Federal court dismisses suit challenging Charter School Act

A First Amendment lawsuit alleging Indiana’s Charter School Acts violates certain religious protections will no longer proceed after a district court judge found the plaintiffs lacked standing to bring the Establishment Clause complaint.

Indiana Southern District Court Chief Judge Jane Magnus-Stinson dismissed without prejudice Thursday the case of Indiana Coalition for Public Education – Monroe County and South Central Indiana, Inc. v. Jennifer McCormick, Seven Oaks Classical School, Inc., 1-17:cv-01295. The Bloomington-based Indiana Coalition for Public Education filed the suit in April 2017 challenging the portion of the Indiana Charter School Act that allowed Grace College, a religious private school, to authorize the Seven Oaks charter school in Ellettsville.

In the complaint, the coalition — which is comprised of Monroe County public school teachers and employees who support traditional public schools — alleges the act violates the First Amendment Establishment Clause by permitting religious schools such as Grace to authorize charter schools. Further, the act violates Indiana Constitution, the complaint says, by allowing religious authorizing institutions to receive up to 3 percent of the public funds diverted to their charter schools as an administrative fee.

The suit was originally filed against Seven Oaks, Indiana Superintendent of Public Instruction Jennifer McCormick and James Benley, executive director of the Indiana Charter School Board. Betley was later dismissed as a defendant. 

Magnus-Stinson initially let the case proceed in November 2017 after finding “the allegations in the Complaint support a reasonable inference that the Charter School Act permits a religious authorizer to accept any application it chooses.” But the chief judge dismissed the case Thursday after the parties filed cross-motions for summary judgment, finding the court lacked subject-matter jurisdiction and that the coalition failed to adequately allege its injury was caused by the act and could be redressed by a favorable court decision.

Magnus-Stinson assumed for summary judgment purposes the coalition did suffer injury sufficient to establish standing — the diversion of public funds and student diversity away from Monroe County public schools and toward Seven Oaks. But the plaintiff’s standing argument otherwise failed, she said, noting the injury had more to do with third-party actions than with state law.

Specifically, the chief pointed to Grace College, which authorized Seven Oaks’ charter. Without the actions of the college – which has never been a party to the complaint — the Charter School Act would not harm the coalition, she said.

But “(t)he more critical intervening causes are the individual decisions of the parents of the schoolchildren who left the school corporations to attend Seven Oaks,” Magnus-Stinson continued. “… Indiana law gave the parents nearly ‘unfettered choices’ in selecting where to bring their per-student educational funding.”

As for redressability, the court noted that even if Seven Oaks were closed, it is not a foregone conclusion that its students would return to Monroe County public schools given the availability of homeschooling, private schools and state voucher programs.

“Even if it were the case that Seven Oaks students would generally not prefer homeschooling or private schools … that still leaves unanswered the issue of whether they would elect to return to public school corporations over the other options,” the chief judge wrote. “In the end, the Coalition asks the Court to speculate that this would be the case, with nothing to support this speculation except the fact that certain students left the school corporations to attend Seven Oaks.”

“To reiterate, the Coalition wants the Court to declare the Act’s authorizing provision unconstitutional and enjoin the state from providing further funding,” Magnus-Stinson concluded. “In order to receive this relief, the Coalition must show that its injuries are “‘fairly traceable’ to a defendant’s actions.’ … But Seven Oaks is not responsible for distributing state funding, nor is it responsible for the allegedly unconstitutional authorizing that allows them to receive state funding.”

The court granted the defendants’ motion for summary judgment on the issue of subject-matter jurisdiction and denied the coalition’s cross-motion.

"We are disappointed with the outcome, which allows a school established and supervised by an evangelical institution to continue to siphon tax money away from the public schools," Alex Tanford, an Indiana University Maurer School of Law professor emeritus who is representing the coalition, wrote in an email to Indiana Lawyer on Friday. "However, in constitutional cases, there are almost always multiple precedents to guide a judge's decision, and those precedents are not always consistent with each other.

"Nowhere is this more true than in the religion cases, where the proper role of religious institutions in secular society is a matter of considerable dispute," Tanford continued. "This time, the judge elected to give more weight to the precedents against us and less to those that favored our claims. We are considering whether to appeal."

In an emailed statement to Indiana Lawyer, Seven Oaks headmaster Stephen Shipp said the school was not surprised by Magnus-Stinson's ruling.

"Seven Oaks Classical School's primary focus has been and always will be on providing a high-quality classical education to the students who attend our school," Shipp said. "We are not surprised by the dismissal of this suit, as its claims were baseless, and appreciate Grace College's ongoing support in authorizing our charter."

Editor's note: This story has been corrected to report that Sevens Oaks Classical School was an original defendant.