A federal appeals court has vacated ruling that the U.S. Department of Health and Human Services violated the establishment clause by allowing a Catholic organization to impose religious-based restrictions on the use of grant money for trafficking victims. Because the contract between HHS and the organization has ended, the court found the case to be moot.

On January 15, the U.S. Court of Appeals for the First Circuit vacated ruling by Judge Richard Stearns of the District of Massachusetts that HHS violated the constitution’s establishment clause. Stearns had granted a summary judgment motion brought by the American Civil Liberties, ruling that the case wasn’t moot because “[t]here is simply no ‘absolute’ assurance that the challenged action will not be repeated.”

But the First Circuit panel unanimously found the case moot because the agency’s grant to the U.S. Conference of Catholic Bishops has expired and the agency’s new grants have different terms.

The First Circuit issued the combined ruling in two appeals: American Civil Liberties Union v. U.S. Conference of Catholic Bishops and American Civil Liberties Union v. Sebelius.

HHS tapped the Bishops’ conference to administer the trafficking aid grant from April 2006 to October 2011. The contract allowed the Bishops’ conference to greatly restrict subcontractors from using the money for abortions or contraception or to refer clients for those services.

The ACLU filed its lawsuit in January 2009, and Stearns granted its summary judgment motion in March 2012. The defendants appealed, and the First Circuit heard oral arguments last month.

Chief Judge Sandra Lynch wrote the opinion, joined by Judge Juan Torruella and Senior Judge Joseph DiClerico Jr. of the District of New Hampshire, who sat by designation.

Lynch first referenced HHS’ current grants to three different organizations, writing that they indicate “a ‘strong preference’ for organizations willing to provide abortion and contraceptive services.”

She concluded that the case is moot because there’s no live controversy and the court cannot provide meaningful relief. Specifically, she rejected the voluntary-cessation exception to the mootness doctrine because the agency did not end the contract to avoid litigation.

She also rejected the “capable of repetition, yet evading review” exception, despite the ACLU’s failure to properly raise the issue on appeal, noting, “The…contract has expired, the terms for [the] grants have changed, and [the agency] has committed itself for the next three years to new grants that fund the full range of legally permissible abortion and contraceptive services.”

In a press release, Brigitte Amiri, senior staff attorney with the ACLU Reproductive Freedom Project, said that the ACLU would have preferred that the First Circuit confirm Stearns’ ruling that the government violated the Constitution. But Amiri, who argued for the ACLU, said that her organization’s challenge is still a victory for victims of human trafficking and for religious liberty: “As a result of this case, the government stopped funneling taxpayer money from this program through the Catholic Bishops, who for years had denied medical services to victims of human trafficking based on purely religious grounds.”

Henry Dinger, a Boston litigation partner at Goodwin Procter who argued for the Bishops’ organization, referred questions to his client.

In an email, Bishops’ conference spokeswoman Sister Mary Ann Walsh said, “The good news out of this for us is that the original decision, which was terrible, is vacated, and so has no precedential effect whatsoever, not even as persuasive authority.”She noted that the organization won “on limited grounds that didn’t decide the core issue whether the conscience clause” of the contract violated the establishment clause.

Justice Department spokesman Charles Miller said the department has no comment.

Lowell Sturgill Jr., an appellate lawyer in the Justice Department’s Civil Division, argued for the government.

Sheri Qualters can be contacted at squalters@alm.com.