIGH SCHOOL ASSOCIATION, d/b/a Concordia
        Preparatory School,

                                Defendant - Appellant,

                        and

        LUTHERAN CHURCH-MISSOURI SYNOD,

                                Defendant.

        ------------------------------

        ASSOCIATION OF INDEPENDENT MARYLAND & DC SCHOOLS;
        NATIONAL ASSOCIATION OF INDEPENDENT SCHOOLS; NATIONAL
        BUSINESS OFFICERS ASSOCIATION; ASSOCIATION OF INDEPENDENT
        SCHOOLS OF GREATER WASHINGTON; SOUTHERN ASSOCIATION OF
        INDEPENDENT SCHOOLS; VIRGINIA ASSOCIATION OF INDEPENDENT
        SCHOOLS; NORTH CAROLINA ASSOCIATION OF INDEPENDENT
        SCHOOLS; PALMETTO ASSOCIATION OF INDEPENDENT SCHOOLS;
        ASSOCIATION OF CHRISTIAN SCHOOLS INTERNATIONAL; AMERICAN
        ASSOCIATION OF CHRISTIAN SCHOOLS; ASSOCIATION FOR BIBLICAL
        HIGHER EDUCATION; INTERNATIONAL ALLIANCE FOR CHRISTIAN
        EDUCATION; INSTITUTE FOR JUSTICE; NAPA INSTITUTE LEGAL
        FOUNDATION; THOMAS MORE SOCIETY,

                                Amici Supporting Appellant.
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        EQUAL RIGHTS ADVOCATES; MARYLAND COALITION AGAINST
        SEXUAL ASSUALT; NATIONAL ALLIANCE TO END SEXUAL VIOLENCE;
        NATIONAL COUNCIL OF JEWISH WOMEN; PUBLIC JUSTICE; ROCKY
        MOUNTAIN VICTIM LAW CENTER; STOP SEXUAL ASSUALT IN
        SCHOOLS; WOMEN'S LAW PROJECT,

                            Amici Supporting Appellee.

        Appeal from the United States District Court for the District of Maryland, at Baltimore.
        Richard D. Bennett, Senior District Judge. (1:20-cv-03132-RDB)

        Argued: January 25, 2024                                      Decided: March 27, 2024

        Before THACKER, HARRIS, and RUSHING, Circuit Judges.

        Reversed and remanded by published opinion. Judge Thacker wrote the opinion, in which
        Judge Harris and Judge Rushing joined.

        ARGUED: Gregg Edward Viola, ECCLESTON & WOLF, P.C., Hanover, Maryland, for
        Appellant. Howard Jonathan Bashman, LAW OFFICES OF HOWARD J. BASHMAN,
        Fort Washington, Pennsylvania, for Appellees. Joshua W.B. Richards, for Amicus
        National Association of Independent Schools. Sean Ouellette, for Amici Civil Rights and
        Survivor Advocacy Organizations. ON BRIEF: Mark P. Johnson, ECCLESTON &
        WOLF, P.C., Hanover, Maryland, for Appellant. Brian Ketterer, Whitney J. Butcher,
        KETTERER, BROWNE & ASSOCIATES, LLC, Bel Air, Maryland, for Appellees. James
        P. Ulwick, Geoffrey H. Genth, Steven M. Klepper, KRAMON & GRAHAM, P.A.,
        Baltimore, Maryland, for Amicus The Association of Independent Maryland & DC
        Schools. J. Douglas Baldridge, Washington, D.C., Geoffrey R. Garinther, Evan T. Shea,
        William B. King, Elizabeth C. Rinehart, VENABLE LLP, Baltimore, Maryland; Joshua
        W.B. Richards, SAUL EWING LLP, Philadelphia, Pennsylvania, for Amici The National
        Association of Independent Schools, The National Business Officers Association, The
        Association of Independent Schools of Greater Washington, The Southern Association of
        Independent Schools, The Virginia Association of Independent Schools, The North
        Carolina Association of Independent Schools, and the Palmetto Association of Independent
        Schools.    Megan H. Mann, NATIONAL ASSOCIATION OF INDEPENDENT

                                                   2
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        SCHOOLS, Washington, D.C., for Amicus National Association of Independent Schools.
        John J. Bursch, Gregory S. Baylor, Ali Kilmartin, ALLIANCE DEFENDING FREEDOM,
        Lansdowne, Virginia; Stephen J. Hammer, Dallas, Texas, Thomas G. Hungar, Russell
        Balikian, Lavi M. Ben Dor, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for
        Amici Association of Christian Schools International, American Association of Christian
        Schools, Association for Biblical Higher Education, and International Alliance for
        Christian Education. Paul M. Sherman, INSTITUTE FOR JUSTICE, Arlington, Virginia,
        for Amicus Institute for Justice. Roman Martinez, G. Charles Beller, Alexander G.
        Siemers, LATHAM & WATKINS LLP, Washington, D.C., for Amicus Napa Institute
        Legal Foundation. Thomas Brejcha, B. Tyler Brooks, THOMAS MORE SOCIETY,
        Chicago, Illinois, for Amicus Thomas More Society. Sean Ouellette, Shariful Khan, Adele
        P. Kimmel, PUBLIC JUSTICE, Washington, D.C., for Amici Civil Rights and Survivor
        Advocacy Organizations.

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        THACKER, Circuit Judge:

               N.H. was a student at Concordia Preparatory School (“Concordia Prep”). 1 In 2020,

        N.H. and her mother, Donna Buettner-Hartsoe (“Appellees”) sued Concordia Prep for

        violating Title IX of the Education Amendments of 1972 (“Title IX”). To support their

        Title IX claim, Appellees alleged that Concordia Prep received federal financial assistance

        so as to trigger mandatory Title IX compliance. Concordia Prep moved to dismiss

        Appellees’ Title IX claim on the ground that it was not subject to Title IX because it did

        not receive federal financial assistance. Appellees opposed Concordia Prep’s motion,

        arguing that the school’s 26 U.S.C. § 501(c)(3) tax exempt status constituted federal

        financial assistance for Title IX purposes.

               The district court agreed with Appellees and denied Concordia Prep’s motion to

        dismiss. But the district court nonetheless certified an interlocutory appeal on the issue of

        whether § 501(c)(3) status constitutes receiving federal financial assistance for Title IX

        purposes. We granted Concordia Prep’s interlocutory appeal.

               We conclude that § 501(c)(3) status does not constitute receipt of federal financial

        assistance. Therefore, we reverse and remand to the district court for further proceedings.

               1
                 Baltimore Lutheran High School Association, doing business as Concordia
        Preparatory School.

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                                                       I.

                                                       A.

               N.H. was a student at Concordia Prep during the 2017–18 academic year. She

        alleges that during that time, she was sexually harassed, assaulted, and bullied at school.

        As this is an interlocutory appeal separate from the merits of N.H.’s harassment, we do not

        detail the facts relative to N.H.’s allegations.

               Concordia Prep is a Lutheran private school. It is organized as a nonprofit and has

        federal tax exempt status pursuant to 26 U.S.C. § 501(c)(3).

                                                       B.

               In 2020, Appellees sued Concordia Prep, alleging violations of Maryland state law

        and Title IX. 2 Appellees alleged that because Concordia Prep receives federal education

        funding, it is subject to Title IX. Concordia Prep filed a Partial Motion to Dismiss,

        asserting that Concordia Prep did not receive federal education funding during N.H.’s

        academic year. Concordia Prep admitted receiving grants from the State of Maryland but

        denied receiving any direct federal funding or federal financial assistance.         Thus,

        Concordia Prep argued that it was not subject to Title IX and, therefore, Appellees’ Title

        IX claim should be dismissed. Appellees opposed Concordia Prep’s motion. They argued

               2
                Appellees’ state law claims are not currently before us, as Concordia Prep moved
        to dismiss only the Title IX claim.

                                                       5
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        that Concordia Prep’s tax exempt status pursuant to § 501(c)(3) qualified as federal

        financial assistance. 3

               The district court denied Concordia Prep’s motion. It held that Concordia Prep’s

        § 501(c)(3) tax exempt status constituted federal financial assistance for purposes of Title

        IX. Therefore, the district court reasoned that Concordia Prep could not “avail itself of

        federal tax exemption but not adhere to the mandates of Title IX.” J.A. 111. 4

               Concordia Prep filed a Motion for Reconsideration or to Certify an Order for

        Interlocutory Appeal. Concordia Prep argued that § 501(c)(3) status was not federal

        financial assistance and thus did not trigger Title IX compliance. The district court denied

        the Motion for Reconsideration but granted the Motion to Certify an Order for Interlocutory

        Appeal. We granted Concordia Prep’s Petition for Leave to Appeal on the legal issue of

        whether § 501(c)(3) status constitutes receipt of federal financial assistance for purposes

        of Title IX.

                                                         II.

               On interlocutory appeal, we employ the usual appellate standard governing motions

        to dismiss. Dyer v. Smith, 56 F.4th 271, 276 (4th Cir. 2022). We consider questions of

        law de novo and construe the evidence in the light most favorable to the non-movant.

        EEOC v. Seafarers Int’l Union, 394 F.3d 197, 200 (4th Cir. 2005).

               3
                Before ruling on Concordia Prep’s motion, the district court consolidated
        Appellees’ case with four other cases lodging similar Title IX claims against Concordia
        Prep.
               4
                   Citations to the “J.A.” refer to the Joint Appendix filed by the parties in this appeal.

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                                                    III.

                                                     A.

               Title IX was enacted in 1972 to combat gender discrimination in education. Section

        901(a) of Title IX states: “No person in the United States shall, on the basis of sex, be

        excluded from participation in, be denied the benefits of, or be subjected to discrimination

        under any education program or activity receiving Federal financial assistance . . . .” Title

        IX of the Education Amendments of 1972, Pub. L. No. 92–318, § 901(a), 86 Stat. 235, 373

        (codified at 20 U.S.C. § 1681(a)). Like other federal anti-discrimination measures, 5 the

        hook for Title IX to apply is receiving federal financial assistance. But that phrase is

        undefined in the statute. Therefore, in this case, we are tasked with determining whether

        § 501(c)(3) tax exempt status equates to “receiving Federal financial assistance” so that

        Title IX applies.

                                                     B.

               We begin with the text. We look to Title IX’s language and to the ordinary meaning

        of the words it uses. See United States v. Mills, 850 F.3d 693, 697 (4th Cir. 2017).

        Dictionaries cast light on the ordinary meaning of “receiving Federal financial assistance.”

               5
                 Title VI prohibits race discrimination in “any program or activity receiving Federal
        financial assistance.” Title VI of the Civil Rights Act of 1964, Pub. L. No. 88–352, § 601,
        78 Stat. 241, 252 (codified at 42 U.S.C. § 2000d). Section 504 prohibits discrimination on
        the basis of disability in “any program or activity receiving Federal financial assistance.”
        Rehabilitation Act of 1973, Pub. L. No. 93–112, § 504, 87 Stat. 355, 394 (codified at 29
        U.S.C. § 794(a)). And § 303 of the Age Discrimination Act prohibits discrimination on
        the basis of age in “any program or activity receiving Federal financial assistance.” Age
        Discrimination Act of 1975, Pub. L. No. 94–135, § 303, 89 Stat. 713, 728 (codified at 42
        U.S.C. § 6102).

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        See Davidson v. United Auto Credit Co., 65 F.4th 124, 129 (4th Cir. 2023) (“Searching for

        the plain meaning of a statute’s text often starts with reading dictionaries published close

        in time to when it was enacted.”). To “receive” means “to take,” “to accept,” and to “come

        into possession of (something).”      Webster’s New Collegiate Dictionary 705 (1961);

        Webster’s Seventh New Collegiate Dictionary 714 (1965); The American College

        Dictionary 1010 (1970). And “assistance” means “aid,” “help,” or “support.” Webster’s

        New Collegiate Dictionary 54 (1961); Webster’s Seventh New Collegiate Dictionary 53

        (1965); The American College Dictionary 76 (1970). “Financial” describes “assistance,”

        and means “relating to” or “pertaining to finance.” Webster’s New Collegiate Dictionary

        311 (1961); Webster’s Seventh New Collegiate Dictionary 309 (1965). And at least one

        definition of “financial” contemplates “monetary receipts and expenditures,” which

        indicates a flow of funds. The American College Dictionary 453 (1970).

               Taken together then, the phrase “receiving Federal financial assistance” means

        taking or accepting federal financial aid, help, or support. Thus, the plain text of Title IX

        contemplates the transfer of funds from the federal government to an entity. 6 This reading

               6
                This plain text reading is underscored by federal regulations interpreting the phrase
        “Federal financial assistance.” See, e.g., 31 C.F.R. § 28.105 (Department of the Treasury);
        34 C.F.R. § 106.2(g) (Department of Education); 40 Fed. Reg. 24128 (Department of
        Health, Education, and Welfare). Those regulations state:
                      Federal financial assistance means any of the following, when
                      authorized or extended under a law administered by the Federal
                      agency that awards such assistance:
                      (1) A grant or loan of Federal financial assistance, including
                      funds made available for:
                      (i) The acquisition, construction, renovation, restoration, or
                      repair of a building or facility or any portion thereof; and
        (Continued)
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        is consistent with Title IX’s neighboring provision which grants enforcement authority to

        agencies “empowered to extend Federal financial assistance . . . by way of grant, loan, or

        contract other than a contract of insurance or guaranty.”      20 U.S.C. § 1682.     This

        neighboring provision’s list -- “grant, loan, or contract” -- suggests very strongly that

        § 1681(a)’s “Federal financial assistance” should be read similarly, and thus limited to

        affirmative forms of assistance.

               With the above dictionary definition in hand, we turn to Supreme Court precedent

        which has construed the scope of when federal financial assistance includes indirect

        assistance.   The Supreme Court has held that federal financial assistance includes

        assistance through an intermediary.

                     (ii) Scholarships, loans, grants, wages or other funds extended
                     to any entity for payment to or on behalf of students admitted
                     to that entity, or extended directly to such students for payment
                     to that entity.
                     (2) A grant of Federal real or personal property or any interest
                     therein, including surplus property, and the proceeds of the sale
                     or transfer of such property, if the Federal share of the fair
                     market value of the property is not, upon such sale or transfer,
                     properly accounted for to the Federal Government.
                     (3) Provision of the services of Federal personnel.
                     (4) Sale or lease of Federal property or any interest therein at
                     nominal consideration, or at consideration reduced for the
                     purpose of assisting the recipient or in recognition of public
                     interest to be served thereby, or permission to use Federal
                     property or any interest therein without consideration.
                     (5) Any other contract, agreement, or arrangement that has as
                     one of its purposes the provision of assistance to any education
                     program or activity, except a contract of insurance or guaranty.
        31 C.F.R. § 28.105. Each of the examples contemplates the flow of assets or resources
        from the federal government to an entity, consistent with the plain meaning of the phrase.

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               In Grove City College v. Bell, the Court held that “receiving” included receiving

        federal grants through indirect means. 465 U.S. 555, 563–70 (1984). There, Grove City

        College enrolled students who received federal aid and paid that aid to the school. Id. at

        560–62. Key to the Court’s analysis was that even though the aid flowed through an

        intermediary, the school was still a recipient of the aid. Id. at 569–70.

               In contrast, in later cases, the Court differentiated between receiving indirect

        assistance, as in Grove City, and merely benefitting indirectly from federal assistance. The

        Court reasoned that receiving federal financial assistance “covers those who receive the

        aid, but does not extend as far as those who benefit from it.” U.S. Dep’t of Transp. v.

        Paralyzed Veterans of Am., 477 U.S. 597, 607 (1986). Because “Congress tied the

        regulatory authority to those programs or activities that receive federal financial assistance;

        the key is to identify the recipient of that assistance.” Id. Put differently, “Title IX

        coverage is not triggered when an entity merely benefits from federal funding.” Nat’l

        Collegiate Athletic Ass’n v. Smith, 525 U.S. 459, 468 (1999).

               So “receiving” federal financial assistance includes direct assistance or assistance

        through an intermediary, but it does not include mere beneficiaries. In other words, the

        phrase “receiving Federal financial assistance” means taking or accepting federal financial

        aid, help, or support, even when that assistance is through an intermediary.

                                                      C.

               Before applying this definition to entities with tax exempt status, we briefly explain

        tax exemption. Tax exemption for charitable institutions is deeply rooted in American

        history. Bob Jones Univ. v. United States, 461 U.S. 574, 588 (1983) (“Tax exemptions for

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        certain institutes thought beneficial to the social order of the country as a whole, or to a

        particular community, are deeply rooted in our history, as in that of England.”). Section

        501(c)(3) provides that “[c]orporations . . . organized and operated exclusively for

        religious, charitable . . . or educational purposes” are entitled to tax exemption. 26 U.S.C.

        § 501(c)(3). Along with requiring that entities be organized and operated for an exempt

        purpose, § 501(c)(3) prevents private inurement, limits lobbying, and prohibits

        electioneering. Id. Organizations that meet these requirements, and apply for exemption,

        are exempt from federal income taxes. Id. § 501(c)(1)(A). And when taxpayers donate to

        organizations with § 501(c)(3) status, they can claim a charitable deduction. Id. § 170.

               The requirement that organizations be operated for an exempt purpose disqualifies

        organizations that operate for illegal purposes or engage in activities contrary to clearly

        established public policy. Bob Jones, 461 U.S. at 592. 7

               Tax exempt status is a tax benefit. Bob Jones, 460 U.S. at 587–88. Tax exempt

        organizations keep the amount of tax they would have paid on their income. And by

        exempting organizations from tax, “all taxpayers are affected” because “other taxpayers

        can be said to be indirect and vicarious ‘donors.’” Id. at 591. But even though “exemptions

        and deductions . . . are like cash subsidies,” they are not “in all respects identical.” Regan

        v. Tax’n with Representation of Wash., 461 U.S. 540, 544 n.5 (1983). “A subsidy involves

               7
                 The IRS has not issued regulations requiring tax exempt organizations to comply
        with Title IX, nor has it revoked tax exemption based on gender discrimination. Thus, we
        need not decide whether the IRS could condition tax exempt status on organizations
        following Title IX or whether ending gender discrimination in schools is a fundamental
        public policy akin to ending racial discrimination in schools in Bob Jones. 461 U.S. at 592.

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        the direct transfer of public monies to the subsidized enterprise and uses resources exacted

        from taxpayers as a whole. An exemption, on the other hand, involves no such transfer.”

        Walz v. Tax Comm’n of New York, 397 U.S. 664, 690 (1970) (Brennan, J., concurring).

                                                      D.

               With that background, we address the issue at hand. Do organizations with tax

        exempt status “receiv[e] Federal financial assistance” for Title IX purposes? Incorporating

        the plain meaning of that phrase, does tax exempt status constitute accepting federal

        financial aid, help, or support? We think not.

                                                      1.

               Tax exemption is not “Federal financial assistance.” This is not a novel concept.

        Indeed, since Title IX’s inception over fifty years ago, it has never been applied to

        organizations based solely on their tax exempt status. And for good reason. Although tax

        exemption is a tax benefit, that does not mean it is “Federal financial assistance” for Title

        IX purposes. As noted above, “assistance” means “aid, help, or support,” which all

        connotate financial grants. Tax exemption, however, is the withholding of a tax burden,

        rather than the affirmative grant of funds. Thus, tax exemption is not “Federal financial

        assistance.”

               The meaning of “receiving” financial assistance underscores our conclusion.

        Appellees argue that tax exemption is akin to the indirect grants in Grove City. They argue

        that because § 501(c)(3) status results in a monetary benefit to tax exempt entities, it is the

        same as the IRS granting funds to tax exempt entities. We are unconvinced. In Grove

        City, the college received federal education funding through its students. 465 U.S. at 559.

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        Even though it received the funding through indirect means, that is, its students, there was

        still a grant of federal aid to the school. Id. at 564. In contrast, with tax exemption, no

        funds actually change hands. Tax exemption merely allows organizations to keep the

        money they otherwise would owe in income tax.                Therefore, tax exemption is

        distinguishable from the federal grants in Grove City as tax exemption is an indirect benefit,

        as opposed to federal financial aid through indirect means. See Nat’l Collegiate Athletic

        Ass’n, 525 U.S. at 468 (“Title IX coverage is not triggered when an entity merely benefits

        from federal funding.”).

                                                      2.

               Appellees also argue that 26 U.S.C. § 170’s charitable contribution deduction is like

        the indirect grants in Grove City. They argue that because donors can receive a § 170

        deduction when they donate to tax exempt organizations like Concordia Prep, those

        organizations receive more money through donations than they otherwise would have if

        the donors received no deduction. An example illustrates their argument. If a donor whose

        federal income tax rate is twenty percent wishes to donate $100 of their post-tax income,

        this $100 donation costs $125 pre-tax. But if the donor elects a § 170 deduction, the donor

        effectively avoids paying tax on the $100 donation -- meaning it costs only $100 pre-tax.

        Appellees argue that this $25 difference allows tax exempt organizations like Concordia

        Prep to receive higher donations. Appellees contend that these higher donations are

        functionally the same as the indirect grants in Grove City. We disagree.

               Section 170’s charitable contribution deduction, like § 501(c)(3) tax exempt status,

        is far afield from Grove City's funding-by-intermediary scheme. In Grove City, federal

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        funds were dispersed, through students, to the school. 465 U.S. at 559. But here, donors

        do not actually receive any federal funds by claiming a charitable deduction. Instead, they

        are merely allowed to donate the full pre-tax amount of their donation. Thus, the charitable

        contribution deduction is not federal financial assistance for Title IX purposes. And even

        if it were, any benefit that Concordia Prep receives by donors potentially donating more

        after claiming § 170’s charitable contribution deduction is far too attenuated to constitute

        “receiving” federal financial assistance. 8

                                                      IV.

               For these reasons, we hold that tax exempt status pursuant to 26 U.S.C. § 501(c)(3)

        does not equate to “receiving Federal financial assistance” for purposes of Title IX.

        Therefore, we reverse the district court and remand for further proceedings.

                                                                   REVERSED AND REMANDED

               8
                 Because the plain meaning of Title IX excludes tax exempt status from qualifying
        as “receiving Federal financial assistance,” we need not reach the alternate grounds for
        reversal raised by Concordia Prep and amici.

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