Iowaska Church of Healing v. United States

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IOWASKA CHURCH OF HEALING, Plaintiff, v. UNITED STATES OF AMERICA, et al., Defendants.

Civil Action No. 21-02475 (BAH)

United States District Court, District of Columbia

March 31, 2023

MEMORANDUM OPINION

BERYL A. HOWELL, U.S. District Court Judge.

Plaintiff Iowaska Church of Healing is a non-profit organization whose members' sincerely-held religious belief partly involves the consumption of the Sacrament of Ayahuasca (“Ayahuasca”), a tea brewed from South American plants that contains a drug illegal under federal law. Pl.'s SMF ¶¶ 5-6, 14-15, ECF No. 20-1. On January 10, 2019, plaintiff filed Form 1023 with the Internal Revenue Service (“IRS”), requesting recognition as a tax-exempt organization, pursuant to 26 U.S.C. § 501(c)(3) of the Internal Revenue Code of 1986, and as a church within the meaning of 26 U.S.C. § 170(b)(1)(A)(i). Id. ¶ 35. The IRS denied that application, both because plaintiff was not organized and did not operate exclusively for exempt purposes and because using Ayahuasca is illegal under federal law and violates public policy. AR, Ex. 18 at 1 (“IRS Determination Letter”).^[1]

Plaintiff sued the IRS's administrator, in his official capacity and the federal government, claiming, first, that the IRS erred in its analyses of application of both § 501(c)(3) and § 170(b)(1)(A)(i), and, second, that the IRS's decision violated plaintiff's rights under the Religious Freedom Restoration Act (“RFRA”), 42 U.S.C § 2000bb et seq. See generally Am. Compl., ECF No. 16. The parties have now filed cross-motions for summary judgment on both claims. See Pl.'s Mot. for Summ. J. (“Pl.'s Mot.”), ECF No. 20; Pl.'s Mem. Supp. Mot. for Summ. J. (“Pl.'s Mem.”), ECF No. 20-3; Def.'s Opp'n to Pl.'s Mot. for Summ. J. & Cross-Mot. for Summ. J. (“Defs.' Cross-Mot.”), ECF No. 23; see also Def.'s Mem. Supp. Opp'n to Pl.'s Mot for Summ. J. & Cross-Mot. for Summ. J. (“Defs.' Mem.”), ECF No. 23-1. For the reasons below, defendants' cross-motion is granted, and plaintiff's motion is denied.

I. BACKGROUND

The relevant factual and procedural background is described below.

A. Factual Background

The material facts are not disputed. Plaintiff was incorporated, in Iowa, as a nonprofit religious corporation, on September 24, 2018, under Iowa Code § 504.141(38). AR, Ex. 4 at 19. Since March 19, 2019, plaintiff has also been registered to do business in Florida. Pl.'s SMF ¶ 1. Plaintiff's self-described mission is “to offer the public access to spiritual growth, development and healing through the sacred Sacrament of Ayahuasca,” id. ¶ 5, which is a tea brewed from plants native to South America that contain dimethyltryptamine (“DMT”), id. ¶¶ 14-15. DMT is classified as a Schedule I drug under the Controlled Substances Act (“CSA”), see 21 U.S.C. § 812, Schedule I(c)(6).^[2] Certain communities can apply and receive a religious exemption under the CSA from the Drug Enforcement Administration (“DEA”) to use Ayahuasca, pursuant to the Supreme Court's decision in Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 439 (2006) (“O Centro”) (holding that, at the preliminary injunction stage, the government had failed, under RFRA, to demonstrate a compelling interest justifying the substantial burden on the plaintiff organizations' sincerely-held religious belief in using “hoasca”). Plaintiff applied for such a CSA exemption with the DEA on February 28, 2019, but that application remains pending. AR, Ex. 7 at 9. Meanwhile, plaintiff, as of August 18, 2019, voluntarily suspended all its ceremonies while awaiting DEA's decision on the requested CSA exemption allowing legal use of Ayahuasca by plaintiff's members. Pl.'s SMF ¶¶ 28-29, 36; AR, Ex. 11 at 5. Apart from giving its members the Sacrament of Ayahuasca, plaintiff's religious ceremonies include sacred prayers, singing, music, reflections and readings from the Ayahuasca Manifesto, which is the foundation of plaintiff's religious doctrine, as well as readings from the Universal Laws of Respect. Pl.'s SMF ¶¶ 17-18.^[3]

Plaintiff has had as many as twenty members living in different states and foreign countries, and generally holds its ceremonies on weekends, with members staying in frequent contact with the plaintiff's “healers” to help guide them through their daily struggles before and after they attend and participate in ceremonies. Id. ¶¶ 19-22, 26. Becoming a member costs $60, AR, Ex. 5 at 4, and members were required to pay $333 per ceremony in 2019, AR, Ex. 7 at 5.

The month before filing the application for a CSA exemption with DEA, plaintiff submitted, on January 10, 2019, an application to the IRS, seeking to obtain tax-exempt status, under 26 U.S.C. § 501(c)(3). Pl.'s SMF ¶ 35. The IRS requested, on July 3, 2019, additional information from plaintiff, which promptly responded on July 25, 2019. Id. ¶¶ 37-38. The IRS issued a second informational request, on September 10, 2019, questioning the legality of plaintiff's ceremonial use of Ayahuasca under federal and state law without having first received a CSA exemption from the DEA, id. ¶ 39, to which plaintiff responded on October 4, 2019, explaining that the Supreme Court and the government acknowledged in O Centro that the sacramental use of Ayahuasca is a sincere exercise of religion under the First Amendment, id. ¶ 40. The IRS again questioned plaintiff's use of Ayahuasca without having received a CSA exemption in a third informational request on February 4, 2020, id. ¶ 41, to which plaintiff again reiterated its view that O Centro made the IRS's concern a non-issue, see id. ¶ 42.

The IRS issued, on June 16, 2020, a proposed adverse determination letter recommending denial of plaintiff's request to be classified as a charitable organization, under 26 U.S.C. § 501(c)(3), and as a church, under 26 U.S.C. § 170(b)(1)(A)(i), see AR, Ex. 12 at 8-11, explaining that plaintiff's “primary purpose of conducting activities utilizing [Ayahuasca] violates federal law” since plaintiff had not “sought relief in the courts” or “received the exemption to the CSA” from the DEA. AR, Ex. 12 at 11. Plaintiff appealed that determination, and on June 28, 2021, the IRS's Independent Office of Appeals issued a final adverse determination finding that plaintiff did not qualify for the section 501(c)(3) exemption, explaining that plaintiff was not organized nor operated exclusively for exempt purposes, and plaintiff's activities were illegal under federal law and violated public policy. IRS Determination Letter at 1.

B. Procedural History

Plaintiff filed the instant complaint, on September 22, 2021, challenging the IRS's section 501(c)(3) and section 170(b)(1)(A)(i) determinations, under 26 U.S.C. § 7428, Compl. ¶¶ 29-33, ECF No. 1, and on grounds that the IRS's determination that plaintiff's activities are illegal violates the RFRA by substantially burdening plaintiff's exercise of religion, see Compl.

¶¶ 34-37.^[4] Plaintiff later filed an Amended Complaint to add the United States as an additional defendant in the litigation, see Am. Compl; Minute Order (Apr. 18, 2022) (authorizing filing of Amended Complaint). The parties' pending cross-motions for summary judgment are now ripe for review.

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 56, “[a] party is entitled to summary judgment only if there is no genuine issue of material fact and judgment in the movant's favor is proper as a matter of law.” Soundboard Ass'n v. FTC, 888 F.3d 1261, 1267 (D.C. Cir. 2018) (quoting Ctr. for Auto Safety v. Nat'l Highway Traffic Safety Admin., 452 F.3d 798, 805 (D.C. Cir. 2006)); see also Fed.R.Civ.P. 56(a). When parties file cross-motions for summary judgment, each motion is viewed separately, in the light most favorable to the non-moving party, with the court determining, for each side, whether the Rule 56 standard has been met. See Baylor v. Mitchell Rubenstein & Associates, P.C., 857 F.3d 939, 952 (D.C. Cir. 2017) (when considering “cross-motions for summary judgment, [courts] must accord both parties the solicitude owed non-movants”); see also CEI Wash. Bureau, Inc. v. DOJ, 469 F.3d 126, 129 (D.C. Cir. 2006) (noting that “[i]t is of no moment that the parties filed cross-motions for summary judgment and that neither party explicitly argued that there are genuine disputes about material facts” because “[a] cross-motion for summary judgment does not concede the factual assertions of the opposing motion.”); Sherwood v. Washington Post, 871 F.2d 1144, 1147 n.4 (D.C. Cir. 1989) (“The rule governing cross-motions for summary judgment . . . is that neither party waives the right to a full trial on the merits by filing its own motion; each side concedes that no material facts are at issue only for the purposes of its own motion.” (quoting McKenzie v. Sawyer, 684 F.2d 62, 68 n.3 (D.C. Cir. 1982))).

III. DISCUSSION

Defendants seek summary judgment on both of plaintiff's claims, contending, first, that plaintiff's § 501(c)(3) application was properly denied since plaintiff is not organized and operated exclusively for tax-exempt purposes; and, second, that plaintiff lacks Article III standing to raise a RFRA claim because the cause of plaintiff's claimed injury in not being able to use Ayahuasca in religious ceremonies is not traceable to the IRS's denial of plaintiff's § 501(c)(3) application, but rather DEA's inaction on plaintiff's CSA exemption application, and thus, even were plaintiff to prevail on the RFRA claim, plaintiff's injury would not be redressed in this lawsuit. See Defs.' Mem. at 6-19.

Defendants are right as to both claims. The IRS correctly determined that plaintiff was not eligible for tax-exempt status under § 501(c)(3), and plaintiff lacks Article III standing to raise its RFRA claim. In short, de...