Boy Scouts Defeat Dismissal Motion in Philadelphia Headquarters Building Dispute

U.S. District Judge Ronald L. Buckwalter has rejected the City of Philadelphia’s motion to dismiss federal and state constitutional claims by the Cradle of Liberty Council of the Boy Scouts of America, which is fighting the city’s move to evict the Scouts from a city-owned building because of the BSA’s anti-gay membership policy.  While rejecting state law claims of breach of contract and unjust enrichment, Judge Buckwalter’s September 25 ruling held that the Scouts had sufficiently alleged constitutional claims to survive the motion to dismiss.  Cradle of Liberty Council v. City of Philadelphia, 2008 Westlaw 4399025 (E.D.Pa.). 

In 1928, the city gave the local Boy Scouts Council permission to build a headquarters building on city land, to be the regional Scout headquarters, with the proviso that the completed building would be city property, which the Scouts could use exclusively for their own activities without having to pay rent.  The Scouts also had the obligation to maintain the building.  The building was completed in 1929 and has been in continuous use since then.  Annual maintenance costs to the Scouts have averaged $60,000 in recent years, and they spent $1.5 million on a major renovation project in 1994.

After the Supreme Court held that the Boy Scouts have a First Amendment right to exclude gay men from being adult members of the organization in the Dale case, gay activists began to exert pressure on municipal officials and school boards around the country to reexamine their sweetheart deals with local Scout units, as being inconsistent with local ordinances forbidding sexual orientation discrimination.  The theory behind these efforts was that the Scouts may have a right to exclude gays, but local governments have a right to refrain from subsidizing discriminatory organizations.  In California, this resulted in an epic legal battle between the City of Berkeley and the Sea Scouts over city marina privileges, which ended up in a California Supreme Court decision vindicating the city’s right to terminate the sweetheart deal.

In Philadelphia, this has resulted in protracted debate and negotiation concerning the no-rent deal for the Scouts’ headquarters building.  At first, the Scouts sought to accommodate the city’s demands by issuing a statement that it would not engage in unlawful discrimination, but the city questioned the meaning of this, in light of the Dale decision, which arguably made the Scout’s discrimination “lawful” – or at least privileged under the Constitution. 

The logistical problem for the Philadelphia Scouts is that giving in to the city’s demand that they conform to local law, which has forbidden sexual orientation discrimination since 1982, by disavowing anti-gay discrimination, which evidently many of the local Scouts officials would like to be able to do, would bring them into direct conflict with the Boy Scouts of America national organization, which has an inflexible policy of requiring its affiliates to toe the line on exclusion of openly gay personnel.  Losing their charter from the BSA would require the local unit to forfeit the right to use the proprietary intellectual property and organizational benefits that go with the charter.  This would presumably include the entire apparatus of Scouting, the organizational name, the publications, the uniforms, and participation in the joint regional and national activities with other Scout units. 

The city did provide an alternative, offering to allow the Scouts to keep using the building if they would pay market rent, foregoing any subsidy from the city, but the estimated market rent is $200,000 annually, which would break the budget of the Cradle of Liberty Council.  Instituting a membership dues level necessary to support this cost on top of the annual maintenance cost would put scouting out of reach of poor inner city youth, who are among the main beneficiaries of the program.  Of course, the Scouts would only have to find a handful of big corporate sponsors in order to pony up the rent, but that would divert money from paying directly for programs, and the current economy probably makes finding the big corporate sponsors more of a challenge than it would have been during more prosperous times.

The Scouts argued in this lawsuit that they thought they had a compromise deal with the city based on their disavowal of “unlawful discrimination,” but a subsequent City Attorney disavowed any agreement reached with his predecessor, which was never reduced to writing and never formally approved as a contract by the law department, as required by municipal law, thus the court’s dismissal of the breach of contract claim.  The unjust enrichment claim asserted that if the city evicted the Scouts, the city would unfairly benefit from the major investment the Scouts have made in maintaining and renovating the building, but the court found that Pennsylvania contract law does not allow an unjust enrichment claim to be asserted when the parties’ relationship is governed by a contract – in this case, the original 1928 grant of permission to build, which was premised on an obligation by the Scouts to maintain the building.  So those state law claims fall out of the case.

Remaining are the constitutional claims.  In support of their equal protection claims, the Scouts allege that the city has gone after them but not after other similarly situated groups that enjoy city subsidies but are arguably in violation of one or another provision of the city’s Fair Practices Ordinance.  This logically brings into play as well the First Amendment claims.  The Scouts allege that they are being singled out for their exercise of the First Amendment right, recognized by the Supreme Court in Dale, to exclude gays from adult membership positions.  This places an “unconstitutional condition” on their enjoyment of the city subsidy, they argue. 

Judge Buckwalter found that these claims could not be simply dismissed, noting that in this kind of case it is enough for the plaintiff to credibly allege unequal treatment and a content-based burden on their free speech rights, raising the question of whether the city has a “rational basis” for its action and a content-neutral basis for its policies, and only after the building of a factual record through discovery would it be appropriate for the court to dispose of these constitutional claims through a summary judgment ruling or – if there are contested facts – a trial on the merits. 
Thus, the constitutional portion of the lawsuit will continue, and the Scouts will presumably continue to occupy the building while the litigation plays out or a settlement is reached.