Jane Doe and Grace Roe were students at Currey Ingram Academy, a boarding school in Tennessee. The students alleged that another student, Brenda Doe, sexually assaulted them at the School. The students filed suit against the School, asserting federal claims under Title IX and state law claims such as negligence, negligent supervision, and intentional infliction of emotional distress.
The School filed a motion to dismiss, arguing that the Title IX claims should be dismissed. The School argued that if the federal claims were dismissed, then the federal court would not have jurisdiction over the remaining state law claims.
The students argued that the School was subject to Title IX because they received federal financial assistance through their tax-exempt status as a 501(c)(3) organization. The Court considered the Title IX regulations, which define federal financial assistance, and which do not include income tax exemption in any category listed. In reviewing the regulations, the Court concluded that federal financial assistance encompassed only direct transfers of federal money, property or services from the government to a program. The Court concluded that exemption from taxation was not the same type of direct transfer.
The Court also considered the Spending Clause in Title IX. The Spending Clause states that when the government offers to transfer property or money to an entity to support an educational program or activity, the intended recipient has the choice whether or not to accept the assistance. If the entity does accept the assistance, they are subject to the associated obligation to not discriminate on the basis of sex. The Court reasoned that when granting tax-exempt status, the government does not invoke the same nondiscrimination requirements.
The Court specifically noted that it was rejecting the cases that take the opposite view on tax-exempt status because the Court believed that those cases did not focus sufficiently on the words in the applicable regulations for federal financial assistance.
The Court dismissed the Title IX claims and declined to exercise jurisdiction over the state law claims.
Note: Over the last few years, two courts (one California court and one Maryland court) have held that tax-exempt status constitutes federal financial assistance, obligating the schools involved in those cases to follow Title IX and the Rehabilitation Act, among other statutes. In January 2024, an Arizona court held that tax-exempt status did not constitute federal financial assistance. This area of the law remains in flux and LCW will monitor these cases for further developments.
Doe v. Currey Ingram Acad. (M.D.Tenn. Mar. 5, 2024) 2024 U.S.Dist.LEXIS 38241.