Ed Brayton is a journalist, commentator and speaker. He is the co-founder and president of 
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.
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Comments
He hasn't a chance of winning... which is a shame, as it probably isn't a good thing for government funds to go towards providing what is, as the TMLC points out, essentially a religious service. In this case though, I'd consider it a very petty issue because funding the sharia division isn't the intention - it's just a fringe effect of bailing out the whole company.
Also, it'd grant me huge gloating powers the next time the TMLC starts screaming that denying government money to Christian churches, schools and charities is persecution.
Posted by: Suricou Raven | June 3, 2009 9:16 AM
"providing what is, as the TMLC points out, essentially a religious service"
Bullshit.
Posted by: NoAstronomer | June 3, 2009 9:40 AM
In other AIG news, they have decided to become comic book villains.
Posted by: Taz | June 3, 2009 9:52 AM
The case is, for so many reasons, toast.
My favorite reasons are a fortiori:
* This is less direct than the "faith-based initiatives" which seem to have survived Establishment Clause scrutiny (IMHO wrongly)
* Can we all say, "Army chaplains?"
* Add your own -- it's a long list.
Posted by: D. C. Sessions | June 3, 2009 10:00 AM
Taz -
There
fixed'comic-booked' it up for you. :) - DJPosted by: DingoJack | June 3, 2009 10:03 AM
But..but muslims!! Sharia law!! It will cause the end of the world and bring the gay anti-christ!!! Which I'm guessing is the main argument.
Posted by: Crabaniel | June 3, 2009 10:19 AM
Did anyone else do a double-take when they read it was the Thomas More Law Center who was filing this lawsuit out of a concern for violations of the Establishment Clause? I know I sure did.
I'm sure they're doing so from a sincere change of heart prompted by the the thumping they got in Kitzmiller v. Dover over the Establishment Clause violations perpetrated by their clients, the Dover school board and the Disco 'tute, and not because they only see a violation when a religion *other* than Christianity tries to get away with similar violations.
Posted by: Will | June 3, 2009 10:25 AM
Could I, an atheist with no Muslim affiliations or connections in my history, purchase a Sharia-compliant policy? (Should I for some perverse reason wish to). If so, then I fail to see how AIG is promoting, endorsing or otherwise entangled with religion here. Essentially all that happened is that a bloc of potential customers said, "We don't like any of your current products, but if you had something that did X, Y and Z, we'd be interested", and AIG did the good capitalist thing by responding to that niche -- presumably because there was money to be made there. Why the customer bloc wanted that product -- whether it's religious strictures, or just the colour of paper it's printed on -- should be irrelevant.
Posted by: Eamon Knight | June 3, 2009 11:01 AM
I think Eamon Knight is exactly right on this issue. There are lots of investment firms who offer similar products, particularly mutual funds. Some of them are marketed as Christian and they operate just like these Shariah-compliant insurance funds, avoiding investment in products and services that those who invest in the funds would find immoral. But there are a whole range of other funds that do the same thing based on non-religious factors, socially-conscious mutual funds that do not invest in companies with poor environmental records or companies that are not unionized.
Posted by: Ed Brayton | June 3, 2009 11:23 AM
Ed, how much would we have to pay you to dig up a bunch of quotes from the TMLC (Too Many Loony Christians??) that argue exactly the opposite stance they are attempting to make here?
C'mon, ya know ya wanna.....
Cheers!
Posted by: FastLane | June 3, 2009 11:33 AM
Anyone know where Americans United stand on this case? I couldn't find anything at their blog or googling.
Posted by: Michael Heath | June 3, 2009 12:12 PM
Michael: I don't see why AU should care. Does a grocery store selling hallal merchandise before Passover violate the first Amendment, even if the government has acquired an ownership share somehow? Of course not; among other things, non-Jews buy these products too. The fact that a product is designed to appeal to a particular audience does not imply endorsement by the offeror. Furthermore, in this case, is the government in any way directing the operation of AIG? If not, then what is the mechanism whereby endorsement is supposed to occur?
This case should have been dismissed. I'm not in the camp that argues for sanctions under Rule 11, but there's nothing here.
Posted by: kehrsam | June 3, 2009 12:41 PM
I can't help but suspect that TMLC's involvement may not be what it appears. Losing might establish a precedent Monaghan wants. If so, dismissal was the only hurdle TMLC needed to overcome, and every court of appeals up the ladder potentially entrenches some exception -- a precedent -- Monaghan is looking to carve.
Posted by: Jim Babka | June 3, 2009 12:55 PM
I'm not sure moving for dismissal on standing grounds was such a great move, either. To me it sounds like a case this weak should be dismissed on other grounds. Standing is rather weak, since TMLC would be able to claim that they didn't get their day in court and the government is still behaving badly. If it were dismissed for failing to state an actionable claim, TMLC would have a harder time spinning that ruling.
And of course Eamon is exactly right. Islam is not the only religion which prohibits usury. As long as these products are available to anybody who wants them, there is nothing wrong with offering them.
Posted by: Eric Lund | June 3, 2009 2:02 PM
Tough call. I sure do hate TMLC, but on the other hand, I would sing a jaunty campfire tune as AIG burnt to the ground. Don't know who to root for, so I guess I'll just smile at the thought of useless court costs draining both their coffers.
Posted by: Daniel | June 3, 2009 3:24 PM
"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."
I'm not sure this is exactly right, either. Just because they avoided a quick dismissal on standing grounds doesn't change the fact that their substantive claim is ridiculously weak, and they will likely lose on a Rule 12(b)(6) motion to dismiss for failure to state a claim.
Also, Jim, the precedent this would create by losing is so pointless that I don't see how it gains them anything.
It sure looks like the Thomas More Law Center is just a bunch of Muslim-haters.
Posted by: bob | June 3, 2009 4:20 PM
I don't see how this is any different from selling Kosher food, as virtually any government-run restaurant does (military, Congressional, museum cafeterias, etc.). No one could possibly construe that as unconstitutional.
Moreover, even if it were unconstitutional, the remedy would not be to declar ownership of the restaurant unconstitutional, but to discontinue the sales.
But in any case, this will probably be thrown out on procedural grounds. In may more worthy cases in recent years, Federal courts have ruled that, while something might be illegal, no one is in exactly the right place to have standing to sue.
Posted by: RobNYNY1957 | June 3, 2009 4:26 PM
Daniel stated:
About 30 people at AIG is the sum total of people responsible for what AIG contributed to our credit crisis. Millions of other people: suppliers, 116,000 employees, families of employees, peripheral businesses, and taxpayers would be harmed if AIG "burnt to the ground". Do you really wish devastation on them?
I applaud the retired Allstate CEO Ed Libby, that saw it as his public duty to jump in and help save them when it became clear of the threat from their lack of reserves to hedge their CDS. His efforts, and the remaining employees who had nothing to do with the CDO/CDS market, have been met with diatribes like I quote.
I'd love to see the guys who did this gone after in the civil courts, but we should also recognize they were a small piece of activity of what happened in this company (from a division- and employee-count perspective). The innocents there feel kind of like the gals around Salem in the 17th century.
Posted by: Michael Heath | June 3, 2009 4:39 PM
Uh ... how 'bout rooting for the Constitution and the law, regardless of the parties?
Posted by: Scott Hanley | June 3, 2009 4:40 PM
These Christian right arguments about Islamic finance annoy me far more than they should. I mean, there are a lot of things to criticise about Islamic finance, mainly from an Islamic perspective, but it's absolutely not establishment of religion. Observant Muslims cannot use interest based credit or conventional insurance. Consequently, there's a pretty strong establishment clause argument that the government providing interest based credit or conventional insurance failing to provide sharia compliant options is itself establishment of religion, because it denies Muslims the same free exercise of religion as Christians. Unless there's a compelling state interest for not doing so, which there clearly isn't, providing sharia-compliant products to Muslims and non-Muslims and alongside conventional products is clearly far closer to the spirit of the establishment clause than the alternative.
Posted by: Ginger Yellow | June 3, 2009 5:21 PM
@ Jim Babka: "I can't help but suspect that TMLC's involvement may not be what it appears. Losing might establish a precedent Monaghan wants."
Jim, I think you are giving the TMLC a little too much credit. I don't think they've demonstrated that level of subtlety before.
Posted by: John the Skeptic | June 3, 2009 7:05 PM
"I sure do hate TMLC, but on the other hand, I would sing a jaunty campfire tune as AIG burnt to the ground. Don't know who to root for"
They aren't suing AIG, they're suing Tim Geithner, ie, the government, ie we're paying for it.
Posted by: Jon H | June 3, 2009 7:51 PM
If those suing aren't also suing to forbid employers who receive government money from allowing employees to arrange to take religious holidays off work, they don't have a case. That's how frivolous this is.
Posted by: Azkyroth | June 3, 2009 9:10 PM
Might one not argue that failing to offer such insurance policies would be illegal as that would prevent Muslims from obtaining insurance?
Posted by: SimonG | June 4, 2009 7:18 PM
I was initially going to say, "Not really," but then I realized that this is a tough question. Since everybody is required to have some forms of insurance, if no Sharia-compliant insurance was available, that law would force Muslims to violate their beliefs. When that happens, it all comes down to who bakes better brownies for SCOTUS.
Posted by: Brandon | June 4, 2009 10:14 PM
"Since everybody is required to have some forms of insurance, if no Sharia-compliant insurance was available, that law would force Muslims to violate their beliefs."
Exactly. I think it's pretty hard to argue that there's a compelling state interest in not providing Islamic insurance. About the only one I can think of is that not all sharia scholars accept (the common forms of) Islamic finance, so you could argue that it's impossible for the their religious needs to be satisfied. I don't think that applies to all but a handful of US Muslims, though - it tends to be fairly hardline scholars in Saudi Arabia and Yemen who argue against takaful. And health insurance is compulsory even in Saudi (which also has a conventional banking industry).
Posted by: Ginger Yellow | June 5, 2009 11:28 AM
Quoth Brandon:
And if some sect decides that e.g. auto insurance violates their beliefs, they would ipso facto be allowed to drive uninsured? I don't think so.Quoth Ginger Yellow:
You should read some Robert Spencer, because there's a lot more to it than that: to be Sharia-compliant, a percentage of revenue must be sent to Islamic "charity" groups.In case you have forgotten, Islamic "charities" have donated their money and efforts to such wonderful activities as blowing up buses and pizza parlors and launching rockets from the Gaza strip. I know people here don't put much stock in publications like the National Review, but in the interest of fairness you should still take a look at what they have to say on the subject:
Aside from the First Amendment issue, the US government has prosecuted people for sending money to "charities" operating as fronts for terrorists. What the US prosecutes, entities owned by the US should not do.
Posted by: Engineer-Poet | June 7, 2009 8:53 AM
This is so stupid. AIG or any bank for that matter caters to Muslims, Amish, Baptist, Christian not because they love the religion. Rather they do so because there is money to be made. Anyone who disagrees has to be a godless, commie. I mean how can you go against the mantra of capitalism. Make profit where ever possible. We forget that a AIG is not a person. It's a corporation (?) or a legally compromised business entity. It's has no feeling or aspiration or support. It just wants to make money.
Posted by: JohnTheBaptist | June 8, 2009 11:29 AM
Don't believe the above poster (#28). He's the ANTE-CHRIST! :)
(Sorry I've been sitting on that one for a while now)
The Right has to let AIG offer these policies. Not to do so would be hypocritical.
If a corporation offers similar services to other religious groups with similar non-guarantees that money isn't being channeled into organisations someone might label as 'terrorists', and they're making money out of it, isn't the very essence of the 'American way'*? Are we smarter than the 'invincible and infallible' markets? Shouldn't we back-off and let individuals in those markets figure it out?
Take out the word 'sharia' and you'd be trampled by the Right rushing to support the position. -DJ
*'Give me the cash; to hell with the consequences to others'.
Posted by: DingoJack | June 8, 2009 11:49 AM
Quoth JTB:
And why is there money to be made? Because there is an extremely well-financed outfit behind it which is interested in promoting Sharia world-wide. The bits like punishing infidels for any criticism of Islam will come later.Quoth DingoJack:
You're confusing what private organizations can do and what the government, as owner of AIG, is allowed to do. AIG contributing to organizations promoting Sharia, or Islam in general, is un-Constitutional as long as the government owns and controls it. It would be just as wrong for the government to contribute to Mormon missionaries or Moonie love-bombing, whether as part of financial products or for its own sake.Posted by: Engineer-Poet | June 8, 2009 10:46 PM
@DingoJack (#29): I hope you were jesting because I was being sarcastic. I'm too lazy to be the anti-Christ(!) Isn't it anti-christ? I'm confused because ante-Christ can a be a valid phrase. I came before Jesus? So I'm older than Jesus? Haha.
@Engineer-Poet (#30): >
What the hell do you mean by "well-financed outfit behind." Who are these nameless, faceless well-financed outfit? You must be one of those paranoid person who believes Muslim are coming to get you and Muslims are going to over take the world in 50 years. Why does any corporation make money? Because the more it makes the richer it's stakeholders get. It's so silly and stupid to think AIG is making profit from Muslims because it wants to promote Shari'ah. AIG's making profit becaue that's what it's supposed to do.
To respond to your response to DingoJack: You forget the reality. AIG was a private company. It was not a government company. When government invested in it, it did so knowing full well what product AIG provides. Gov. was bailing out an American company that would have wrecked havoc in America if it failed completely. Gov. isn't promoting Islam or Shri'ah. The primary goal is to not see AIG go down completely. That was and is and will be the the goal behind the government's bailout. Not to promote Shari'ah.
And more, contributing to a Mormon missionay is so far off than investig in a company that might fail, that has a huge impact on American society, that sells a product without interest. Let's not compare two distinct things and call them the same. Ok? Thanks.
Posted by: JohnTheBaptist | June 11, 2009 11:32 AM
Why can't the "Sharia-compliant" insurance schemes be considered just as another line of product? Surely these offers are not only restricted to muslims? That would be discriminatory and unconstitutional, regardless of there being a government bailout or not. Maybe this is a misunderstanding being blown out of proportion.
Posted by: Insurance | July 6, 2009 7:16 AM
If you recall John, you were sent before to announce Jesus' arrival and baptise him in the Jordan River, I know you're not a young man any more* but seriously dude do some crosswords, sudoku, read with a little exercise helps slow the loss of neurons in the brain. ;)
Congratulations Engineer Poet, you've managed to completely miss the point. IF AIG offers religious compliant services to one, it should offer such services to all. And, of course, those who are complaining loudest are from the Right of the American political spectrum (the far-right out here in the real world), a group who seem to have absolute faith (pardon the pun) in the power of the market. If you believe the market knows best, then let the market decide and quit complaining. (Also one wonders whether the government, or any other investor, makes financial decisions anyway, doesn't the company hire people, on astronomical salaries & perks, to do that for them? The investors simply give 'em money and expect rising stock prices and good dividends.) - DJ
__________________________
*BTW Happy 2013th Birthday (you don't look a day over 1000)! I know I a couple of months late & I haven't got a gift (what do you get the man whose outlived nearly everything?) but still... It's the thought right? ☺
Posted by: DingoJack | July 6, 2009 9:58 AM