Two federal district courts across the country have issued decisions over the last few months finding that private high schools are subject to Title IX of the Education Amendment Act of 1972. These courts reached their decisions because the schools in question are tax-exempt under §501(c)(3) of the Internal Revenue Code (IRC). In their respective decisions, the courts both reasoned that the schools’ federal tax-exempt status constituted “federal financial assistance” for the purposes of Title IX, thus subjecting the schools to the mandates of Title IX.
These decisions are a significant departure from the long-standing position that independent and private schools, including religious schools, are exempt from compliance with certain federal non-discrimination laws, including Title IX. That position primarily rested on the assertion that federal tax-exempt status under IRC 501(c)(3) alone was insufficient to qualify as “federal financial assistance” under Title IX. As a result, private and religious schools should be aware of the implications of 501(c)(3) tax-exempt status in this regard.
E.H. v. Valley Christian Academy
In E.H. v. Valley Christian Academy, a minor female student filed suit under Title IX amidst various other claims against Valley Christian Academy, which allegedly refused to play her school if she played on its football team, for which she had successfully tried out and become a member. Valley Christian moved to dismiss the Title IX claim because it did not receive “federal financial assistance” and therefore was not covered by Title IX. The federal law applies only to entities that receive federal financial assistance.
However, the U.S. District Court for the Central District of California disagreed and denied the school’s motion to dismiss. The court found that the school had received “federal financial assistance” within the meaning of Title IX, both by receiving a federal paycheck protection program (PPP) loan and tax-exempt status under IRC 501(1)(c)(3). As a result, Valley Christian was required to comply with Title IX.
Buettner-Hartsoe v. Baltimore Lutheran High School Association
The U.S. District Court for the District of Maryland reached a similar conclusion in Buettner-Hartsoe v. Baltimore Lutheran High School Association. In that case, five former Baltimore Lutheran High School students filed suit under Title IX, amongst other claims. The students based their Title IX suit on the alleged failure of the school to adequately address allegations of sexual assault and harassment by male students. Baltimore Lutheran moved to dismiss the Title IX claim or, in the alternative, for summary judgment in their favor on the claim, alleging that it was not subject to Title IX because it received no “federal financial assistance.”
The court denied the school’s motions to dismiss and for summary judgment, finding that the school’s federal tax-exempt status rendered it subject to the strictures of Title IX. In addition, while the court also mentioned that the school had received a PPP loan, it also noted that it had not done so until 2020, whereas most of the allegations that the plaintiff raised as violative of Title IX had occurred before 2020.
The court cited the U.S. Supreme Court decisions of Regan v. Taxation with Representation, 461 U.S. 540 (1983), Grove City Coll. v. Bell, 465 U.S. 555 (1984), Nat’l Collegiate Athletic Ass’n v. Smith, 525 U.S. 459 (1999), and Cannon v. Univ. of Chicago, 441 U.S. 667 (1979) in reaching its decision. The court further found that enforcing the use of Title IX in schools with 501(c)(3) status aligned with and protected the principal purpose of Title IX, or “to avoid the use of federal resources to support discriminatory practices” and “to provide individual citizens effective protection against those practices.”
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