The Seventh Circuit recently held in Laskowski v. Spellings that grantees of government funding can be forced by taxpayers to give grant money back to the federal government when the grant has allegedly violated the Establishment Clause – even when the grant statute expired years ago, the funds have long since been spent, and the government does not want the money back. Laskowski’s new remedy has the potential for widely impacting Establishment Clause jurisprudence, especially in the areas of government funding for sectarian schools and other religiously-affiliated groups. The ready availability of a recoupment remedy could also have far-reaching and detrimental effects on the cooperative relationship between government agencies and faith-based organizations to provide services to the needy. Whether the recoupment remedy is appropriate is not an easy question to answer. The values protected by the Establishment Clause have been recognized as fundamental since this country’s founding.

On the other hand, the Constitution has framed our system of government so that each of the three branches of the federal government, including the judiciary, has limited powers and must stay within the boundaries set by the Constitution. This article will show that the restitutionary recoupment remedy allowed by the Seventh Circuit arguably violates Article III’s limits concerning mootness and standing, as well as general separation of powers principles. Although it is important for constitutional provisions to be obeyed by the legislative and executive branches, it is not right for the Courts also to violate the Constitution’s mandates in order to police the other branches’ every move. The Supreme Court has made clear that “[i]f a dispute is not a proper case or controversy, the courts have no business deciding it, or expounding the law in the course of doing so.” That principle is especially relevant here, where allowing the courts to order charitable organizations to repay grant funds to the federal treasury provides only a negligible or nonexistent gain to the plaintiff taxpayers, but may bankrupt the organizations that have spent the funds in providing services of benefit to the community. This “equitable” restitutionary remedy is anything but equitable, and there is a better way to ensure that the Constitution’s safeguards are obeyed.

This article will begin with an examination of the Supreme Court’s precedent regarding standing and mootness, as well as the history of restitution in the Establishment Clause context. Next, the article will explain the circumstances surrounding Laskowski v. Spellings and address the holdings of both the district court and the Seventh Circuit. The next section will explore the developments that have unfolded following the Laskowski holding. Finally, in determining whether recoupment is a proper remedy in this context, this article will examine mootness, standing, and restitution separately and explain why the remedy is contrary to precedent in each of those areas of the law.

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