The US Court of Appeals for the Fifth Circuit, with jurisdiction over the states of Texas, Louisiana and Mississippi, ruled on June 20 that a Texas company whose owner has religious objections to Equal Employment Opportunity Commission (EEOC) guidance about the federal non-discrimination rights of LGBTQ applicants and employees under Title VII of the Civil Rights Act of 1964 is entitled to a statutory exemption under the federal Religious Freedom Restoration Act (RFRA), as protection from EEOC enforcement activity (investigations and lawsuits) on behalf of such individuals.
The ruling in Braidwood Management Inc. v EEOC affirmed part of a decision by US District Judge Reed O’Connor, while reversing some other parts in a way that significantly narrowed the scope of Judge O’Connor’s ruling, particularly by vacating his certification of the case as a class action. Thus, the Fifth Circuit approves a religious exemption only for three businesses owned by Braidwood Management, which employs approximately 70 individuals. Under Judge O’Connor’s class certification ruling, the EEOC would have been barred from enforcement activity against any employer in the country holding religious objections to employing LGBTQ people, despite the Supreme Court’s determination in 2020 that employers subject to Title VII may not discriminate because of sexual orientation or transgender status. The appeals court found that the description of the plaintiff classes that Judge O’Connor had certified was too broad, subjective, and vague, and needed to be reconsidered by the trial court.
Despite this limitation, however, the ruling establishes a precedent for the federal district courts within the Fifth Circuit, and might be cited as a persuasive precedent by other federal courts in cases brought by the EEOC against other employers with religious objections.
In his opinion for the three-judge Fifth Circuit panel, Circuit Judge Jerry E. Smith observed that the Supreme Court’s 2020 ruling in Bostock v. Clayton County, which held that claims of employment discrimination because of sexual orientation and transgender status could be covered as sex discrimination claims under Title VII, had not directly addressed how the Supreme Court’s ruling would affect employers with religious objections. As a result, wrote Judge Smith, the question of reconciling religious free exercise claims by employers with the non-discrimination rights of employees were “issues of first impression” for the court of appeals.
In Bostock, Supreme Court Justice Neil Gorsuch identified “three potential avenues of legal recourse for religious and faith-based employers to shield themselves from any potential infringement of their religious rights,” wrote Judge Smith. These “avenues” are Title VII’s “religious exception,” the “ministerial exception” developed by the Supreme Court under the First Amendment’s Free Exercise Clause, and RFRA, which Gorsuch characterizes as a “super statute” that may supersede the requirements of other federal statutes “in appropriate cases” by limiting the enforcement power of the federal government. Justice Gorsuch did not identify what would be “appropriate cases.”
The express “religious exception” in Title VII appears rather narrow. It says that a religious institution may refer co-religionists in its employment practices, thus carving out an exception to Title VII’s ban on employment discrimination because of an individual’s religion. The First Amendment “ministerial exception,” not mentioned in the constitution but developed by the Supreme Court as an “interpretation,” shields religious institutional employers from any Title VII liability regarding individuals who can be considered “ministerial employees,” those employed specifically to advance the religious mission of the institution. The Supreme Court has interpreted this broadly in recent years.
Finally, RFRA states that the federal government may not impose a substantial burden on a person’s free exercise of religion unless the government has a compelling purpose for doing so and uses the least intrusive method of achieving that purpose. The Supreme Court has yet to announce whether RFRA applies to private litigation between individual plaintiffs and employers, but most federal courts have interpreted the language to apply only to enforcement activity (including lawsuits) by the government. In the context of the Braidwood case, issuing a guidance that fails to account for religious objects is considered by the Fifth Circuit panel to be such a “substantial” burden, since it could “chill” an employer from enforcing its protected religiously-based policies.
After the Supreme Court decided the Bostock case, the EEOC issued a “guidance” document spelling out employers’ non-discrimination obligations regarding sexual orientation and gender identity under Title VII. Braidwood Management and Bear Creek Bible Church filed their lawsuit claiming to be exempt from the Title VII requirements spelled out in the EEOC’s guidance because of their religious beliefs. Steven Hotze, who owns Braidwood, claims that he runs its businesses as “Christian” businesses, in conformity with his religious beliefs. According to Judge Smith’s summary of the complaint, Hotze “does not permit Braidwood to employ individuals who engage in behavior he considers sexually immoral or gender non-conforming, nor does he allow Braidwood to recognize homosexual marriage,” which he says would “lend approval to homosexual behavior and make him complicit in sin.” Bear Creek Bible Church, a non-denominational church with both ministerial and non-ministerial employees, claims exemption from Title VII for similar policies.
Judge O’Connor dismissed Bear Creek as a plaintiff from the case, concluding that it was already immune from EEOC action under the “religious exception” and the “ministerial exception.” This was an overly broad reading of the “religious exception,” and the “ministerial exception” does not extend to Bear Creek’s non-ministerial employees, but the Fifth Circuit affirmed the dismissal nonetheless, leaving only Braidwood as plaintiff. Although Hotze says he runs “Christian businesses,” and they are referred to as such by O’Connor in his opinion, these are for-profit businesses, not religious institutions, so neither the “religious exception” to Title VII nor the “ministerial exception” applies to them. Braidwood’s claim turns on RFRA in the court’s analysis.
The Fifth Circuit panel agreed with Judge O’Connor that the EEOC failed to show a compelling interest here, characterizing the issue — as it had been characterized by the Supreme Court last term in Fulton v. City of Philadelphia — as whether the government had a compelling reason to deny Braidwood an exemption from complying with the non-discrimination requirement under Title VII. Judge O’Connor found that because Title VII has various significant exceptions — for example, it does not apply to employers with fewer than 15 employees, it has a religious exception, and it shields employers for discrimination liability when religion or sex are “bona fide occupational qualifications” — the government does not have a policy of applying the non-discrimination obligation to all employers in all cases, so why not recognize an exemption for a “religious” business such as Hotze’s?
This, of course, sends a signal to employers that if they can credibly allege religious objections to complying with the Bostock decision, they have a free way out from the non-discrimination requirement in Title VII regarding LGBTQ people. The danger of this is enlarged by the Supreme Court’s practice of declining to inquire into the sincerity of an employer’s religious beliefs; they are presumed to be sincerely held if the employer is asserting them as a defense to a discrimination claim.
Interestingly, Braidwood admitted in its complaint that it has not knowingly employed any LGBTQ individuals, and that none of the issues it raises as presenting burdens on its religious beliefs has actually arisen in its businesses. None of its employees have asked for spousal benefits for same-sex spouses, it has not had transgender employees who have refused to comply with its traditionally-gendered dress code for employees, and none of its employees have tried to use restrooms inconsistent with their so-called “biological sex.” Nobody has filed a Title VII claim against its businesses with the EEOC, and it has not been threatened with any EEOC investigation and enforcement actions. So, one might ask, why can Braidwood file this kind of declaratory judgment action when the Supreme Court has banned “advisory opinions” by federal courts? The Supreme Court’s “standing requirement,” nowhere actually mentioned in the Constitution but devised as an interpretation of the proviso that the courts have jurisdiction over “cases and controversies,” requires a plaintiff to show that the challenged federal policy injures the plaintiff.
The answer that satisfied Judge O’Connor and to which Judge Smith devoted a large share of his opinion is that the EEOC has been active in bringing lawsuits on behalf of LGBTQ individuals, and its guidance document shows it is serious about using the Bostock decision to combat anti-LGBTQ discrimination as part of the agency’s mission. The court specifically points to the Harris Funeral Homes case that eventually became part of the Bostock decision, where the owner cited his religious beliefs in firing a funeral director who announced she was transitioning and would henceforth dress as a woman. The EEOC brought suit on behalf of the discharged employee, lost in the district court, but won in the Sixth Circuit Court of Appeals, whose decision was affirmed in the Bostock decision. The employer raised a RFRA defense in that case, and RFRA was clearly applicable under Sixth Circuit rules because the EEOC brought the lawsuit, but the Sixth Circuit ruled against the employer’s RFRA defense, and the employer did not appeal that part of the Sixth Circuit’s ruling to the Supreme Court.
Because of the Harris Funeral Homes case, the Fifth Circuit concluded, Braidwood could claim a real threat of future prosecution, since it admitted that its employment policies regarding LGBTQ people clearly violate Title VII as described in the EEOC guidance. Thus, said the court, this is not an “advisory opinion” because Braidwood intends to continue enforcing policies that violate the EEOC guidance and could lead to enforcement activity by the agency.
Although the Fifth Circuit vacated Judge O’Connor’s class certifications, limiting the injunctive relief to Braidwood, it sent the case back to O’Connor for reconsideration of the class descriptions, so it is still possible that O’Connor might devise a narrower, more objective class description in an attempt to make his ruling more broadly applicable to “religious” businesses besides Braidwood.
Braidwood is represented by Jonathan F. Mitchell and Gene Patrick Hamilton of America First Legal Foundation, a law firm set up by alumni of the Trump Administration to pursue the MAGA agenda in the federal courts. The US Department of Justice represents the EEOC.
District Judge O’Connor was appointed by President George W. Bush. Circuit Judge Jerry Smith was appointed by President Ronald W. Reagan. Both are known as among the country’s most conservative federal judges.