This article is the first in a special six-part series commemorating the 50th anniversary of the National Club Association. Over the years, NCA has kept the private club industry informed, engaged and protected from legislative, regulatory and legal issues that threatened the rights and privileges of private clubs.
The first article in the series covers the landmark Supreme Court decision in 1988 regarding public accommodation and a club’s First Amendment right. Articles on this topic first appeared in the September 1988 issue of Perspective, the predecessor of Club Director. Additional excerpts are from the August and September 1989 issues (Note: August was the transition issue in magazine titles—see cover treatments below).
This look to the past reminds us of the broad scope and ramifications of our industry’s First Amendment Right of freedom of association. Though more than twenty years have passed, this issue looms large in present day threats against private clubs’ rights to association. We hope you enjoy reading these historic article excerpts and recognize that club leaders must continue to safeguard privacy rights.
Editor’s note: The following article summarizes guidelines formulated in a more detailed analysis authored by former NCA President Fred L. Somers, Jr.
The most common threat to a private club is likely that of a state or city legislature passing a law declaring it to be a “public accommodation.” Such action would usually subject the club to a panoply of state-imposed restrictions and requirements, including serving all who seek entry. Forty-one states have public accommodation laws.
New York City L.L. (ordinance) 63 has become the model of such legislation proposed throughout the country. In New York State Club Association v. New York City, the NYSCA, supported by NCA, argued that L.L. 63 was invalid on its face, because it did not allow clubs to establish that they were protected from its effect by the constitutional right of free association. At the last minute, the city conceded that the law must be interpreted to preserve constitutional rights. The Supreme Court found that the law was not unconstitutional on its face, but that more was needed to be proven before a club’s freedom of association right could be limited. (See sidebar with Justice O’Connor’s opinion.)
The question remains as to how such legislation can be applied without trespassing on the freedom of association. Consequently, responding to this legislation requires dual considerations—avoiding the impact of the law and, if that is not feasible, positioning the club to claim constitutional protections which negate the law. (See Sidebars “How Public Accommodation Laws Affect Privacy Rights” and “Can Clubs Resist the Power of the State?”)
Factors Influencing “Public Accommodation”
The New York City law had three major provisions. A club is a “public accommodation” if it:
- has 400 or more members
- regularly serves meals
- regularly receives payment for dues, fees, use of space or facilities, services, meals or beverages, directly or indirectly, from or on behalf of nonmembers for the furtherance of trade or business.
The first two factors are fairly straight forward and easily understood. There is no particular magic to the number 400, aside from the fact that the Supreme Court, in deciding the New State Club Association case, did not find it so restrictive that the act would automatically be unconstitutional. Consequently, other legislatures are more likely to adopt it as a safe number, having already received the Court’s approval, no matter how limited.
It may be helpful to have club bylaws specify a ceiling number on the overall membership, as well as on each class of membership. It might be possible for clubs to subdivide their membership into various categories, constituting clubs within clubs. Another option is to adopt a bylaws provision forbidding the creation of new membership categories if the overall size of the club has already exceeded the average size of the type of club within that geographical area. These efforts will help avoid absolute size limitations and help clubs build a case for the right to constitutional protection under the right of free association.
Concerning the New York City ordinance’s second element, “regular meal service,” little can be said. Whether or not meals are “regular” usually depends on the regulations or guidelines promulgated by whatever agency is given jurisdiction to enforce the act. The regulations promulgated under this provision have been fairly stringent, by no means requiring that three meals per day be served. In some instances, they have
required only one meal per week, depending on the circumstances.
The third element, concerning outside income, embodies a number of issues to be considered and probably offers the greatest flexibility. The club must regularly receive payment for dues or fees, use of space or facilities, services, meals or beverages directly or indirectly from or on behalf of nonmembers in furtherance of trade or business. Generally speaking, avoiding this provision, and thus avoiding the impact of the law, requires circumspection from the club in its policies concerning payments to the club, use of the club for business purposes, and guests. There are many steps that may be taken.
The club should adopt and publish a rule forbidding payments to the club by company check or even from a personal account used primarily for trade or business. That rule would include rejecting all checks appearing to be drawn on a corporate or business account.
Use of the club for business should be discouraged. The club should adopt and publish a rule forbidding business discussions (“no briefcase” rule) and business meetings, except those concerning the business of the club itself or of related activities. The club should require special permission for nonmember use of the club that is not obviously social, with an absolute limit upon such uses.
Similarly, clubs should discourage members from accepting reimbursement from their employer or business for payment of dues, fees, etc. If you want to be purely private, or are under threats of impending or existent anti-privacy legislation, member should refrain from accepting reimbursement. Again, if you decide on pure privacy, encourage members not to deduct their dues as business expenses. Just as invoices should caution against reimbursement, they must ensure that members will not deduct expenses.
All steps taken to avoid business use of the club will avoid the direct impact of the law and buttress the club’s constitutional privacy claims. One of the major factors influencing the Supreme Court’s rejection of other organizations’ privacy claims (the Jaycees and the Rotary Club) was that those organizations overtly emphasized business or professional activity.
Such service groups, in addition to their service objective, help promote the business and career ambitions of their members, thus generally promoting business. Consequently, the Court was convinced that by being denied membership in those “business” clubs, women were unfairly foreclosed from valuable business contacts or opportunities. The state’s interest in eradicating such unfairness was thus held to outweigh member’s privacy interests.
Quite apart from considerations of avoiding the direct impact of a “public accommodations” law, clubs can strengthen their constitutional defenses in a number of ways. In disposing of previous privacy claims, the courts have identified several criteria for determining whether or not an organization could legitimately claim the constitutional right of free association. The criteria included:
- limited size
- club purpose
- club policies
- non-commercial nature
- selectivity
- permanent machinery for carefully screening applicants
- congeniality
- exclusivity
- non-use of public facilities
- limited nonmember use of facilities
- use of facilities by nonmembers
- membership control of club
- operating solely for members’ benefit
- avoidance of publicity
- history of club
- deductibility of dues
- any other factors deemed relevant
One other element not specifically mentioned by the courts is that of overt discrimination. It is wise for a club to purge its bylaws of gender-specific references. It is also suggested that clubs adopt bylaws stating that being of a particular creed, national origin, sex or color does not preclude a person from being considered. Instead, the membership committee should prescribe and publish subjective criteria for membership.
Statements to the contrary make a club a potential target of legislation. In addition, the Supreme Court has yet to interpose the right of free association to protect discriminatory membership practices. Consequently, careful membership policies may be the most propitious place to start, because they probably offer the best protection of all.
Justice O’Conner, With Justice Kennedy Concurring
Perspective, September 1988
One of the most important parts of the case is the opinion written by these two Justices. While the entire Court ruled that the New York ordinance was constitutional, these two Justices established why the case was a victory for the private club industry by upholding the requirement that more must be shown before any private club can have its First Amendment Right interfered with by a local or state government.
The Court reaffirms the “power of States to pursue the profoundly important goal of ensuring nondiscriminatory access to commercial opportunities in our society.” But our cases also recognize an “association’s First Amendment right to control its membership,” acknowledging, of course, that the strength of any such right varies with the nature of the organization. Balancing these two important interests calls for sensitive tools. As it has been interpreted, Local law 63 is such a device (though) the factors identified in (L.L. 63) are not exclusive, but are to be considered along with other considerations such as “size, purpose, policies, selectivity, congeniality, and other characteristics.
An association or club thus is permitted to demonstrate that its particular characteristics qualify it for constitutional protection, despite the presence of the three factors specified in Local Law 63.
How Public Accommodation Laws Affect Privacy Rights
Private & Tax-Exempt Status, National Club Association, 2003
A distinctly private club which qualifies for First Amendment protection should be exempt from state and local public accommodation laws. This is because the U.S. Constitution trumps state and local statutes and ordinances.
However, state courts don’t always agree with freedom of association principles as interpreted by the federal courts. As a result, state court decisions are sometimes at odds with one another and with federal decisions. Moreover, the U.S. Supreme Court is usually reluctant to grant review of state supreme court decisions if the matter involves the applicability of state law, unless there is an obvious conflict in the manner in which two or more state supreme courts have dealt with an identical issue.
There is a fair amount of variation in state and local public accommodation laws. Some of them provide a limited exemption for private organizations, some only for religious organizations, and some offer no exemption at all. Some state and local laws provide for a wider reach of protected classes than others do. Thus, developing case law in one jurisdiction may have little or no value in predicting the outcome of litigation in another jurisdiction based on the same or similar facts.
Another difficulty which sometimes arises in public accommodation litigation is the reluctance of federal and state courts to grant absolute immunity from state and federal civil rights laws. Even though the First Amendment trumps statutes and other legislation of a lower order, courts are very protective of what they perceive to be an equally significant right—the right to not be discriminated against in the provision of goods and services, employment or housing opportunity. Thus, courts will often engage in a balancing test, weighing the burden on the right of privacy or freedoms of association and assembly against the right not to be discriminated against under state and federal civil rights laws.
The result of this balancing test is the qualification of the right of privacy. It is not absolute and may be jeopardized if privacy criteria are not followed or if a particular court determines that the right to not be discriminated against predominates over the right of privacy under the facts and circumstances of the case.
New York City’s Local Law 63
New York City’s Local Law 63 is seen by many as the early model for local public accommodation ordinances. The New York City Council declared there existed a compelling public interest in providing its citizens with fair and equal opportunity to participate in the business and professional life of the city and that this interest outweighed the interests of club members in private association.
Proponents of public accommodation laws argued that the three criteria noted earlier cut to the core of whether clubs are truly private. They pointed to the fact that many clubs do not really act in a distinctly private manner; many are large, business-oriented groups; and their function often exceeds the social purpose for which they were originally formed.
The U.S. Supreme Court reviewed the constitutionality of the New York City law in
1988, as it applied to private clubs. In New York State Club Association (NYSCA) v. New York City, 487 U.S. 1 (1988), the NYSCA, supported by NCA, argued that Local Law 63 was invalid on its face, because it violated private clubs’ associational protections afforded to them under the First Amendment of the U.S. Constitution.
The court held that the law was constitutional on its face because under the facts presented, it might be valid. However, the court also ruled that the three-part test couldn’t be used as the exclusive basis for determining private status. The three-factor test under Local Law 63 must be considered in conjunction with other relevant characteristics of the club, such as purpose, policies, selectivity and congeniality. As a result, clubs are still permitted to assert their constitutional rights of private association, if the facts warrant.
Can Clubs Resist the Power of the State?
Club Director, August 1989
NCA and the New York State Club Association challenged Local Law 63, starting with testimony in July 1980, stating that the Local Law 63’s irrebuttable, three-part test was unconstitutional on its face. Such a challenge is exceptionally difficult to maintain because it requires demonstration that the law could not, under any reasonable interpretation and circumstances, be applied without violating the Constitution. At the 11th hour, before the Supreme Court in February 1988, attorneys for the City of New York conceded that the law merely provided guidelines, and that clubs would be allowed to show that they were private regardless of the seeming rigidity of the law, thereby negating the irrebuttable challenge.
In the face of that concession, the Court accepted the constitutionality of the law.
Although there is still great uncertainty in this area of the law, the right of intimate association is not unlimited. It can be regulated by the state in the public interest. This determination is consistent with constitutional law principles, because no right is absolutely unlimited. Even free speech and the practice of religion are subject to some limitations, however small.
In determining the constitutionality of limitations upon intimate association, the Court has balanced that right against the State interest involved. This approach is also consistent with general constitutional law. This approach may make it appear that the Court has unchecked power, but the Supreme Court has nearly always been guided by rational, neutral, and objective considerations in striking the balance.
The private status of a club is a factual matter and privacy is a matter of degree. In the eyes of the Court, large clubs allegedly formed to provide members a place to socialize and do business entertaining, having little or no apparent selection criteria, engaging in large amounts of outside business, freely admitting non-members, etc., have a small claim to intimate association and a correspondingly small chance of resisting state interference with privacy rights.