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Black United Fund of New Jersey Inc. v. Kean

May 24, 1985


Appeal from the United States District Court for the District of New Jersey, D.C. Civil No. 84-3565.

Author: Weis


WEIS, Circuit Judge.

Since 1955, a New Jersey statute has permitted voluntary contributions to the United Way and its predecessors to be deducted from the salaries of state and local governmental employees. Concluding that the state impermissibly excluded other charitable organizations, such as plaintiff Black United Fund, the district court directed that plaintiff be given immediate access to the solicitation and withholding process. One month later a new Act came into effect repealing the 1955 statute and substantially enlarging the criteria for participation by charitable groups in the campaigning and withholding procedures. Because the new legislation altered the basis on which the district court acted, we reverse the grant of the preliminary injunction.

After its requests for gubernatorial permission to solicit charitable contributions from state employees under the 1955 statute were denied, plaintiff resorted to the United States District Court. Its complaint alleged that the provision allowing payroll deductions for the United Way was unconstitutional and asked for injunctive relief.

The district court agreed that the 1955 statute was unconstitutional and, on October 4, 1984, issued a preliminary injunction barring solicitation of state employees. The order granting relief, however, was stayed to give the state an opportunity to adopt new legislation.

On March 14, 1985, the district court issued another preliminary injunction, but this time it directed the defendant to grant plaintiff the same access to state facilities as was accorded the United Way. We directed a stay of the March order pending an expedited appeal. On April 12, 1985, the governor signed a bill which enlarged eligibility for participation in the solicitation of state employees and repealed the predecessor 1955 statute.

The 1955 statute, N.J. Stat. Ann. 52:14-15.9c, authorizes the state treasurer to deduct from wages of state employees voluntary contributions to United Way.*fn1 The legislation listed "United Fund, Community Chest, or United Appeals" as charitable organizations entitled to participate in the withholding process. When those groups became absorbed into the United Way, that organization was treated as the sole beneficiary of the statute.

To implement the legislation, successive governors arranged an annual fund-raising campaign.*fn2 On those occasions, presentations were made to the state employees for the purpose of obtaining authorizations to withhold an amount from their salaries as pledges. The state treasurer would then transmit the funds to the United Way.

The process was a highly cost effective fund-raising activity for the charity, yielding over $500,000 annually to various chapters of the United Way. Not unexpectedly, other charitable groups sought to participate in both the solicitation campaign and the withholding mechanism. After receiving an opinion from the state Attorney General, the defendant governor concluded that the statutory authorization was limited to the United Way and that amendatory legislation was needed before eligibility could be broadened.

Beginning in early 1983, the governor's office held a series of meetings with charitable groups to formulate suggested legislation. In March 1984, a draft of a proposed statute was distributed to the interested charities. Its general tenor was acceptable to a number of the organizations, including the New Jersey Health Agencies, the United Negro College Fund, and the Delaware United Fund, but was rejected by plaintiff in May 1984.

On August 17, 1984, plaintiff again asked to be included in the state-wide campaign, particularly the one in 1984. When no approval was received, plaintiff filed its complaint. The district court conducted a hearing on September 10, 1984, the day before the campaign was scheduled the begin.

On October 3, 1984, the district court issued an opinion holding the 1955 statute unconstitutional.*fn3 The court recognized that "the state has no constitutional obligation to grant charitable solicitors access to its offices and payrolls in the first instance." In extending a right of access to the United Way, however, the state had arguably created a "limited public forum." The district court found it unnecessary to resolve the question of whether the annual campaign was a limited or nonpublic forum because, in its view, the restrictions on access failed "to meet even the minimal requirements of reasonableness which govern access to a nonpublic forum." The court held that the state could not reasonably extend the privilege to the United Way yet exclude other charitable entities in the absence of some even-handed criteria. In that sense, a First Amendment violation was said to exist.

The court also found that the statute violated the equal protection clause by granting benefits to the United Way while denying them to plaintiff. The court observed that the state did not show a rational basis justifying the perpetuation of a legislative decision favoring the United Way reached 30 years earlier when plaintiff had not yet come into existence.

Noting other constitutional infirmities as well, the court enjoined the governor "from conducting or permitting any solicitation of state employees pursuant to N.J. State. Ann. 52:14-15.9c or otherwise enforcing or action upon" the statute. Despite its conclusion that the 1955 statute was unconstitutional, the court did not want to interfere with the campaign then in progress and accordingly stayed the injunction for 45 days to give the state time to draft new legislation. The stay was later extended to December 31, 1984.

Because no legislation has been enacted by that time, at a hearing on January 10, 1985, plaintiff asked the court to stop all payroll deductions. The court again declined the request, stating that it did not wish to injure the United Way which depended on receiving its pledges from state employees. As an alternative, the court commented that it would make available to plaintiff, and any other charitable organizations that asked, the same privileges as the United Way.

Counsel were unable to agree on a form of order, and after settlement negotiations proved fruitless, on February 18, 1985, plaintiff renewed its demand that the state cease the payroll deductions. On March 14, 1985, the court ordered the governor to provide access to the state offices and payroll deductions "equivalent in all respects to that which has been afforded the United Way since September 1984."

Approximately one month later, on April 12, 1985, the governor signed the "Public Employee Charitable Fund-Raising Act."*fn4 It repealed and replaced the predecessor statute, effective immediately. The new Act allows for voluntary payroll deductions for charitable organizations which meet specified eligibility standards. An annual fund-raising campaign is to be conducted under the direction of a steering committee composed in part of representatives from each of the participating charities. In addition, the state treasurer was directed to adopt rules and regulations within 90 days to implement the provisions of the Act.

On appeal, defendant contends that the district court erred in its conclusion that the 1955 statute was unconstitutional and, alternatively, the court lacked authority to grant plaintiff access to the state facilities through a mandatory preliminary injunction. Plaintiff argues that the district court acted within its discretion in issuing the injunction.

After argument we solicited comments from counsel on whether this court has the power to pass on the constitutionality of the repealed 1955 statute. Defendant responded that because the mandatory injunction is presently in effect, the constitutionality of the old statute remains an issue and therefore the matter is not moot. Plaintiff, on the other hand, contends that "the constitutionality of a repealed statute squarely fits within the mootness doctrine." Nevertheless, plaintiff argues that we should affirm the district court's injunction.

Usually in reviewing appeals from the grant of a preliminary injunction, we employ an abuse of discretion standard. See Rennie v. Klein, 653 F.2d 836, 840 (3d Cir. 1981); United States Steel Corp v. Fraternal Assoc. of Steelhaulers, 431 F.2d 1046, 1048 (3d Cir. 1970). That approach, however, is not appropriate here because the condition which led to the district court's action no longer exists. The statute which the court struck down has now been repealed. We therefore are confronted by a legal question -- the effect of a change of law which occurs after the entry of an order in the trial court but before appellate review.

The controlling principle was set out in the United States v. Schooner Peggy, 5 U.S. (1 Cranch 103), 2 L. Ed. 49 (1801), where Chief Justice Marshall noted that generally an appellate court's function is to inquire whether a judgment was erroneous when rendered. However, "if subsequent tot he judgment and before the decision of the appellate court, a law intervenes and positively changes the rule which governs, the law must be obeyed, or its obligation denied." Id. at 40. See also Bradley v. School Board of The City of Richmond, 416 U.S. 696, 711, 40 L. Ed. 2d 476, 94 S. Ct. 2006 (1974).

In Hall v. Beals, 396 U.S. 45, 24 L. Ed. 2d 214, 90 S. Ct. 200 (1969), the plaintiffs contended that a six month state residency requirement imposed on the right to vote was a violation of the equal protection, due process, and privileges and immunity clauses of the United States Constitution. While the case was on appeal, the state legislature reduced the residency requirement to two months.

The Supreme Court held that the amendment had operated to moot the case. "We review the judgment below in light of the Colorado statute as it now stands, not as it once did." Even though the election had become history, the Court said, "Under the statute as currently written, the appellants could have voted in the 1968 presidential election." 396 U.S. at 48. The appellants continued to object to a residency requirement of any length, but the Court concluded, "as far as [plaintiffs] are concerned nothing in the Colorado legislative scheme as now written adversely affects either their present interest, or their interest at the time this litigation was commenced." Id.

A similar situation was presented in Diffenderfer v. Central Baptist Church, 404 U.S. 412, 30 L. Ed. 2d 567, 92 S. Ct. 574 (1972). In that case, a tax exemption for church property was modified by a statute enacted after the district court entered a judgment for the church. The Supreme Court stated that it was required to review the action of the district court "in light of Florida law as it now stands, not as it stood when the judgment below was entered." Id. at 414. Declaratory relief, said the Court, was "inappropriate now that the statute has been repealed." Id. at 415. See also Hamm v. Rock Hill, 379 U.S. 306, 13 L. Ed. 2d 300, 85 S. Ct. 384 (1964) (repeal of criminal statute pending appeal requires conviction be abated): United States v. Alabama, 362 U.S. 602, 4 L. Ed. 2d 982, 80 S. Ct. 924 (1960) (civil rights action against state reinstated after passage of the Civil Rights Act of 1960); Hines v. Davidowitz, 312 U.S. 52, 60, 85 L. Ed. 581, 61 S. Ct. 399 (1941).

Defendant also contends that the case is not moot because plaintiff has included a claim for damages in its complaint. However, the defendant has raised the bar of the Eleventh Amendment and it is questionable that plaintiff will prevail on a damage claim in the federal courts against the defendant in his capacity as Governor of the State. See Edelman v. Jordan, 415 U.S. 651, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974). In any event, the question of damages is not before us at this time and does not affect the prospective relief presented for review.

We conclude, therefore, that the repeal of the 1955 statute and the enactment of new legislation make it inappropriate for us to affirm the district court's order based on alleged deficiencies in the old Act. The raison d'etre for the injunction no longer exists.

Moreover, we note that the new Act has enlarged the group of charitable organizations which may have access to state facilities and establishes criteria which govern eligibility. The legislation thus meets at least two of the objections cited by the district court -- the exclusivity granted the United Say and the lack of standards for determining which other groups may participate. Presumably, plaintiff will qualify as a "charitable fund-raising organization," and will be eligible to participate in the ...

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