
(photo: Dave Burdick for Huffington Post via Flickr.com)
The U.S. District Court hearing a challenge by a Michigan man against the federal government for bailing out insurance giant AIG because the company sells Shariah-compliant insurance policies to Muslims in the U.S. and abroad has
denied a motion to dismiss (PDF) the suit and allowed the case to move forward.
The case,
Murray v Geithner, was
filed last December by the Michigan-based
Thomas More Law Center, founded by Domino’s creator Tom Monaghan. The TMLC calls itself the “sword and shield for people of faith,” but in this case, the group argues that because the U.S. government now owns a substantial piece of AIG after the bailout, the fact that the company markets products to Muslims that comply with their faith makes the bailout unconstitutional.
The complaint filed in the case argues that the funds given to AIG by the federal government as part of the financial bailout “are being used to finance Shariah-based Islamic religious activities in violation of the Establishment Clause.” The government immediately moved to dismiss the case, arguing that the plaintiff lacks standing to bring the suit. They base this on a series of Supreme Court rulings limiting the standing of plaintiffs to bring Establishment Clause suits merely because they are taxpayers and some tax money may be used wrongly.
Judge Lawrence Zatkoff, a Ronald Reagan appointee, ruled that the plaintiffs do have standing to bring the suit. He did not rule on the merits of the case, only concluding that the plaintiff’s allegations “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.”
When the suit was filed late last year, one of the foremost legal experts on the First Amendment, Eugene Volokh of the UCLA Law School, wrote that the legal theory the case was based on was exceedingly weak:
I’ve read the Complaint, and it seems to me that, once one strips away the “Islam is bad” arguments — arguments that surely don’t advance the Establishment Clause claim — one has the theory 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. …
That can’t be right, either under a Lemon primary purpose / primary effect theory or an endorsement theory, for the obvious reasons that the primary purpose here is to make money (or perhaps to lose as little taxpayer money as possible), the primary effect of the government action is to help AIG compete effectively by providing Muslim customers with what they want, and no reasonable person would assume the government is endorsing Islam by including AIG and all its subdivisions in the bailout package.
Several other First Amendment experts were considerably more blunt, with some even arguing that the case was so frivolous that it might lead to sanctions against the Thomas More Law Center for wasting the court’s time and resources. Such sanctions are allowed under Rule 11 of the Federal Rules of Civil Procedure, but the fact that the case survived a motion to dismiss makes such an outcome highly unlikely.
At this point, the government can appeal the ruling on the question of standing to the 6th Circuit Court of Appeals. Whether it plans to do so is not yet clear. Or they can go forward and argue the case in district court on the substantive issues. The fact that Judge Zatkoff refused to dismiss the case does not indicate that he will rule in the plaintiff’s favor, only that there is enough of an allegation to warrant a full examination of the matter by the court.