Another conflict between LGBTQ rights and religious freedom is broiling in the federal courts, and it has finally reached the U.S. Court of Appeals for the Sixth Circuit.

The controversy centers on whether faith-based institutions can serve as adoption agencies for the state and at the same time discriminate on the basis of sexual orientation. In November 2019, the Second Circuit entered an emergency order to maintain the status quo for faith-based institutions. The Third Circuit, on the other hand, recently opined that the practice was unconstitutional in Fulton v. Philadelphia. Now it is the Sixth Circuit's turn to decide what it will do in a remarkably similar case arising out of Michigan, Buck v. Gordon.

This Michigan case specifically questions whether a faith-based institution can provide services as a "child placing agency," or CPA, under a state contract and at the same time refer same-sex couples to other child placing agencies for the home studies and assessment needed in order to become certified by the state for foster care or adoption.

This particular controversy began in 2017 in Dumont v. Gordon, when two same-sex couples and an adoptee sued the acting director of the Michigan Children's Services and the director of the Michigan Department for Human Health and Services, or MDHHS, for permitting such discrimination in providing the home study service. Michigan's policy relied on amendments to a state statute, passed as Public Act 53 of 2015 (2015 PA 53), that permits a child placing agency to decline to provide services when doing so would conflict with that agency's "sincerely held religious beliefs."

The plaintiffs claimed this policy deprived them of equal protection under the law and respected an establishment of religion, in violation of the U.S. Constitution. Michigan initially opposed the lawsuit and supported the 2015 amendment. But after a change in attorneys general following the 2018 election, the state took the opposite stance and ultimately settled the case in early 2019.

All contracts with CPAs already required them to agree they would "not discriminate against any individual or group because of race, sex, religion, age, national origin, color, height, weight, marital status, gender identity or expression, sexual orientation, political beliefs or disability." But the settlement required the state to enforce that anti-discrimination provision in the state contract differently than it had before. Now, examples of such discrimination included "turning away or referring to another contracted CPA an otherwise potentially qualified LGBTQ individual or same-sex couple that may be a suitable foster or adoptive family for any child accepted by the CPA for contracted services."

About one month later, St. Vincent Catholic Charities sued Michigan Attorney General Dana Nessel and other state officials in the U.S. District Court for the Western District of Michigan after state officials indicated that St. Vincent had violated the anti-discrimination clause in the contracts. St. Vincent said that forcing it to choose between its firmly held belief against same-sex marriage and serving as a child placing agent violated the organization's religious freedom.

The next day, St. Vincent filed a motion for preliminary injunction to preserve the status quo, i.e., to allow St. Vincent to continue providing CPA services while still declining to perform home studies for same-sex couples. Surprisingly, the outcome of this case could turn in large part on a basic question of contract law, rather than constitutional law.

Opposing St. Vincent's motion, the state explained that CPAs were required by contract—and paid—to recruit prospective foster and adoptive applicants, complete home studies and assess whether the person or family meets the department's licensing requirements. It did not ask the contractors to endorse or approve of any relationship or require them to speak in favor of any relationship. It did, however, require all of contractors to abide by this facially neutral and generally applicable nondiscrimination policy, without exception.

The state also suggested that imposing this nondiscrimination provision was necessary to comply with federal law. St. Vincent is paid for its services from a mix of federal and state funds. The Dumont settlement agreement, citing 45 C.F.R. 75.300(c), notes that "as a condition of receiving these federal funds, the U.S. Department of Health and Human Services requires that states' Title IV-E-funded programs prohibit discrimination on the basis of sexual orientation or gender identity." The agreement states that agencies accepting an MDHHS referral of a child or individual for foster care or adoption may not discriminate in providing those contracted services.

In granting St. Vincent's motion, the district court completely rejected those arguments. In the court's words: "Here, the state pays CPAs based on the children they place. And St. Vincent places its children with any certified parent—unmarried couples, same-sex couples, or otherwise. This is precisely the nondiscriminatory conduct the state desires. But despite that, the state now wants to cancel St. Vincent's contract if St. Vincent uses its religious beliefs when it comes to referring new parent applicants. That strongly suggests the state's real goal is not to promote nondiscriminatory child placements, but to stamp out St. Vincent's religious belief and replace it with the state's own."

The court also found compelling the instances in which Nessel, in the run up to her election, called 2015 PA 53 indefensible and described its proponents as "hate-mongers." The court said it seemed that the state's new position under Nessel "targets St. Vincent's religious beliefs" and held that injunctive relief was necessary to "preserve the status quo while the validity of the State's new position is tested in plenary litigation." The state has appealed that decision to the Sixth Circuit.

When and whether the Sixth Circuit will decide the issue is unclear at this point. After the Sixth Circuit declined to stay the preliminary injunction, the state moved to voluntarily dismiss its appeal so it can move in the district court to certify to the Michigan Supreme Court the question of whether 2015 PA 53 is valid. Remarkably, St. Vincent opposes the motion to dismiss, noting that Nessel removed to federal court a parallel case filed by another religious foster care agency in the Michigan state courts.

Adding another twist, the U.S. Supreme Court has recently announced that it will hear the case of Fulton v. Philadelphia, which involves a similar situation. There, faith-based child placement agencies refused to recommend same-sex couples for foster care or adoption. The Third Circuit held that the state could compel those agencies—like any other CPA—to abide by its nondiscrimination policy when certifying families for adoption. The question in the Supreme Court is whether free exercise plaintiffs must prove that the government would allow the same conduct by someone else or whether they can use other evidence, such as the regulatory history, to show the law is not neutral and generally applicable.

The Supreme Court's decision in Fulton could easily affect the outcome in Buck. The district court in Buck considered Michigan's changed contract interpretation and Nessel's pre-election statements as indications that religious targeting occurred. It did not infer that the state would have accepted the same conduct from another agency. With an anticipated decision from the highest court on this hot issue, the Sixth Circuit may very well bide its time before wading in.

Gaëtan Gerville-Réache is a partner in the law firm Warner Norcross + Judd who concentrates his practice in appellate law.