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The Salvation Army is not a state actor and cannot be sued for religious discrimination in hiring even though it receives government funding to administer social services, a federal judge has ruled. Southern District Judge Sidney Stein, in Lown v. The Salvation Army, 04 Civ. 1562, also held that discrimination alleged against the Salvation Army cannot be attributed to the government agencies that contract with the organization. But in a victory for former and current Salvation Army employees represented by the New York Civil Liberties Union, Stein refused to dismiss claims against New York City’s Administration for Children’s Services alleging that the relationship between the agency and the Salvation Army violates the Establishment Clause. And the judge said the Salvation Army could be sued under the laws of New York state and New York City for allegedly retaliating against two employees for pursuing their discrimination claims. The plaintiffs are 18 former or current employees of the Salvation Army who rebelled against a campaign by the organization to make its staff members comply with its religious mission. The Greater New York Division of the Eastern Territory of the Salvation Army administers an array of social services in New York City and several nearby counties, including placing children in foster and group homes, services for children with disabilities, HIV services and adult placement in group homes and boarding homes. It administers these programs through two organizations, Social Services for Children (SSC) and Social Services for Families and Adults (SSFA). Ninety percent of the clients serviced by the Salvation Army are referred by government agencies. SSC gets more than 95 percent of its $50 million annual budget from government contracts and is subject to considerable government oversight. In late 2003 and early 2004, the Salvation Army launched a reorganization plan intended to refocus the church as a “Christian Movement with a Social Service Program.” Part of the plan, meant to advance the “One Army Concept” in which the Salvationist spirit would be promoted in the delivery of social services, was to increase the number of Christians who worked for the organization. Employees allegedly were required to fill out a form acknowledging they received the Employee Manual — a form that stated “I understand the Salvation Army’s status as a church and I agree I will do nothing as an employee of the Salvation Army to undermine its religious mission.” Some employees were also required to sign a “Work with Minors Form,” obligating them to conduct themselves in their work “with children in a way that is consistent with the religious and charitable principles of The Salvation Army.” The initial language in the form required employees to identify their present church and minister, as well as other churches they attended during the last 10 years. Some employees and supervisors refused to follow the policies or force others to sign the Work with Minors Form. They claim they were disciplined, demoted, and, in one case, fired for their actions. Other allegations concerned tension between the Salvation Army’s religious indoctrination of social services recipients and social workers hired by the church who felt the religious emphasis was compromising their own mission. ESTABLISHMENT CLAUSE Stein addressed the government’s motion to dismiss first, finding the complaint lacked any allegation that the government defendants’ “respective decisions to fund SSC programs ran afoul of the Equal Protection Clause.” “Plaintiffs never allege that the government defendants expressly classified on the basis of religion, intended to discriminate, nor possessed animus in the execution of the contracts at issue,” and, in fact, “the contracts at issue existed before the Salvation Army initiated the Reorganization Plan and they included provisions that the Salvation Army not engage in unlawful employment discrimination.” On the Establishment Clause claim, Stein found the plaintiffs had standing to sue as taxpayers challenging the fact that 10 percent — “the traditional religious tithe” — of the face value of the SSC government contracts was diverted to the Salvation Army, allegedly to be used for religious purposes. And the judge went on to find the complaint stated a claim that could go forward for discovery because there was a “reasonable inference” that government funds were used to enforce SSC’s compliance with the Reorganization Plan and “that the Salvation Army may be using government funds to support indoctrination of clients who the government defendants compel to participate in SSC programs.” Turning to the claims against the Salvation Army, Stein said the organization was a “private entity” that could not be found liable unless there were facts showing it was engaged in state action. But the plaintiffs, Stein said, “never allude to any state actor participating in the Salvation Army’s allegedly discriminatory practices.” And the plaintiffs had not, he said, offered enough facts to support a finding of “pervasive entwinement” between the Salvation Army and the government. EMPLOYMENT DISCRIMINATION Stein had a different opinion on the plaintiffs’ employment discrimination claims. The Salvation Army claimed it was exempted from antidiscrimination laws by specific statutory exceptions, and he agreed that “the broad language of the federal exception bars all” of plaintiffs’ claims under Title VII, which normally bars religious discrimination but “does not apply to religious organizations discriminating on religious grounds in employment.” Similarly, “the narrower language of the state and city exceptions precludes plaintiffs’ discrimination claims,” he said. But they do not bar the state and city claims for retaliation brought by former executives of SSC who claim they were “constructively terminated” — forced into resigning — for pursuing the discrimination charges at issue in the case. Beth Haroules of the New York Civil Liberties Union represented the plaintiffs. Kathy Hirata Chin of Cadwalader, Wickersham & Taft represented the Salvation Army. Assistant Attorney General Leonard Cohen represented the state defendants. Assistant Corporation Counsel Jonathan Pines represented the city defendants. William Holst of the Suffolk County Law Department represented Suffolk County. Deputy County Attorney Beth O’Neill represented Nassau County.

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