Allen v. Wright and Donald T. Regan v. Inez Wright

Petitioners
W. Wayne Allen, Donald T. Regan
Respondents
Inez Wright, et al.
Petitioners' Claim
Petitioners claimed that although the suit sought declaratory and injunctiverelief, the respondents did not have sufficient standing to bring suit sincetheir children never applied for admission to any private school.
Chief Lawyer for Petitioners
Rex E. Lee, U.S. Solicitor General in case No. 81-970, and William J. LandersII, in case No. 81-757
Chief Lawyer for Respondents
Robert H. Kapp
Justices for the Court
Warren E. Burger, Sandra Day O'Connor (writing for the Court), Lewis F. Powell, Jr., William H. Rehnquist, Byron R. White
Justices Dissenting
Harry A. Blackmun, William J. Brennan, Jr., John Paul Stevens (Thurgood Marshall did not participate)
Place
Washington, D.C.
Date of Decision
3 July 1984
Decision
The U.S. Supreme Court held that the respondents (parents of African Americanpublic school students in seven states undergoing desegregation) lacked standing to bring suit alleging that the IRS had not fulfilled its obligations regarding the denial of tax-exempt status to private schools that practiced racial discrimination with respect to student enrollment.
Significance
Parents of African American public school children filed a nationwide class action suit alleging that, by permitting tax exemptions for racially discriminatory schools, the IRS did not fulfill its obligation according to provisionsof IRS Code. Although the importance of the respondents' claim seemed to beits focus on a government (IRS) practice that seemed to foster expansion of segregated private schools, the Court cited determining criteria as requiringproof of "injury in fact" that was "fairly traceable" to government action.
In 1976, the parents of African American children attending public schools that were undergoing desegregation brought a nationwide suit to the U.S. District Court for the District of Columbia Circuit. Their claim maintained that the Internal Revenue Service (IRS) was not acting in accordance with U.S. Code,which mandated denial of tax-exempt status to racially discriminatory private schools. (At the time, U.S. Code and IRS policy required that a school notbe segregated and admit "students of any race in order to be granted tax-exempt status.")
Parents who brought suit had listed 32 segregated private schools with tax-exempt status in their respective domicile areas. In response, W. Wayne Allen,headmaster for one of the private schools named in the suit, initiated a motion to dismiss the complaint based on the parents' lack of standing to bring suit. The district court accepted Allen as a defendant, which led to the stalling of the judicial process for several years. During this period, the IRS proposed a new set of revenue procedures to further define the requirements a private school had to meet in order to obtain tax-exempt status. Although legislation strengthening IRS guidelines was blocked in the U.S. Congress until the end of 1980, the district court granted Allen's motion to dismiss the lawsuit. That decision was subsequently reversed by the U.S. Court of Appeals forthe District of Columbia Circuit, which held that parents had standing to bring suit because, as their suit claimed, their children suffered from what amounted to government sanctioning of segregated institutions through tax exemptions. Accordingly, the court of appeals ordered that any educational institution that discriminated racially should not qualify for tax-free status. Thecase was also remanded to the lower court for final adjudication.
Questions of Standing
The U.S. government and Wayne Allen filed separate petitions to the U.S. Supreme Court. The Court heard arguments for both cases concurrently and decidedto reverse the decision of the U.S. Court of Appeals. The majority opinion, shared by five justices, held that the respondents (parents of the African American public school children) did not have legal standing to maintain the lawsuit against the IRS.
In this case "standing," as specified under Article III of the U.S. Constitution, pertained to both the jurisdictional propriety and the appropriateness of the claims of litigants. The majority opinion pointed out that, under the principle of "separation of powers," for any court to exercise judicial authority (according to the decision in Valley Forge College v. Americans United [1982]), especially with respect to alleged wrongdoing by another branchof government, there had to exist a "case or controversy." Moreover, as stipulated in Warth v. Seldin (1975), a court had to ensure the "litigantis entitled to have the court decide the merits or dispute of a legal issue."In the absence of appropriateness in a litigant's "standing," the Court explained that any judicial action would be improper. Specifically, in cases involving alleged governmental injury to a private individual or group, a plaintiff had to allege that some kind of personal injury was sustained that could be traced to (the government's) unlawful conduct and which might be correctedonly through judicial intervention. Thus, the Court held the respondents hadno viable legal standing to bring suit. Respondents did not allege that theirchildren were victims of the segregationist policy of private schools receiving tax exemptions. Neither did they allege that their children ever appliedor would ever apply for any of the mentioned private schools. Either allegation could have allowed the court to recognize a "judicially cognizable injury," which would have been appropriate for judicial redress.
In an earlier decision in Moose Lodge No. 107 v. Irvis (1972), the Supreme Court held that the plaintiff had no standing to challenge a club's policy to discriminate racially because Irvis never applied for membership. Similarly, in Rizzo v. Goode (1976) and O'Shea v. Littleton (1974),plaintiffs did not possess appropriate standing because discrimination was not personally directed at the plaintiffs. Similarly, the claim in the class action suit brought by parents of African American students against Allen (andthe IRS) did not evidence judicially cognizable injury. Hence, the Court feltthey had no choice but to decide that the respondents held no standing, which made complaint or adjudication appropriate. Further, the justices had difficulty understanding how the allegation that tax-exempt status given to segregated private schools harmed the ability to have all schools (public and private) desegregated. The reduced ability of African American children to receivea desegregated education would only have been "fairly traceable" if the respondents could have demonstrated that a sufficient number of segregated private schools in the area existed as a direct result of the IRS extendingtax-exempt privileges to them. Moreover, respondents would have had to present convincing evidence that removing tax exemptions would make an obvious difference in public school integration. Justices for the majority, therefore, held that the alleged injury was not "fairly traceable to the asserted unlawfulconduct of the IRS."
The majority opinion went on to point out that, considering the arguments presented to the Court, they found difficulty in determining exactly how many racially discriminatory private schools might have had tax-exempt status. Theyalso found questionable whether a change in policy regarding the tax status of private schools would make public school integration more effective. Finally, the Court concluded that even if there existed a viable element of "case or controversy," respondents' arguments presented in Court did not show causeand effect and their case was, at best, weak.
More than voicing opposition to the majority opinion, Justice Brennan provided another perspective in his written decision on behalf of the minority justices. He believed that the Court had used the issues of "standing" and "separation of powers" to avoid consideration of a very important claim. IRS practice was not satisfactory in identifying racially discriminatory schools; thus,their lack of proper protocol resulted in permitting tax-exempt status to schools that practiced racial discrimination. Moreover, the respondents' brief was amply meritorious because it correctly argued that IRS guidelines, as written, inappropriately permitted schools to receive tax-exemptions based on adopting and certifying a desegregation policy rather than basing tax-exemptions on implementation of desegregation policy.
In direct opposition to the majority decision, the minority believed the "case or controversy" requirement for the respondents' standing was satisfied. Intheir opinion, the respondents' claim alleged at least one type of injury: in granting tax-exemptions to racially discriminatory private schools, the IRSessentially encouraged expansion that could impede efforts of federal courtsand local schools to operate under the dual school system. (Brennan's written opinion observed that the Court had previously recognized that such injurywas sufficient to satisfy constitutional standards.) Furthermore, the minority firmly believed that distraction of a child's right to receive an educationin a desegregated school, whether public or private, was surely injury in fact. Analogous to the case of Gladstone Realtors v. Metropolitan Life Ins.Co. (1976), such injury was also sufficient to satisfy the constitutionalrequirements of standing. Such injury was also "fairly traceable" to the governmental conduct challenged in the respondents' suit. Accordingly, failure of the IRS to deny tax-exempt status resulted in continued racial discrimination--there existed a direct relationship between government action and injurysuffered.
The minority found inappropriate the majority's argument that injury would be"fairly traceable" only if parents listed enough segregated private schoolsin areas where they lived. In fact, parents had specifically named at least 32 racially discriminatory schools that continued to benefit from tax exemptions. In concluding (and, in a rare moment of adversarial objection), the minority sharply criticized their colleagues, charging that it was only because the respondents' "injury in fact" was "fairly traceable" that the Court was forced to inappropriately and incorrectly introduce the concept of "separation of powers."
Impact
In rendering a decision, the Court wanted to address the issue of standing asan essential matter in suits alleging injury from governmental actions. In rendering its decision, the Court clarified previous rulings by explaining that "injury in fact" was "fairly traceable" only if a plaintiff had suffered personal harm that was both visible and perceptible. Specifically, with regardto cases involving alleged injury sustained through governmental action (or inaction), the injury had to clearly, directly affect a litigant to establishstanding and thus support a claim.
The Court did not seek to question the legality of IRS policy with regard togranting tax-exempt status to racially discriminatory schools. (In likely response to this suit, however, the IRS revised and adopted more stringently defined criteria for determining ineligibility for tax-exempt status of schoolsengaging in racial discrimination of any sort.) Justices chose to focus, instead, on whether respondents had standing to bring suit. The Court conformed to a prior decision, Simon v. Eastern Kentucky Welfare Rights Organization (1976) which held "that litigation concerning tax liability is a matter between taxpayer and IRS, with the door barely ajar for third party challenges." By that decision, the Court also reiterated previous guidance in cases that involved third-party challenges in tax liability suits. Moreover, the highest court in the U.S. tacitly warned that, in the period that followed this decision, they would only entertain lawsuits related to racial discrimination if a litigant personally alleged "fairly traceable" and recognizable injury.
Related Cases

• Moose Lodge No. 107 v. Irvis, 407 U.S. 163 (1972).
  
• O'Shea v. Littleton, 414 U.S. 488 (1974).
  
• Warth v. Seldin, 422 U.S. 490 (1975).
  
• Rizzo v. Goode, 423 U.S. 362 (1976).
  
• Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26(1976).
  
• Gladstone, Realtors v. Metropolitan Life Ins. Co., 441 U.S. 91 (1976).
  
• Valley Forge College v. Americans United, 454 U.S. 464 (1982).

Class Action Lawsuits
Class action lawsuits are suits allowing a large number of people with commoncomplaints to sue together. Until 1938, monetary awards were not allowed. Class action suits have involved significant social issues such as public school desegregation and housing issues, as well as product liability and personalinjury cases (torts).
In 1997, 1,475 class action suits were filed in federal courts. In the mid-1970s over 3,000 suits were being filed per year. By 1984, this number had declined to under one thousand per year by 1984. The number of suits increased during the 1990s. Class action suits comprised only 0.7 percent of total federal civil suits in the 1997, in contrast to 3.5 percent in 1975.
Between 1973 and 1997, over 39,000 class action suits were filed. Over 41 percent concerned civil rights issues, 8 percent with torts, 13 percent with securities (stocks and bonds), 9 percent with prisoner civil rights, and 6 percent or less with various other issues. However, there was a substantial decrease in the percentages of civil rights cases filed, from almost 56 percent ofthe class action suits in 1978 to 16 percent in 1997. Securities fell from 34percent of the class action caseload in 1993 to 21 percent in 1997. Tort cases, however, rose from less than 4 percent in 1978 to over 21 percent in 1997.
Sources
Hooper, Laural L. , Robert J. Niemic, and Thomas E. Willging. Empirical Study of Class Actions in Four Federal District Courts. Washington, DC: Federal Judicial Center, 1996.