Lawsuit Alleging that AIG's Use of Sharia-Compliant Financing Violates the Establishment Clause Survives a Motion To Dismiss:

The case in Murray v. Geithner, and here's an excerpt:

A motion brought pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief may be granted tests the legal sufficiency of Plaintiff's claims. The Court must accept as true all factual allegations in the pleadings, and any ambiguities must be resolved in Plaintiff's favor. While this standard is decidedly liberal, it requires more than the bare assertion of legal conclusions. Thus, a plaintiff must make "a showing, rather than a blanket assertion of entitlement to relief" and "[f]actual allegations must be enough to raise a right to relief above the speculative level." ...

The Establishment Clause of the First Amendment provides that "Congress shall make no law respecting an establishment of religion.". The clause has been construed as preventing the government "from enacting laws that have the purpose or effect of advancing or inhibiting religion." The Court examines Establishment Clause challenges under the test delineated in Lemon v. Kurtzman, 403 U.S. 602, 612--13 (1971): "First, the statute must have a secular legislative purpose; second, its principal or primary effect must be one that neither advances nor inhibits religion; finally, the statute must not foster 'an excessive government entanglement with religion.'" Recent Supreme Court decisions have modified the test slightly by "fold[ing] entanglement analysis into the effect analysis because 'entanglement is . . . an aspect of the inquiry into a statute's effect.'" Establishment Clause queries are conducted under the objective reasonable observer standard.

It is beyond question that the EESA [the Emergency Economic Stabilization Act of 2008] does not violate the Establishment Clause on its face. Congress enacted the EESA in response to what the parties portray as a monumental economic crisis for the sole purpose of restoring stability to financial institutions. The statute makes no mention of religion or religious institutions. Instead it focuses entirely on institutions that are primarily, and in most cases entirely, secular. Nothing from the plain text of the statute hints at an improper relationship between the government and religion.

It is the application of the EESA as it relates to AIG, however, that Plaintiff challenges. The Supreme Court has previously permitted as-applied challenges to facially constitutional statutes. ...

The circumstances of this case are historic, and the pressure upon the government to navigate this financial crisis is unfathomable. Times of crisis, however, do not justify departure from the Constitution. In this case, the United States government has a majority interest in AIG. AIG utilizes consolidated financing whereby all funds flow through a single port to support all of its activities, including Sharia-compliant financing. Pursuant to the EESA, the government has injected AIG with tens of billions of dollars, without restricting or tracking how this considerable sum of money is spent. At least two of AIG's subsidiary companies practice Sharia-compliant financing, one of which was unveiled after the influx of government cash. After using the $40 billion from the government to pay down the $85 billion credit facility, the credit facility retained $60 billion in available credit, suggesting that AIG did not use all $40 billion consistent with its press release. Finally, after the government acquired a majority interest in AIG and contributed substantial funds to AIG for operational purposes, the government co-sponsored a forum entitled "Islamic Finance 101." These facts, taken together, raise a question of whether the government's involvement with AIG has created the effect of promoting religion and sufficiently raise Plaintiff's claim beyond the speculative level, warranting dismissal inappropriate at this stage in the proceedings.

I'm surprised that the court has allowed the case to go forward, for reasons I described when the case was filed. At the same time, I continue to expect that the case will be thrown out, either on summary judgment or on appeal, for those very reasons. As I noted earlier, the theory is apparently that the government may not invest in any company that, in part of its operations, provides products that are tailored to a particular religious faith, and that may be accompanied by donations to religious charities. But lots of companies do this, for the simple reason that religious consumers have their religious tastes such as consumers have other ethical or esthetic tastes.

For instance, a food processing company might have a division that produces kosher products and donates some money to Jewish-specific charities (as a way of better wooing Jewish buyers). An investment company might seek to attract conservative Christian investors by offering a fund that doesn't invest in (say) hospital chains that perform abortions, and by donating some share of its profits to religious causes. Other companies might provide funds that don't invest in munitions manufacturers, to satisfy the desires of Quaker investors. A store might sell, among other products, religiously significant garments or religious symbols. A bookstore might sell religious books alongside other books.

Under the plaintiffs' theory, either Islam is subject to special constitutional constraints, or — once that constitutionally forbidden legal rule is rejected — all of these companies would somehow be forbidden as targets of government investments. The government couldn't bail them out. It presumably couldn't invest public employee retirement funds in them. It couldn't sell religious books alongside other books in public university bookstores, or serve kosher food alongside other food in public university cafeterias.

Likewise, a state-run liquor store wouldn't be able to stock kosher wine. (Visit this site, search for "kosher," and you'll see how much kosher wine the apparently Establishment-Clause-violating New Hampshire State Liquor Commission does indeed sell.) That's plainly wrong, under any sound theory of the Establishment Clause, or even under the broadest theories suggested by Justice Brennan and other Establishment Clause maximalists. (UPDATE: A state-run liquor store might be more restricted than a state-bailed-out company; for instance, it might not be able to make donations to religious causes, even to attract Jewish customers. But it would at the least be able to buy kosher wines, even from companies that themselves donate part of the proceeds to religious causes. And I think the state should be free to invest pension funds -- or bailout funds -- in a privately-owned liquor store that donates to religious causes as a means of attracting religious customers.)

The government investment decisions don't have a "primary religious purpose," because the obvious purpose is to prop up important companies — and have them continue making as much money as possible — and not to advance Islam. The government no more cares about advancing Sharia through the AIG bailout than my local Ralphs supermarket (or the New Hampshire State Liquor Commission) cares about advancing kosher laws by selling products that are certified kosher. The "primary religious effect" inquiry has always been extremely vague, but none of the precedents applying that inquiry would treat the continued provision by AIG of products that some religious customers like as a "primary religious effect."

The "endorsement" argument doesn't make sense here, because reasonable observers wouldn't treat the government's decision to bail out AIG, including its subdivision that sells financial products that Muslims prefer for religious reasons, as an endorsement of Islam. Again, the "endorsement" test is quite vague, but this is a pretty clear example: Making money by satisfying some customers' religious preferences (and lots of other customers' nonreligious preferences) isn't an endorsement of religion. Nor does the allegation that some of the money that is raised is donated to Muslim charities affect the analysis. That donating money to religious charities is good business for AIG doesn't make it impermissible for the government — which after all wants AIG to make as much money as possible, so the government isn't left paying the bill — to invest in AIG.

The only even theoretically plausible objection in such cases, I think, arises if the government becomes too entangled in the religious decisions of the company, for instance if government officials end up supervising the programs and deciding what Sharia law truly requires, or what really is or isn't kosher. But on the facts this just doesn't seem to be so: The operational decisions related to these religiously themed products and programs are made by the company (or perhaps even by the company's subcontractors), not by government officials. There seems to be no danger that some government officer would have to engage in quintessentially religious activities. And it is government decisionmaking, not government stock ownership, that triggers the Establishment Clause, which is one reason that government employee retirement plans can invest in companies without making them state actors governed by the Free Speech Clause, the Establishment Clause, the Due Process Clause, and so on. (This distinguishes the hypothetical of a government-chartered school, which remains a government actor, engaging in religious education.)

It's not exactly clear from the court's opinion what sort of facts the judge envisions might be enough to prove an Establishment Clause violation. If the judge believes that there'd be an Establishment Clause violation simply if it were proven at trial that government money is flowing to "Sharia-compliant financing," or that the government is cosponsoring an "Islamic Finance 101" forum, then the plaintiffs will win — but they shouldn't, and I'm pretty confident that such a decision would be reversed on appeal. Such catering to consumer preferences is no more an Establishment Clause violation than a state-owned liquor store's stocking kosher wine in order to satisfy its kosher-observing customers, plus educating its employees and contractors on which wines kosher-observing customers prefer.

On the other hand, perhaps the judge is waiting to see whether there's evidence of some other alleged misbehavior — maybe what I mentioned in the paragraph beginning "The only even theoretically plausible objection" (though again it's hard to tell, because the opinion is so terse on the subject). In that case, I'd expect that absent evidence of some such misbehavior, the case will be thrown out on summary judgment, as I think it should be.

Related Posts (on one page):

  1. Lawsuit Alleging that AIG's Use of Sharia-Compliant Financing Violates the Establishment Clause Survives a Motion To Dismiss:
  2. Bad Lawsuit from the Thomas More Law Center:
Sasha Volokh (mail) (www):
But I take it that the government couldn't run a liquor store that donated to Jewish causes -- and similarly, if it nationalized a liquor store that made such donations, couldn't continue such donations -- even if the purpose of the donations was just to woo Jewish customers?
5.27.2009 7:06pm
Eugene Volokh (www):
Sasha: Good point; the analogy isn't perfect in that respect, and I added an in-line update to reflect my thinking on the subject.
5.27.2009 7:11pm
What counts as "the government" for this purposes? I would be shocked if there were no public pension funds in any of the States with any AIG stock, for instance, but do those count as government?
5.27.2009 7:15pm

But I take it that the government couldn't run a liquor store that donated to Jewish causes -- and similarly, if it nationalized a liquor store that made such donations, couldn't continue such donations -- even if the purpose of the donations was just to woo Jewish customers?

So it needs to exclude religious causes? I assume there's some model: If we donate to X type of organization, we get Y number of new customers. Does it have to add, but first we make sure X is not a religious organization?

Just goes to show the problems with nationalizing private organizations.
5.27.2009 7:15pm
Which just goes to show the problems with the type of reckless (de)regulation that preceded the expected/threatened/feared meltdown of our financial system.
5.27.2009 7:22pm
Bill Poser (mail) (www):

Just goes to show the problems with nationalizing private organizations.

Yes, but the private organizations that are typically nationalized are ones that shouldn't need to engage in that sort of promotion since they are either monopolies or only attempting to recover the cost of the service that they provide. Problems only arise if the government nationalizes ordinary for-profit organizations and does not nationalize all such organizations in the same market.
5.27.2009 7:23pm
ChrisTS (mail):
God, I adore Arthur K.
5.27.2009 7:42pm

Which just goes to show the problems with the type of reckless (de)regulation that preceded the expected/threatened/feared meltdown of our financial system.

I agree. If only there were some pre-requisite for de-regulation, we could eliminated it and make de-regulation impossible!!
5.27.2009 7:44pm
SANE (mail):
Eugene is not being fair to all of you. Read our response to his "analogies" here and here and then "bring it on"!
5.27.2009 8:03pm
Bruce Hayden (mail):
The problem, as I see it, is that the U.S. has effectively taken over the company, and as a result, it has become a quasi-government agency. Thus, instead of the government giving or loaning money to a company and the company doing something with it, we essentially have the government as the actor doing something with the money, and that includes the Sharia lending and classes thereof. Add to this that one of the requirements of Sharia lending is apparently giving to Islamic charities, and you have the government contributing to such.

One additional question though that was not covered in the decision is what exactly is Sharia lending? Does it include a prohibition on interest? As I understand it, it should. And if it did, then lending without charging interest (or giving that "interest" to Islamic charities) would seem to be spending government money to support Islamic causes, esp. if the money could instead be loaned to non-Islamic borrowers from whom interest could be charged, to replay the taxpayers for the loan to AIG.
5.27.2009 8:11pm

Eugene is not being fair to all of you. Read our response to his "analogies" here and here and then "bring it on"!

Gosh, you guys sure don't like Moslems over at your site, do you? Neat acronym, btw, SANE = Society of Americans for National Existence. Gotta admire your mission statement, too. It's too long to quote fully, but the first paragraph should give everyone the flavor:

The Society of Americans for National Existence or SANE is what its name declares: a society of sane Americans dedicated to preserving and strengthening America's national existence. By national existence we mean what you normally mean when speaking of such matters. America is a unique people bound together through a commitment to America's Judeo-Christian moral foundation and to an enduring faith and trust in G-d and in His Providence. America's founding, and its greatness was neither accident nor staging ground for some better existence or world state. America was the handiwork of faithful Christians, mostly men, and almost entirely white [your emphasis], who ventured from Europe to create a nation in their image of a country existing as free men under G-d. This constellation of forces existed no where else in the world and resulted in a unique people and nation.

5.27.2009 8:22pm
SANE (mail):
Bruce: you are exactly right on the first point.

On the second point. SCF (Shariah compliant finance) does have a prohibition on interest but it is simply by-passed with nominate contracts. However, there is an interesting twist that your point raises. Per Shariah, AIG cannot take its "takaful" (Shariah insurance) proceeds and just invest in any ol' company. When they invest in their mutual funds, the Shariah authorities must also check each company in the investment fund to be sure they don't pay or receive too much income from interest (since those companies themselves are not SCF per se and will not use these SCF nominate contracts), or sell pork or alcohol. But if one of its companies in the fund buys out a company that violates Shariah, AIG at the order of their Shariah authorities must sell that company and "purify" the proceeds by giving it to charity. But Shariah obligates that charity be paid to ONLY a Muslim Shariah compliant charity.

Another interesting twist is that AIG per Shariah cannot invest its proceeds in Western military companies. But, it most certainly can, and it is preferential, to invest those proceeds in the military industries of Muslim armies. Not directly relevant to our issue but telling nonetheless.
5.27.2009 8:23pm
SANE (mail):
Ah, the tried and true argument by what exactly, Arkady. There was a link by the "white" not an emphasis and if you followed it you'd understand that there is a point to that.

That by the by is an historical statement of fact. If you wish to make an argument, make one. If you wish to dismiss or marginalize by suggesting some dark undertones at SANE, that is also your perogative. But argument, at least reasoned argument, it is not.
5.27.2009 8:28pm
mga2 (mail):
Eugene, this is a perfect illustration why you should both know about and care about federal pleading requirements in such cases as Twombly and Iqbal. Those requirements dictate what a plaintiff has to plead to get past a motion to dismiss.
5.27.2009 8:28pm
SANE (mail):
Ah, and by the by, we have many many Muslim members and friends of SANE. We have even provided pro bono legal assistance to Muslims seeking asylum. Our Muslim friends know what Shariah is. They've lived it.
5.27.2009 8:29pm
After reading SANE's founding statement, I can't shake the immortal words of the beloved, wise and smartly attired President Hoover: "[our organization] has a long tradition of existence both to its members and the community at large."

Anybody up for forming a group of SANE supporters? We could call it I Need the Society of Americans for National Existence. There's nothing like an apt acronym.

For law students in the audience, the brilliant legal advocacy by defense counsel Hoover and Stratton in this famous courtroom presentation is not to be missed.

For extra credit, identify (a) the libertarians, (b) the conservatives, (c) the liberals and (d) the future Republican Supreme Court nominee in the clip.
5.27.2009 9:30pm
To a person in a Moslem culture, islamic finance is simply finance, just as to a Jew in Crown Heights, kosher meat is simply meat, and to a Christian, Sunday is simply the day of rest. A Moslem person might wonder how government could justify investing in companies that close on Sundays. Doesn't that promote the Christian calendar?

Government is perfectly justified in offering days off on Sundays for the convenience of Christians. And for the same reason, it is equally justified in offering financial products reflecting Islamic modes for the convenience of Moslemsor kosher meat for the convenience. Accommodating religion simply does not promote it.

Moreover, government would be justified in basing its view of financial ethics on Moslem ethical principles if it wishes, just as it can require employers to give employees Sundays off it it wants. The idea that charging interest is immoral is simply an ethical principle, just as the idea that there should be a day of rest or racial discrimination is bad or civil institutions like universities or marriages ought to be gender-diverse are ethical principles, right or wrong. Government can adapt whatever ethical principles the people think would serve as the best basis for society withot violating trhe First Amendment, selecting whatever produce and paying whatever price the marketplace of ideas will bear. The fact that some ethical principles happen to come from religions does not make them religious.
5.27.2009 9:33pm
Once again, in these cases, it's very important that the judiciary not get too caught up in protecting its conception of American values from the evil people. It may be that the very people it has convinced itself are the evil people are actually the people who need the protection. The judiciary has to retain enough capacity for neutrality not to completely lose sight of this possibility.

The definition of "religion" has to be the same regardless of whether the group involved is favored or disfavored, majority or minority.
5.27.2009 9:41pm
SANE (mail):
We see that Arthur Kirkland (9:30) belongs to the same school of disputation as Arkady (8:22). There is something refreshing about argumentum ad hominem based upon innuendo.

A little reasoned argument might make our effort at following this comment thread worthwhile.

As for ReaderY (9:33), you've simply glossed over the facts. This is not about "Islamic ethics" or "accomodation". This is about the government promoting Shariah. Now, you may or may not know what that law is, but if you'd like to find out, go to any country that rules its regime by Shariah, oh, let's just pick a few: Saudi Arabia, Iran, Sudan, Somalia, Gaza, N. Nigeria, Aceh Indonesia, large swaths of Afghanistan and NW Pakistan. When you arrive, announce that you are a Muslim and you have converted to Buddhism or Christianity. Watch how ethically the Shariah courts will treat you.

Now, none of that is directly relevant to the Establishment issue. But again, since no one wishes to actually take on the brunt of our argument at this link, we'll bid adieu and leave the Kirklands and the Arkadys to revel in their deep thinking.
5.27.2009 9:51pm
Ricardo (mail):
What if the government told AIG it had to stop providing any Islamic finance services? Could Muslims take the government to court for violating the Religious Freedom Restoration Act? After all, the idea of Islamic finance is it allows Muslims to participate in financial markets in ways that are consistent with their beliefs. Without Islamic finance, devout Muslims are excluded from financial markets.

Isn't the government caught in a bit of a tight spot if this lawsuit proceeds much further?
5.27.2009 10:07pm
Soronel Haetir (mail):

I can see a big difference however between how a transaction is arranged to satisfy customer demand and choice of charity donations in order to attract customers.

I would even argue that it is simply wrong for a government funded entity to make /any/ charitable contributions, no matter what the charity's nature. Such use of taxpayer money strikes me as very shaky.
5.27.2009 10:15pm
Disputation? Argumentum? It is to scoff. I was merely attempting to be humorous, and performing the ever-appropriate function of encouraging people to appreciate the second-highest achievement in American cinema, Animal House.

If we are going to examine a serious angle, when can we expect the lawsuit seeking to invalidate the laws restricting sale of healthful alcohol beverages on Sundays, or the Sundays-only free parking rules, or the law that added "God" in the Pledge of Allegiance?
5.27.2009 10:17pm
one of many:
Richardo, that line might work for Scientology but I am pretty sure that being part of the financial markets is not a religious practice of Muslims. the RFRA only applies to government action which prevents the exercise of religion, not of the exercise of finances.
5.27.2009 10:31pm
Perhaps someone at SANE might ask the Thomas More Law Centerers -- who bolted before the question could be asked -- when they intend to get around to sending a million dollars to the citizens of the Dover Area School District to reimburse Dover for the promised "free" lawsuit.
5.27.2009 10:33pm
Brian K (mail):
Now, none of that is directly relevant to the Establishment issue.

how about first you answer why you haven't sued public schools to stop them from cooking and selling kosher food as a violation of the establishment clause. The analogy is quite apt and this violation has been going on much longer and is much more widespread.

*Yes, I read your links (which were filled with a number of ad hominems btw) and the logic that you used to dismiss this analogy is patently false. Public schools don't just buy pre-packaged complete kosher food. They have to determine what ingredients are kosher first. a good thing to keep in mind is that not everything that is kosher is marked as such and almost nothing that is not kosher is marked as such. and your ridiculous analysis completely ignores the fact that the food must also be prepared in a kosher fashion.
5.28.2009 12:20am
J.T. Wenting (mail):
The establishment clause doesn't bar the government from doing anything religious, it only bars the government from forcing any specific religion on people (and implicitly MAYBE from banning specific religions).
Investing money in or even running outright a commercial operation that targets as customers specific religious groups would IMO not do that, certainly not as long as other religious groups are not explicitly excluded as customers (if I want to buy kosher wine because I like the taste, who'd stop me?).

Similarly a strict reading would not prevent the government from donating money to religious groups, nor from running bible classes in schools, as long as it doesn't mandata participation in those groups or classes from the citizenry.

Of course all those restrictions apply to the federal government only, unless the establishment clause was forced on the states under the 14th ammendment in which case it'd automatically be state law as well.
5.28.2009 3:24am
David Schwartz (mail):
how about first you answer why you haven't sued public schools to stop them from cooking and selling kosher food as a violation of the establishment clause. The analogy is quite apt and this violation has been going on much longer and is much more widespread.
There are a lot of differences:

1) Public schools have a captive audience. The children who go to them have a limited choice of eating options. So it's not like private religious or non-government groups could realistically provide this same service.

2) There's a huge question of degree. For example, what if providing kosher food required the government employees to receive religious trainings and certifications? What if they had to pick particular rabbis to perform the inspections? What if those rabbis were government employees? What if keeping their kosher certification required that they make certain religious statements and refrain from making other religious statements?

3) Closely analogous functions *have* been complained about, and justifiably so. For example, a government-run Christian bookstore on a military base (where government employees on government time hawked religious texts) was widely criticized, and justifiably so.
5.28.2009 5:40am
SANE (mail):
Brian K (12:20am): no, there were no ad hominem attacks. What we did first was to analyze Eugene's cavalier, results-oriented, and visceral approach to legal analysis. We also carefully analyzed his language to explain in part his poor analysis.

Then, we carefully picked apart his "analogies".

Public schools offering kosher lunches in our view is problematic from a FA POV, but leaving that aside, that is simply not analogous because the lunches are never prepared by the school in a "kosher kitchen" with some orthodox sect providing "supervision". They are pre-packaged. We still believe offering "pre-packaged" kosher meals is problematic as we said because the gov't has to decide which rabbis are "orthodox" or "jewish" enough to put their 'hechsher' or stamp of approval on the lunches.

The case of AIG is more akin to the takeover of a network of private schools on the verge of BK, some of which are Catholic parochial schools. I would like to hear from EV if he would find this case, which we raised in our rebuttal piece, compliant with today's jurisprudence.

Finally, the fact that something occurs today and whether it is complained about does not suggest constitutionality. Many old and "accepted" practices have been challenged and then held unconstitutional. That is typically how the law moves so jaggedly. Because FA jurisprudence and especially the absurd Lemon Test is so convoluted and results-oriented, until the Court rules, it is hardly obvious how it will rule and of course much of this depends on the precise balance on the Court. When EV pontificates on how something is quite obviously "not what the rule was meant to apply to", he is exercising the perogatives of an academic who wishes it to be that way because it fits his understanding or "scholarship". He has a vested interest to support his "legal analysis" as published in law reviews or this blog. If you look at how the distr cts and the circuits rule on FA and then how the Court rules, especially as the delicate right-left balance on the Court shifts, you see that his statements such as "no sensible" or "shockingly broad" are euphemisms for, "no sensible person would or should disagree with me-EV" or "this shocks me-EV". So it is, he must believe that the court in Murray v Geitner was "shockingly" wrong. Fine. And, then when on cert, assuming it goes that far, when the Court splits 5-4 or 6-3, what then? The 4 or 3 justices were also shockingly wrong?
5.28.2009 9:30am
Presumably a government-run cafeteria will provide kosher food even to gentiles; but I suspect that if it tried to restrict kosher food to Jews, there'd be a problem - possibly not Establishment Clause, but certainly Fourteenth Amendment. Likewise, loans under Sharia law may not be a problem if the lender does business with all comers but I'm not sure that 'all comers' is compatible with Sharia law. Certainly, the restriction on giving only to Moslem charities is a problem.
5.28.2009 9:46am
PatHMV (mail) (www):
I agree that the case should be dismissed, but I'm actually excited it's made it this far. Government ownership of institutions like AIG is a terrible idea, and fraught with potential problems. While the merits of this case are, I think, on the side of AIG, in other cases they will not be. There are many Constitutional limitations on government action which do not normally apply to private actors. That will inevitably make government-owned businesses less flexible and less able to compete.

Granted, I say this in part because I want every institution which accepted federal funds to fail massively, so that we never try such a god-forsaken experiment again.
5.28.2009 10:01am
PatHMV (mail) (www):
Oh, and SANE, you might get more traction in your complaints about ad hominem attacks if your responses to them focused more on the merits of your case and less on returning the ad hominems and ranting about the terrible "elite" professors.

Investment companies offer all sorts of funds, aimed at people who prefer to invest to please their consciences rather than their pocketbooks. You can invest in "green" funds, you can invest in "healthy" funds (no fast foods!), you can invest in sin-free funds that eschew stocks of any company making tobacco or alcohol products. So the Sharia-compliant funds have a set of conditions to meet the preferences of those borrowers and investors. So what? There are "Christian" investment funds, too. Is your position that AIG must analyze each of the funds it offers to ensure that they are not religious-based, and must prohibit its customers from investing in such funds?
5.28.2009 10:14am
SANE (mail):
To PatHMV (10:14am)

On returning ad hominem, point taken but we're only so thick-skinned.

On whether private companies can offer such religious or ethical products and services, of course so. The question is what happens when the gov't owns and controls the company such that the company's actions are state action.

This is not as EV argues applicable to his two main analogies:

[1] passive pension fund like investement in a company that happens to offer such religious products. Passive investment funds are by definition "passive" and often made through a fund of funds and certainly not a controlling interest. The USG's investment in AIG includes not merely 80% ownership, but actual control through voting rights and a whole host of collateralized agreements. AIG is a state company and its actions are state action. If that is not true, we'd like to know what "state action" means beyond an actual act by gov't agency.

[2] gov't owning a company like the state liquor store or even a public school and offering packaged religious products. while we don't agree that this is obviously not a problem, this is certainly not the case we have here. The kosher food service requires nothing beyond buying wholesale and selling retail an item as any other item. But, what if the gov't cafeteria opened up a whole kosher kitchen, hired rabbinical supervisors from just the Satmer Chassidic brand of orthodoxy, with milk and meat divisions, etc. Several courts have already ruled that enforcing state kosher laws by choosing one brand of judaism (orthodoxy ver conservative) is unconst'l. Similarly but even more egregiously, SCF re insurance products per AIG requires the employment of a Shariah advisory board consisting of Shariah authorities; requires these employees to then decide how to structure the products to make the shariah compliant, to decide which companies can be invested in, where to pay its zakat (charity) and "purification" monies. This means the USG via AIG (they are one and the same) is involved in not merely promoting actively Shariah-Islam but making intricate decisions about which interpretation of Islam they will promote.

Now, again, as a private company, no big deal as long as they are satisfying full disclosure of all material facts (see here). But as a state owned and operated company, this is most certainly a promotion of one religion and one version of that religion.

So, the answer is, yes, any state owned and operated company is forbidden to engage in the promotion of or investment in a particular religious viewpoint.
5.28.2009 10:54am
(if I want to buy kosher wine because I like the taste, who'd stop me?).

Wine snobs?
5.28.2009 12:27pm
Anthony A (mail):
one of which was unveiled after the influx of government cash

I think this alone should be sufficient to defeat a motion for dismissal. If the government takes temporary stewardship of a company, prior to returning it to private ownership, allowing the company to maintain existing programs which might "promote" religion doesn't seem too constitutionally fraught (though if it becomes evident that AIG is to remain a part of the government for the long run, a re-examination would be in order), any more than allowing a company to continue to offer kosher certification services while under the supervision of the bankruptcy court.

However, beginning an activity which would be barred to a government actor while AIG is under government direction, should be examined by the courts.
5.28.2009 6:44pm
David M. Nieporent (www):
So it is, he must believe that the court in Murray v Geitner was "shockingly" wrong. Fine. And, then when on cert, assuming it goes that far, when the Court splits 5-4 or 6-3, what then? The 4 or 3 justices were also shockingly wrong?
You seem to be under the mistaken belief that your view actually prevailed in the case, when all it did was survive a motion to dismiss. The court didn't rule that Sharia compliant financing was a violation of anything.
5.30.2009 1:23am
SANE (mail):
Re David M. Nieporent (1:23 am 5-30):

No, we're under so such mistaken belief. If you read EV's posts and our posts which include other links, EV and most other academics were convinced the complaint was not worthy of even this level of recognition.

This case will almost likely go up to the Ct of Appeals, so it will be tested yet again.

Finally, if the USG does not appeal or if Murray wins there, it will go into discovery where plaintiff's counsel will seek to establish several important facts. We won't here go into specifics since we have inside information and we'd hate to tip off the other side.
5.30.2009 10:14pm

Two comments.

First - I think you may be looking at this the wrong way. Essentially these law professors - unanimous in their opinion that there was no way this lawsuit could survive a motion to dismiss - didn't count on you doing such a good job. In other words: you dun gud! If these professors had taken it, they would have lost. But you won (at least this round). Good Job!

Simply put, you are a better lawyer than Mr. Volokh.

If I were you, I would revel in the admission against interest that you are a better lawyer than this gaggle of liberal and "libertarian" law professors that scoffed at the case. Shor 'nuf.

Second - a lot of red herrings are being thrown up in these comments. But one deserves attention. Fact is there are NO public schools serving Kosher food. It simply doesn't happen. If only because there is no mass amount of Jews who are shomer kashrus that attend public school. So can we please stop with this analogy which is not true?
5.31.2009 1:37pm

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