Under the First Amendment can the government require the foreign affiliates of domestic nongovernmental organizations to implement policies that explicitly oppose prostitution and sex trafficking in order for those organizations to receive government funds to fight HIV/AIDS abroad?
This case asks the Supreme Court to determine whether the government violates the First Amendment when it requires the foreign affiliates of U.S.-based nongovernmental organizations to adopt policies explicitly opposing prostitution and sex trafficking in order to receive federal funding. The United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (the “Leadership Act”) authorizes federal funding for nongovernmental organizations to assist their worldwide campaigns against HIV/AIDS and other diseases. But the Act requires fund recipients to adopt a policy that explicitly opposes prostitution and sex trafficking (the “Policy Requirement”). The United States Agency for International Development (“USAID”) administers the Leadership Act and contends that requiring foreign affiliates to comply with the Policy Requirement does not violate the First Amendment rights of these domestic organizations. It explains that First Amendment rights do not extend to the foreign affiliates because foreign entities are not entitled to any First Amendment rights and are legally distinct from their domestic counterparts. The Alliance for Open Society International, Inc. (“AOSI”) counters that the Policy Requirement infringes on its First Amendment rights because it compels speech that is likely to be attributed to AOSI. The outcome of this case has heavy implications for the international network of welfare workers, as well as the government’s control on federal funding.
Questions as Framed for the Court by the Parties
Whether—when in Agency for International Development v. Alliance for Open Society International Inc., the Supreme Court held that the First Amendment bars enforcement of Congress’ directive, which required respondents, United States-based organizations that receive federal funds to fight HIV/AIDS abroad, to “have a policy explicitly opposing prostitution and sex trafficking” as a condition of accepting those funds—the First Amendment further bars enforcement of that directive with respect to legally distinct foreign entities operating overseas that are affiliated with respondents.
In 2003, Congress passed the United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (the “Leadership Act”), codified at 22 U.S.C. § 7601, which authorized funding for nongovernmental organizations that fight HIV/AIDS and other diseases worldwide. Alliance for Open Society International, Inc. v. United States Agency for International Development (Second Circuit) at 3. As a condition for receiving this funding, Congress required them to adopt policies “explicitly opposing prostitution and sex trafficking” (the “Policy Requirement”). Id. at 7.
In 2013, the United States Supreme Court ruled that the Policy Requirement violated the First Amendment. USAID v. AOSI (Second Circuit) at 3. The Court stated that, under the First Amendment, the Government cannot condition federal funding on the adoption of a certain belief. Id. The Court explained that, under the Leadership Act, the Policy Requirement leverages federal funding to compel organizations to explicitly oppose prostitution and sex trafficking. Id. at 3. The Court explained further that while the Government has broad discretion under the Spending Clause when allocating federal funds for “general welfare” purposes, the Government cannot unconstitutionally burden the recipient’s First Amendment rights in exchange for federal funding. Id. at 20.
Petitioner United States Agency for International Development (“USAID”) administers federal funding under the Leadership Act. Id. at 6. It interpreted the Supreme Court’s decision as limited to domestic organizations and not to their foreign affiliates, and therefore continued to apply the Policy Requirement to foreign affiliates. Id. at 3. Respondents, including Alliance for Open Society International, Inc. (“AOSI”), are a group of U.S.-based nongovernmental organizations fighting the HIV/AIDS epidemic globally, often through their foreign affiliates. Id. at 3–7. AOSI sued USAID in the United States District Court for the Southern District of New York (the “District Court”) seeking a permanent injunction barring USAID from applying the Policy Requirement to the foreign affiliates because doing so would violate the First Amendment. Id. at 7. In 2015, the District Court granted the permanent injunction. Id.
USAID appealed to the United States Court of Appeals for the Second Circuit (the “Second Circuit”) which upheld the District Court’s injunction. Id. at 13–15. The Second Circuit explained that where a domestic entity and its foreign affiliates formed a homogenous organization, the speech of one can be attributed to the other. Id. at 11–12. Therefore, requiring the foreign affiliate to adopt a position that contradicts the beliefs of the domestic organization essentially forces the organization to enact contradictory positions. Id. This, the Second Circuit ruled, violates the domestic organization’s First Amendment rights. Id. at 13–15.
USAID petitioned for a writ of certiorari which the United States Supreme Court granted on December 13, 2019.
FIRST AMENDMENT RIGHTS AND AFFILIATED ENTITIES
USAID argues that foreign entities operating abroad do not have First Amendment rights, and therefore, the Policy Requirement applies to AOSI’s foreign affiliates. Brief for Petitioner, United States Agency for International Development at 20. Furthermore, USAID explains that Congress is constitutionally authorized to implement conditions in order for organizations to receive federal funds, which includes requiring organizations to comply with certain requirements like the Policy Requirement. Id. at 21. USAID also differentiates the Supreme Court’s holding in Agency for International Development v. Alliance for Open Society International, Inc. by contending that the freedom of speech concerns in the prior case do not apply to foreign recipients of federal funding. Id. In deciding the prior case, the Supreme Court relied on the unconstitutional-conditions doctrine, which states that the government cannot deny benefits to an individual or entity if the basis for that denial infringes on constitutionally guaranteed freedom of speech. Id. at 22. According to USAID, the unconstitutional-conditions doctrine does not apply to foreign affiliates of AOSI because the doctrine can only be used by an entity with constitutional rights. Id. at 23.
AOSI counters that private entities have a right to control their speech. Brief for Respondents, Alliance for Open Society International, Inc. at 30. AOSI explains that the Government cannot force private entities to support ideas against their will by compelling certain speech. Id. at 31. For example, AOSI distinguishes speech restrictions from compelled speech. Id. at 32. It explains that speech restrictions can prevent an organization from explicitly affirming certain views but can only limit this speech within the scope of federal funding, thus remedying the First Amendment violation by permitting the organization to espouse their ideals outside of the federal funding requirements. Id. AOSI contends that compelled speech cannot be remedied in the same manner because the private entity is forced to affirmatively support a view, such as the Policy Requirement, which cannot be cabined into one part of the organization “because the government’s view is inscribed on the organization as a whole.” Id. at 32. In particular, AOSI notes that the organization cannot support one belief due to the Policy Requirement when utilizing Leadership Act funds and then claim a different belief when utilizing the organization’s private funds because compelled speech cannot be limited “to the recipient’s federally funded activities.” Id. at 28. Thus, AOSI argues that their organization is harmed by the Policy Requirement because if foreign affiliates have to espouse a particular belief for Leadership Act funds, that belief will inevitably be cast upon AOSI. Id.
LEGAL DISTINCTION AND ATTRIBUTION
USAID argues that applying the Policy Requirement to AOSI’s foreign affiliates does not violate AOSI’s First Amendment rights because the foreign entities are legally distinct. Brief for Petitioner at 27. USAID further supports this claim by explaining that the domestic and foreign entities cannot be viewed as one unified entity simply because the organizations “share their names, logos, and brands,” especially since the organizations themselves decided to organize as legally distinct entities. Id. at 28. This claim is supported by corporate law principles, according to USAID, because by forming legally distinct entities, these entities are able to have distinct rights and responsibilities such as a lack of liability. Id. USAID also notes that Supreme Court precedent has applied legal distinction in funding-condition cases; and therefore, since these entities are set up as legally distinct, instituting the congressional policy requiring foreign entity recipients of Leadership Act funds to have a policy expressly opposing prostitution and sex trafficking does not infringe on AOSI’s First Amendment rights. Id. at 29. Overall, USAID argues that AOSI and its affiliates decided to maintain legal distinction, and these entities are able to utilize the benefits of that separation, but the entities are not able to disregard this legal distinction in order to avoid the burdens that accompany corporate separation. Id. at 32–33.
Additionally, USAID contends that AOSI’s concern that the organization and its affiliates will appear hypocritical by having differing views regarding prostitution and sex trafficking is unwarranted because there are several ways to mitigate those concerns. Id. at 37. First, USAID explains that AOSI can clarify that their affiliated entities do not speak for them by utilizing “their own speech rights to make clear that no other entity speaks for them on these issues.” Id. at 38. Also, USAID states AOSI could stop utilizing foreign affiliates and instead operate directly in other countries. Id. Finally, USAID posits that AOSI could decide not to have affiliates receive Leadership Act funds, which would mean these entities would not be subject to the Policy Requirement. Id. USAID adds that AOSI has several options in order to ensure statements by foreign affiliates that do not align with AOSI’s policies are not attributed to AOSI; however, USAID argues that AOSI “cannot bootstrap” their First Amendment rights not requiring compliance with the Policy Requirement in order to apply federal funds to its foreign entities operating abroad. Id.
AOSI counters that the legal distinction does not remedy the burden on AOSI posed by compelled speech. Brief for Respondent at 37. AOSI contends that despite all the corporate formalities, a legal burden on one entity can always implicate the First Amendment rights of another independent but “closely related” entity. Id. AOSI notes that there are several compelling reasons that AOSI and its foreign affiliates would be established as legally distinct entities, including, requirements of local incorporation in certain foreign countries and funding eligibility requirements. Id. Furthermore, AOSI explains that the importance of legal distinction is context-dependent because in this case the separation between entities does not remedy the freedom of speech concerns because the belief necessary under the Policy Requirement “easily crosses invisible corporate lines” and thus, is easily attributed to AOSI. Id. at 39.
AOSI further contends that the hypocrisy of views that the Policy Requirement could cause cannot be remedied without infringing on AOSI’s First Amendment rights. Id. AOSI notes that legal distinction does not remedy the First Amendment harm because speech by one legally distinct entity is likely to be attributed to an affiliate, and therefore, legal distinction is “insignificant” in this context. Id. In addition, AOSI posits that the likelihood of attributing speech by one entity to its affiliates is the determinative factor in this case, not whether the entities are legally distinct. Id. at 41. AOSI explains that Supreme Court precedents on government-speech issues have been dependent, in part, on the likelihood that the speech will be attributed to affiliates. Id. at 42. Here, AOSI argues that the scope of the injunction restricts USAID from imposing the Policy Requirement on foreign affiliates that utilize the “same name, logo, and trademark” because attribution is likely to occur. Id. at 42–43. Overall, AOSI contends that legal separation between entities does not remedy USAID’s freedom of speech infringement because speech by foreign affiliates is likely to be attributed to AOSI, and AOSI should be able to organize their entity and affiliates as they see fit without being harmed by the Policy Requirement. Id. at 45.
CONGRESS’S GOAL TO ERADICATE HIV/AIDS
USAID contends that the Policy Requirement is necessary to meet Congress’s goal of eradicating HIV/AIDS. Brief for Petitioner at 39. Congress’s opposition to prostitution and sex trafficking, USAID asserts, was a broad strategic choice in combating HIV/AIDS. Id. at 39. This choice, USAID adds, was supported by a “broad bipartisan consensus.” Id. at 40. USAID explains that Congress opposed prostitution and sex trafficking because both have “rapidly and tragically spread HIV/AIDS among unknowing and powerless victims.” Id. at 41. Therefore, USAID contends, the Policy Requirement is necessary to serve the Congress’s public health goal of preventing the spread of HIV/AIDS. Id. at 39. Many organizations led by victims of prostitution and sex trafficking, USAID points out, support Congress’s stance against prostitution and sex trafficking in the fight against HIV/AIDS. Id. at 40−41.
AOSI counters that the Policy Requirement does not serve Congress’s goal of eradicating HIV/AIDS. Brief for Respondent at 45−46. According to AOSI, Congress’s policy opposing prostitution and sex trafficking has played no role in the success of the Leadership Act overseas. Id. at 46. AOSI notes that some of the world’s largest public-health agencies and recipients of federal funding in Congress’s fight against HIV/AIDS were exempt from the Policy Requirement. Id. While this proves that the Policy Requirement has never been essential to the fight against HIV/AIDS, on the other hand, AOSI asserts, enforcing such a requirement could burden many of AOSI’s private partners. Id. at 47. AOSI explains that many of its private partners extensively and necessarily involve sex-workers in their fight against HIV/AIDS and adopting a position against prostitution and sex trafficking will ostracize such sex-workers. Id. Therefore, AOSI concludes, the Policy Requirement should not be enforced because it will dampen AOSI’s efforts against the epidemic and, in turn, impede the eradication of HIV/AIDS. Id.
USAID argues that upholding the permanent injunction against the application of the Policy Requirement would lead to untenable consequences such as sham affiliations. Brief for Petitioner at 32. USAID explains that foreign organizations could use their U.S. affiliate’s First Amendment rights to challenge speech-related funding conditions. Id. USAID argues, this could force the Government to fund foreign organizations that are anti-democratic and support terrorism. Id. According to USAID, a white supremacist group in the United States could affiliate with an apartheid supporting organization in South Africa and allow the foreign organization to challenge the United States Government’s speech restrictions on federal funding. Id. USAID points out that AOSI does not refute such a possibility; instead, AOSI asserts that such is not the case in this instance. Id. Therefore, USAID concludes, the Policy Requirement is necessary to avoid such probable consequences. Id.
AOSI argues that the permanent injunction against the application of the Policy Requirement should be upheld because this case is not about new or unfamiliar affiliates. Brief for Respondent at 48. AOSI points out that Respondents are bona-fide U.S. organizations with a hard-earned reputation and its affiliates are long-standing trusted partners of 17 years. Id. AOSI contends that the recipients of Leadership Acts funding have to go through rigorous screening before they are deemed eligible to receive it. Id. at 49. The recipients are further subject to government monitoring that ensures compliance. Id. These measures ensure that “sham affiliates” do not take advantage of a domestic organization’s First Amendment rights to misappropriate federal funding for extreme causes. Id.
- Natalie Dickes: SCOTUS Update, American Bar Association (Jan. 14, 2020).
- Joseph Blocher: New Problems for Subsidized Speech, 56 Wm. & Mary L. Rev. 1083 (2015).
- Restrictions on the Speech of Recipients of Federal Funds Under the Leadership Act of 2003: United States Agency for International Development v. Alliance for Open Society, EveryCRSReport (July 3, 2013).