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The Eighth Circuit’s decision in Americans United for the Separation of Church and State v. Prison Fellowship Ministries, Inc. makes for a nice, early Christmas present.

No one should think that the separation of church and state somehow prevents government and private contractors from bargaining and performing in “good faith.” But a federal trial court’s ruling from last year seemed to suggest a deal isn’t a deal if the contractors are religious. A federal judge ordered a private, faith-based organization to pay $1.5 million to the State of Iowa even though the organization already performed prison rehabilitation services in accord with then-existing law.  Fortunately, the Eighth Circuit Court of Appeals issued an opinion earlier this month reversing key parts of the trial court’s ruling. The organization was allowed to keep the money it had contracted for. The Eight Circuit’s decision serves as a small victory for contract rights, religious freedom, and judicial restraint.

Americans United for the Separation of Church and State v. Prison Fellowship Ministries, Inc. arose with a constitutional challenge to the State of Iowa’s funding part of InnerChange Freedom Initiative (IFI) Inc.’s program for prisoner education, training, and worship. Due to its early operational structure, the program’s constitutionality was borderline under murky U.S. Supreme Court precedents interpreting the Establishment Clause. But the case took on broader significance than that.  As detailed previously at Intellectual Conservative (see “Good Faith Contracting, Bad Faith Judging,” July 6, 2005), U.S. District Court Chief Judge Robert W. Pratt’s ruling was disturbing on many levels.  Thankfully, the Eighth Circuit reversed the most troublesome aspects of the trial court’s ruling. 

Judge Pratt unnecessarily spent an extensive part of an unusually lengthy opinion examining the religious beliefs of IFI.  But judges should strive to decide the cases before them on the narrowest legal grounds available.  Judges shouldn’t takes up pages in the Federal Supplement to pen uncomplimentary essays about various groups of people they dislike.  It contravenes the limited role of judges under Article III to decide cases and controversies, as well as the freedoms of association and religion guaranteed by the First Amendment. We want judges to decide cases based on established law, not side with one interest group over another on grounds of political correctness.   

Importantly, the Eighth Circuit panel slapped down Judge Pratt and defended religious liberty and free association. Eight Circuit Court of Appeals Judge Duane Benton’s opinion for the panel (which included Retired Justice Sandra Day O’Connor) held that Judge Pratt abused his discretion by accepting the testimony of a law professor/Ph.D./author about the beliefs of Evangelical Christians. Quoting from the U.S. Supreme Court’s decision in Mitchell v. Helms (2002), Judge Benton wrote that “[a]n inquiry into an organization’s religious views to determine if it is pervasively sectarian ‘is not only unnecessary but also offensive.  It is well established, in numerous other contexts, that courts should refrain from trolling through a person’s or institution’s religious beliefs.’”

In his district court opinion, Judge Pratt also took the draconian step of ordering IFI to pay back to the State of Iowa the $1.5 million it received. That money was reimbursement to IFI for operating its prison rehabilitation program for prisoners who willingly chose to participate.  IFI’s contracting with the State of Iowa was valid under existing law. There was (and is) strong reason to believe in the constitutionality of funding approximately 40% of the program in light of the U.S. Supreme Court’s ruling on private-school vouchers under Zelman v. Simmons-Harris (2002).  Judge Pratt even acknowledged there was no evidence of bad faith on the part of IFI or the State of Iowa.  Existing case law strongly suggests that equity demands that bad faith be shown before ordering a contracting party to return money it received for services rendered.

Significantly, the Eighth Circuit panel made mincemeat of Judge Pratt’s ruling on this point.  The panel observed that Judge Pratt gave no weight to the fact that IFI’s public funding was legal under then-existing law. They found flimsy Judge Pratt’s rationale that IFI should’ve know its program could eventually be considered unconstitutional because of a district court opinion in Texas about a different prison program and a California Dept. of Corrections Attorney opinion.  But federal district court opinions are not binding precedent, and the attorney opinion had absolutely no force of law.  Flimsy indeed. 

Moreover, the Eighth Circuit panel also noted the utter lack of any evidence of bad faith on the part of IFI or the State of Iowa.  In fact, the panel cited evidence of the contracting parties’ good faith in securing services for prisoners.  They pointed out that Judge Pratt did not even consider evidence by Iowa prison officials suggesting the IFI program “was beneficial and the State received much more value than it paid for.”  Additionally, the panel cited Americans United for the Separation of Church and State’s decision not to seek interim injunctive relief to stop the program while the litigation was pending.  They maintained that this increased the reasonableness of IFI’s reliance on its payments from the State of Iowa.  The panel likewise insisted a contractor’s mere ability to pay back money it received for services is not a sufficient reason to require repayment where contracts are subsequently ruled invalid.  To hold otherwise “deters financially sound organizations from contracting with the government.”

Americans United for Separation of Church and State didn’t just seek to throw a private, religious contracting organization out of state prisons.  Letting itself get carried away, the group tried to infringe the obligation of contracts and use the judicial arm of government to editorialize against an organization it vehemently disagrees with. A federal judge tried to make all that happen.  Fortunately, a few federal judges from a higher court put a stop to IFI’s mistreatment.  What’s more, judicial opinions of federal circuit courts of appeal are binding precedent. Thus, important legal principles received a small bit of authoritative vindication. The Eighth Circuit’s decision in the Americans United for the Separation of Church and State v. Prison Fellowship Ministries, Inc. makes for a nice, early Christmas present.