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schools with those involving government aid that reaches religious
schools through individuals.
College I, 159 F.3d at 158 (citing Roemer, 426 U.S. at 758 n.
21.) So even though the loan agreement explicitly prohibits
Lipscomb from using any bond-financed facilities for
religious purposes, there is no way to prevent that from
happening here because of the University’s pervasively
religious character. Since the sectarian and secular activities
at Lipscomb are so inextricably intertwined, the government
cannot avoid excessive entanglement with the sectarian
mission of the University. Agostini, 521 U.S. at 234.
Accordingly, the low-interest loan arranged by the Board
through the issuance of the tax-exempt revenue bonds to
Lipscomb results in a violation of the Establishment Clause.
Indeed, it is not at all clear that Lipscomb would have been
able to proceed with its construction and renovation project
without the issuance of the tax-exempt revenue bonds;
certainly, the record indicates that it would not have been
possible to proceed on such financially favorable terms.
The Supreme Court’s recent decision in Zelman, 122 S. Ct.
at 2460, does not alter this conclusion, but indeed supports it.
As noted by the Court in Zelman, "our decisions have drawn
a consistent distinction between government programs that
provide aid directly to religious schools . . . and programs of
true private choice, in which government aid reaches religious
schools only as a result of the genuine and independent
choices of private individuals." Id. at 2465 (citations
omitted.).7KH&RXUWDGGHG
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religious organizations from taxes, as it would were it to
subsidize them. The exemption simply leaves untouched
that which adherents of the organization bring into being
and maintain.
Id. at 693.
Although no state funds were transferred through the
revenue-bond financing employed in this case, the form of
state aid at issue, however, exhibits the "affirmative
involvement characteristic of outright governmental subsidy."
Id. at 691. Here, the Board and Metro do not play a "passive"
role, but rather "affirmatively foster" the activities of
Lipscomb by acceding to its request for a low-interest loan
funded by tax-exempt revenue bonds. Moreover, the tax-
exempt revenue financing does not "simply leave[] untouched
that which adherents of the organization bring into being and
maintain." Id. Instead, the issuance of the low-interest loan
to the pervasively sectarian educational institution in this case
"employs the organs of government for essentially religious
purposes" by allowing Lipscomb to fund improvements to its
University in order to advance its sectarian mission. Id. By
providing a low-interest loan funded by tax-exempt revenue
bonds to a pervasively sectarian educational institution, the
Board and Metro provided the kind of state aid that is
characteristic of a direct governmental subsidy.
Consequently, given Lipscomb’s pervasively sectarian
character, it must be concluded that Lipscomb’s receipt of a
direct economic benefit in the form of a low-interest $15
million loan resulted in excessive governmental entanglement
with the religious mission of the University. In view of
Lipscomb’s "character and purposes," Agostini, 521 U.S. at
232 (quoting Lemon, 403 U.S. at 615), its "secular activities
cannot be separated from sectarian ones." Roemer, 426 U.S.
at 755. Because the religious and secular functions are
inseparable at Lipscomb, "no safeguard can ensure that direct
monetary aid, even if designated to fund the school’s secular
functions, will not aid its religious mission." Columbia

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that a direct economic benefit accrues to such an institution as
a result of the government’s active participation in arranging
for a low-cost loan that enables the institution to advance its
sectarian mission.
In view of the government’s direct involvement with
advancing the religious mission of a pervasively sectarian
educational institution, it cannot be said that this form of state
aid comes within Walz v. Tax Comm’n, 397 U.S. 664 (1970),
where the Supreme Court upheld a property tax exemption to
religious organizations for properties used solely for religious
worship. See Hunt, 413 U.S. at 745 n. 7. As noted in the
concurring opinion of Justice Brennan in Walz, while general
subsidies of religious activities would constitute
impermissible state involvement with religion, tax
exemptions "constitute mere passive state involvement with
religion and not the affirmative involvement characteristic of
outright government subsidy." Walz, 397 U.S. at 690-91. As
explained by Justice Brennan:
Tax exemptions and general subsidies, however, are
qualitatively different. Though both provide economic
assistance, they do so in fundamentally different ways.
A subsidy involves the direct transfer of public monies to
the subsidized enterprise and uses resources exacted from
the taxpayers as a whole. An exemption, on the other
hand, involves no such transfer. It assists the exempted
enterprise only passively, by relieving a privately funded
venture of the burden of paying taxes.
Id. (footnotes omitted.) Thus, in finding that the property
exemptions in question did not rise to the level of excessive
governmental involvement, Justice Brennan noted:
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they do not advance "essentially religious purposes." To
the extent that purely religious activities are benefited by
the exemptions, the benefit is passive. Government does
not affirmatively foster these activities by exempting
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fundamental character of the government’s participation in
this kind of financing arrangement. In this respect, it is
important to examine the reasoning of the Virginia Supreme
Court in Lynn, which found that the governmental aid
involved in the revenue-bond financing in that case did not
amount to "direct aid" to Regent University, a pervasively
sectarian educational institution, because no governmental aid
was received by the University since the bond proceeds are
funds of private investors. 538 S.E.2d at 638. According to
Lynn, "Regent receives these funds because of the genuinely
independent choices of investors," whose decisions to
purchase the bonds "cannot be attributed to state decision
making." Id. at 639 (citing Zobrest v. Catalina Foothills Sch.
Dist., 509 U.S. 1, 10 (1993)). Accordingly, the Virginia
Supreme Court concluded that there was no Establishment
Clause violation because "[n]o government funds ever reach
Regent’s coffers." Id.
What is being ignored in this account is the fact that the
government provides the pervasively sectarian educational
institution with a direct economic benefit in the form of a
low-interest loan, which the institution would not be able to
obtain without the direct participation of the government.
Thus, although it is true that no state funds are being
transferred through this kind of financing mechanism, the
relevant question is whether the government has provided the
pervasively sectarian educational institution with a direct
economic benefit. Contrary to the understanding of the court
in Lynn, a direct economic benefit is not necessarily
determined by merely looking at whether there was a
transference of governmental money. To constitute a direct
economic benefit to a pervasively sectarian educational
institution, it is sufficient that the government makes it
possible for the institution to obtain economic aid that it
would not otherwise be able to obtain without the
government’s direct participation. That no governmental
funds actually reach the coffers of the pervasively sectarian
educational institution does not alter for one moment the fact

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lots, landscaping, computer mainframe, baseball stadium,
tennis courts, fiber optic network, a pedestrian walkway, and
renovate its administration and business school buildings.
Through the low-interest loan, Lipscomb was thereby able to
improve its facilities to increase its student enrollment to
3,000, and thus advance its sectarian mission.
The district court also properly rejected Defendants’
argument that Lipscomb’s economic benefit came from the
bond purchasers who purchased the tax-exempt revenue
bonds, and not from the government. Properly understood,
Lipscomb received a direct economic benefit in the form of a
low-interest government sponsored loan. For Establishment
Clause purposes, it is immaterial that the Board subsequently
assigned the loan to Sovran Bank.
The district court also correctly rejected Defendants’
argument that the bondholders, not Lipscomb, are the true
beneficiaries of the aid program. As the district court
properly noted, the Supreme Court in Hunt examined a
similar transaction and found that "[t]he income tax-exempt
status of the interest enables the Authority, as an
instrumentality of the State, to market the bonds at a
significantly lower rate of interest than the educational
institution would be forced to pay if it borrowed the money
by conventional private financing." Steele, 117 F.Supp.2d at
717 (quoting Hunt, 413 U.S. at 739). Thus, the district court
rightly concluded that "Lipscomb received a flow of funds
into its coffers provided by a loan from the Board. These
funds did not merely supplement the teaching of secular
subjects at Lipscomb; they were central to the school’s stated
goal of increasing enrollment. If Lipscomb’s mission is to
promote Churches of Christ doctrine, then Metro, through the
Board, provided aid to promote Churches of Christ doctrine."
Steele, 117 F. Supp.2d at 718.
It should be pointed out, at this juncture, that characterizing
the role of the state as a "mere conduit" on the basis that the
use of governmental funds is not involved ignores the
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receipts from any such facilities and secured by a pledge
of said revenues and receipts.
(J.A. at 130-31.) Thus, contrary to the protestations of the
Board and Metro, it is clear that because the Board is an
instrumentality of Metro, both Defendants were involved in
the project benefiting Lipscomb, notwithstanding their
separate legal identity. Further, the district court properly
rejected Metro’s contention that it could not be liable for an
Establishment Clause violation in this case because it only
provided "host approval" for the bonds to be federally tax
exempt. As the district court properly noted, Metro’s role in
the financing was critical because the bonds could not have
been issued as federally tax exempt without Metro’s
participation in approving the bond issue.
Under the terms of the statute, local governments are
authorized to offer low-interest loans by making funds
available through the issuance of tax-exempt municipal
bonds. Here, Lipscomb approached the Board seeking a low-
interest development loan funded by the proceeds of the tax-
exempt bond issuance. While the money that went to
Lipscomb ultimately came from private investors who
purchased the tax-exempt revenue bonds, and while
Lipscomb must repay Sovran Bank for the loan, the direct
economic benefit that Lipscomb received from the
governmental entities, as the district court pointed out, was
the low-interest "loan from the Board and, hence, from
Metro." Steele, 117 F. Supp.2d at 717.
Thus, even though there was no direct transfer of money
from the Board to Lipscomb, the district court correctly found
that "[t]he money went directly to Lipscomb in the form of a
loan from the Board, an instrumentality of Metro." Id., 117
F. Supp.2d at 720. As a result of the low-interest loan of $15
million originated by the Board at Lipscomb’s request,
Lipscomb thus saved about 30% of the cost of its campus
building projects. These savings enabled Lipscomb to fund
the new library, intramural sports building and field, parking

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providing every religion with an equal opportunity (say, to
secure state funding or to pray in public schools), but by
drawing fairly clear lines of separation between church and
state") (emphasis in original). :KDWPDWWHUVLQWKLVFDVHWKHQ
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SHUYDVLYHO\ VHFWDULDQ LQVWLWXWLRQ LV LQ YLRODWLRQ RI WKH
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The district court properly concluded that the Establishment
Clause was violated because Lipscomb received a direct
economic benefit from the government, which resulted in
excessive entanglement of the government with the religious
institution. Although the district court noted that "[t]here is
no single, clear definition of ‘direct benefit’ to control this
analysis," Black’s Law Dictionary defines "direct" in the
relevant sense as "[i]mmediate; proximate; by the shortest
course; without circularity; operating by an immediate
connection or relation, instead of operating through a
medium; the opposite of indirect." Black’s Law Dictionary
459 (6th ed. 1990). In contrast, "indirect" is defined as "[n]ot
direct in relation or connection; not having an immediate
bearing or application; not related in the natural way." Id. at
773.
As the district court correctly noted, the Board and Metro
were both directly connected to the project benefiting
Lipscomb. According to the official statement regarding the
issuance of $15 million in educational facilities refunding
bonds,
The Issuer [the Board] was created on May 6, 1959
pursuant to the Act as a public corporation and
instrumentality of the Metropolitan Government of
Nashville and Davidson County, Tennessee, for the
purpose, among other things, of financing educational
facilities with a view to promoting the education of the
people of the State of Tennessee. The Issuer is
authorized by the Act to issue revenue bonds, including
refunding bonds, payable solely from the revenues and
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(noting "the development of constitutional doctrine that reads
the Establishment Clause as avoiding religious strife, not by

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the present case under Walz v. Tax Comm'n, 397 U.S.
664, 90 S.Ct. 1409, 25 L.Ed.2d 697 (1970), where this
Court upheld a local property tax exemption which
included religious institutions.
413 U.S. at 745 n. 7 (emphasis added). Equally, in Johnson,
this Court declined to resolve whether a very similar type of
tax-exempt revenue bond issue amounts to a direct benefit
because it held that the religious academy was not a
pervasively sectarian educational institution. 241 F.3d at 511,
n. 3. However, unlike those cases in which the institutions
were found not to be pervasively sectarian, the issue must be
directly confronted here because Lipscomb is an institution in
which religion is so pervasive that a substantial portion of its
functions is subsumed in the religious mission so as to
suggest that the state aid to Lipscomb has the primary effect
of advancing religion.
,Q GHFLGLQJ WKLV TXHVWLRQ LW LV DGYLVDEOH WR PDNH VRPH
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addressed by other circuits or by the Supreme Court, it
inaccurately states that all the state courts that have addressed
the issue "have found that the issuance of industrial revenue
bonds is not tantamount to the giving of direct aid to religious
schools." Opn. at n. 2. However, with the exception of the
Virginia Supreme Court’s decision in Lynn, 538 S.E.2d at
682, none of the cases cited by the majority has addressed the
precise question at hand, namely, ZKHWKHUWD[H[HPSWERQG
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The issuance of tax-exempt revenue bonds in this case
constitutes direct aid within the meaning of the
Establishment Clause
Given that Lipscomb is a pervasively sectarian educational
institution, it thus must be determined whether the issuance of
the tax-exempt revenue bonds is a direct or indirect benefit
for Establishment Clause purposes. In this regard, it should
be noted that because Hunt found that the Baptist College at
Charleston was not a sectarian educational institution, it did
not need to decide the issue whether the issuance of the
revenue bonds constituted direct state aid in that case. In a
footnote, though, the Court in Hunt remarked:
The ‘state aid’ involved in this case is of a very special
sort. We have here no expenditure of public funds, either
by grant or loan, no reimbursement by a State for
expenditures made by a parochial school or college, and
no extending or committing of a State’s credit. Rather,
the only state aid consists, not of financial assistance
directly or indirectly which would implicate public funds
or credit, but the creation of an instrumentality (the
Authority) through which educational institutions may
borrow funds on the basis of their own credit and the
security of their own property upon more favorable
interest terms than otherwise would be available. The
Supreme Court of New Jersey characterized the
assistance rendered an educational institution under an
act generally similar to the South Carolina Act as merely
being a ‘governmental service.’ Clayton v. Kervick, 56
N.J. 523, 530-531, 267 A.2d 503, 506-507 (1970). The
South Carolina Supreme Court, in the opinion below,
described the role of the State as that of a "mere conduit."
258 S.Ct., at 107, 187 S.E.2d, at 650. Because we
conclude that the primary effect of the assistance
afforded here is neither to advance nor to inhibit religion
under Lemon and Tilton, we need not decide whether, as
appellees argue, Brief for Appellees 14, the importance
of the tax exemption in the South Carolina scheme brings

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encourages faculty to "pursue truth . . . by research,
discussion, and other forms of inquiry." Nonetheless,
Regent prohibits faculty from using "their position or
classroom as a platform to demand adherence by students
to a personal theological viewpoint, political preference
or social agenda." The SACS in a review of Regent’s
accreditation application in 1998 found that "[f]aculty
and students are free to examine all pertinent data,
question assumptions, be guided by the evidence of
scholarly research, and teach and study the substance of
a given discipline." With respect to its curriculum, each
faculty member at Regent is required to include in the
syllabus for each class a "description of how the
Christian faith and the Bible will be incorporated into the
course."
Id. at 617-18.
Like Regent, the "supreme purpose" of Lipscomb is to
promote Christian ideals. Both Lipscomb and Regent also
require applicants to submit a recommendation from a
member of the clergy, without specifying the denomination.
However, unlike Regent, nearly three-quarters of the students
at Lipscomb are identified with a particular creed, the
Churches of Christ. Further, in contrast to Regent, which
encourages, but does not require, its students to attend chapel
services or to participate in certain religious activities, daily
Bible class and chapel attendance are mandatory at Lipscomb.
In addition, while both schools require its faculty to adhere to
religious principles and to incorporate the Bible into class
instruction, Regent provides much greater latitude in terms of
academic freedom than Lipscomb. Thus, even among
pervasively sectarian religious institutions, Lipscomb clearly
stands out as unrelentingly sectarian in its policies and
practices.
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Vision--Our vision, through our graduates and other
scholarly activities, is to provide Christian leadership in
transforming society by affirming and teaching principles
of truth, justice and love as described in the Holy
Scriptures, embodied in the person of Jesus Christ, and
enabled through the power of the Holy Spirit.
Id. In spite of its religious mission, Regent does not have any
"specific religious requirement for student admissions, and
"the lack of such a ‘[Christian] commitment’ does not
negatively impact an applicant’s standing for admission." Id.
at 686. However, the Virginia Supreme Court noted that
"[a]ll applicants are required to submit a ‘Clergy
Recommendation,’ both as a matter of policy and practice.
Among the questions asked is whether the applicant has
‘made a meaningful personal commitment to Jesus Christ.’"
Id. The Virginia Supreme Court in Lynn further remarked:
Although encouraged to do so, students are not
required to attend Regent’s weekly corporate chapel
services or participate in any particular religious
activities. However, they must have "[p]ersonal goals
consistent with the mission and goals of Regent
University," and must submit a "[p]ersonal goals
statement" addressing how their "personal and spiritual
objectives" relate to Regent’s "Christ-centered
educational philosophy." The instructions explain that
"for the Christian, [a goal] is a statement of faith in God's
will for his or her life."
Faculty, unlike students, are required to sign a
document indicating their adherence to the "Statement of
Faith." They are "strongly encouraged but they're not
required" to attend chapel. The faculty is required to
integrate "faith and learning." Dr. Selig testified, and the
SACS (Southern Association of Colleges and Schools)
and the ABA (American Bar Association) agree, that the
Statement of Faith has not interfered with academic
freedom. Regent’s detailed academic freedom policy

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institution for Establishment Clause purposes. As noted by
the Virginia Supreme Court in Lynn,
Regent’s Articles of Incorporation, provide that:
[Regent] shall exist for the purpose of bringing glory
to God and His Son Jesus Christ by providing an
institution or institutions of learning in which those who
are mature in the knowledge of God and His ways can
assist and guide, in a spirit of free inquiry and scholarly
excellence, those who would learn of Him, His ways, and
His creation, while together they study ways to glorify
God and better their world.
538 S.E.2d at 685. Lynn also noted that Regent has adopted
a Statement of Faith that provides,
Regent University is a Christ-centered institution. The
Board of Trustees, along with the faculty and staff of the
university, are committed to an evangelical interpretation
and application of the Christian faith. The campus
community is closely identified with the present-day
renewal movement, which emphasizes the gifts, fruit and
ministries of the Holy Spirit. It is expected that all
trustees, officers, administrators and faculty will
subscribe to this statement in writing[.]
Id. Regent’s Mission Statement provides:
Preamble--Regent University is a graduate institution
that exists to bring glory to God the Father and His Son
Jesus Christ through the work of the Holy Spirit.
Mission--Our mission is to provide an exemplary
graduate education from biblical perspectives to aspiring
servant leaders in pivotal professions and to be a leading
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Columbia Union Coll. v. Oliver, 254 F.3d 496 (4th Cir. 2001)
("Columbia Union II"). In Columbia Union II, the Fourth
Circuit stated:
The district court respected fully the majority’s order
of remand in Columbia Union I. Working through the
four factors in this case, the court found that although
Columbia Union had a mandatory worship policy, it
applied only to a minority of students. With regard to the
second factor, the court held that the evidence submitted
by the Commission was insufficient to show that the
traditional liberal arts classes were "taught with the
primary objective of religious indoctrination." The court
pointed to "affirmative evidence indicating that secular
education is the primary goal of" Columbia Union. The
court examined the college’s mission statement and the
descriptions of secular curricula in the college’s catalog,
among other things, in making this finding. The court
looked at the college’s syllabi for secular courses and
determined that the religious references were too isolated
and scattered to justify a finding that religion permeates
the secular courses. And although the court found that
the Seventh-day Adventist Church exerted a dominance
over college affairs and that the college gave an express
preference in hiring and admissions to members of the
Church, these factors by themselves were not enough to
make the college a pervasively sectarian one.
Id. at 508-09. In contrast to Columbia Union College,
Lipscomb has a mandatory worship policy and imparts
instruction with the primary objective of religious
indoctrination. Lipscomb also places religious restrictions on
admission and expressly hires faculty and staff based upon
membership in the Churches of Christ.
Indeed, Lipscomb is even more pervasively sectarian than
Regent University ("Regent"), the only other institution that
has been found by a court to be a pervasively sectarian

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Moreover, there are no religious requirements for
membership on the Academy's Board of Trustees.
Non-Catholics have served, and currently serve, on the
Board.
In addition, the Academy does not discriminate on the
basis of race, color, creed, or national origin in its
admissions process, nor does it give preference in
admission to Roman Catholics. Furthermore, the
Academy does not discriminate on the basis of race,
color, or national origin in any of its educational policies,
scholarship and loan programs, athletic or extracurricular
activities, or other-school administered programs. As of
the date of the issuance of the bonds at issue, 135 of the
366 (non-preschool) students at the Academy, or 37%,
were not Catholic. And as of the date of the stipulation,
34% of the students were not Catholic. The facts
indicate that faiths represented in the Academy student
body include non-Catholic Christian, Jewish, Islamic,
Shinto and others. Finally, the Academy does not
discriminate on the basis of race, color, creed or national
origin in the hiring of its employees. The Academy has
a teaching faculty of 60, of whom five are members of
religious orders. There is no religious-affiliation
requirement or preference for the Academy's teachers,
and the school does not inquire as to the religious
affiliation of prospective faculty members.
Johnson, 241 F.3d at 516-17. Most striking, Lipscomb,
unlike the academy in Johnson, interjects religion into
virtually all aspects of its institutional life. Further, unlike
the school in Johnson, Lipscomb reserves the right under
Title VII of the Civil Rights Act of 1964 to discriminate in
the hiring of faculty and staff on the basis of religion.
Lipscomb is also distinguishable from Columbia Union
College, the educational institution affiliated with the
Seventh Day Adventist Church that the Fourth Circuit did not
regard as a pervasively sectarian educational institution. See
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educational institutions that the Supreme Court has found not
to be pervasively sectarian.
It should also be noted that Lipscomb is markedly different
from the religious academy in Johnson that this Court found
not to be pervasively sectarian. In Johnson, this Court
described the religious academy in the following terms:
As to the nature of the institution, as with any
religiously affiliated school, the Academy pledges its
allegiance to its faith. Nevertheless, the facts establish
that the Academy is not a pervasively sectarian
institution. The Academy’s Restated Articles of
Incorporation provide that the school’s purpose is to
"conduct an independent Catholic school from pre-school
through and including the 12th grade, wherein the arts
and sciences, and other forms of primary and secondary
learning are taught, and diplomas and honors therein
conferred: while maintaining a philosophy consonant
with that of the network of the Sacred Heart schools of
which it is a member." (J.A. at 66.) The Academy’s
curriculum and requirements provides that
[e]very student at [the Academy] receives intensive
training in the basic academic skills of English,
Mathematics, History, Foreign Language and
Science. Art, Music, Drama, Forensics, Theology
and Computer Science are essential parts of this
program. [The Academy] offers each student a full
Physical Education Program designed to develop a
sense of sportsmanship, a respect for physical fitness
and an awareness of the enjoyment derived from
athletic endeavors.
(J.A. at 154.) A review of the course descriptions and the
subjects covered for each of the courses offered at the
Academy, with the exception of the Religion
Department, demonstrates that the Academy does not
interject religion into every aspect of its curriculum.

-- 20 of 38 --

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institution based upon the fact that it did not impose religious
qualifications on its faculty and staff and given that the
percentage of the student body roughly reflected the same
percentage of Baptists in the area. Unlike the college in Hunt,
which did not hire faculty on the basis of religion, apart from
those teaching in the theology departments, Lipscomb
requires that its faculty be members in good standing of the
Churches of Christ. Further, the fact that the student body at
Lipscomb is largely affiliated with the Churches of Christ
reflects Lipscomb’s placement of religious restrictions on
student admissions.
Lipscomb is also clearly distinguishable from the Roman
Catholic colleges in Roemer, which were "characterized by a
high degree of institutional autonomy" from "their formal
affiliation with the Roman Catholic Church." Roemer, 426
U.S. at 755. By contrast, Lipscomb’s "supreme purpose" is
"to teach the Bible as the revealed will of God to man and as
the only and sufficient rule of faith and practice, and to train
those who will attend in a pure Bible Christianity." Further,
unlike the colleges in Roemer, Lipscomb does not subscribe
to the AAUP’s Statement of Principles on Academic
Freedom. Moreover, unlike the colleges in Roemer, where
attendance at religious exercises was not required and where
spiritual development was encouraged as a "secondary
objective," Lipscomb requires attendance at religious service,
placing those who fail to attend on "chapel probation," and
clearly promotes spiritual development as the primary
objective of the institution. While the colleges in Roemer
gave mandatory religion and theology courses taught
"primarily by Roman Catholic clerics," those courses only
supplemented "a curriculum covering ‘the spectrum of a
liberal arts program.’" Roemer, 426 U.S. at 756. In contrast,
the Bible classes at Lipscomb are central to the mission of the
school, and the failure to pass a Bible course results in a
student being placed on "Bible probation," which subjects the
student to dismissal from the school if he or she does not pass
every Bible course taken while on Bible probation. Lipscomb
thus clearly stands separate and apart from the higher
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these four institutions requires its students to attend
religious services. Although all four schools require their
students to take theology courses, the parties stipulated
that these courses are taught according to the academic
requirements of the subject matter and the teacher's
concept of professional standards. The parties also
stipulated that the courses covered a range of human
religious experiences and are not limited to courses about
the Roman Catholic religion. The schools introduced
evidence that they made no attempt to indoctrinate
students or to proselytize. Indeed, some of the required
theology courses at Albertus Magnus and Sacred Heart
are taught by rabbis. Finally, as we have noted, these
four schools subscribe to a well-established set of
principles of academic freedom, and nothing in this
record shows that these principles are not in fact
followed. In short, the evidence shows institutions with
admittedly religious functions but whose predominant
higher education mission is to provide their students with
a secular education.
Id. at 686-687. Unlike Tilton, where the theology courses at
the colleges affiliated with the Roman Catholic Church were
"taught according to the academic requirements and the
teacher’s concept of professional standards," without
attempting "to indoctrinate students or to proselytize," the
religion classes at Lipscomb are Bible classes, not theology
classes. At Lipscomb, Bible classes are taught as "the
revealed will of God to man and as the only and sufficient
rule of faith and practice, and to train those who will attend in
a pure Bible Christianity, excluding from the faith all
opinions and philosophies of men, and from the work and
worship of the church of God all human inventions and
devices," except those that "will aid in the understanding and
teaching of the Scriptures."
Lipscomb also clearly differs from the Baptist college in
Hunt. As already noted, the Baptist College at Charleston
was not found to be a pervasively sectarian educational

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testimony that Lipscomb instructs the faculty in the Biology
and Physics Departments to "teach creationism." By
Lipscomb’s own admission, the religious tenets of the
Churches of Christ are designed to permeate every facet of the
University, including classroom instruction in subjects that
are considered non-religious or nonsectarian.
Here, the record shows that Lipscomb satisfies all the
elements of a sectarian educational institution profile,
conclusively demonstrating that religion pervades it to such
an extent that "its functions are subsumed in the religious
mission." Hunt, 413 U.S. at 743. Accordingly, there is no
genuine issue of material fact about whether Lipscomb is a
pervasively sectarian educational institution.
Lipscomb is clearly distinguishable from educational
institutions found not to be pervasively sectarian
As an educational institution, Lipscomb is clearly
distinguishable from those higher educational institutions that
the Supreme Court has found not to be pervasively sectarian.
For example, in Tilton v. Richardson, 403 U.S. 672 (1971),
the Supreme Court found that a direct federal grant awarded
pursuant to the Higher Education Facilities Act of 1963 to
four colleges and universities affiliated with the Roman
Catholic Church for the construction of academic facilities
devoted to secular purposes did not violate the Establishment
Clause, except for the section of the Act that limited federal
interest in the facilities to a period of twenty years because it
allowed the unconstitutional contribution of valuable property
to a religious institution, and could be "used to promote
religious interests." 403 U.S. at 683. The colleges in Tilton
were described in the following terms:
All four schools are governed by Catholic religious
organizations, and the faculties and student bodies at
each are predominantly Catholic. Nevertheless, the
evidence shows that non-Catholics were admitted as
students and given faculty appointments. Not one of
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Gospels, The Church, Old Testament, and Defense of the
Faith. According to Lipscomb, the Bible is the inspired word
of God, and students are encouraged to apply Biblical
principles in conducting the affairs of their personal and
professional lives. Students are also required to pass Bible
courses, and the failure to do so results in being placed on
"Bible probation," which could lead to expulsion. From 1988
to 1992, approximately 100 students were placed on Bible
probation. In addition, students are required to attend chapel
every school day, and the failure to do so may lead to being
placed on "chapel probation."
Fourth, attendance at chapel and the study of the Bible at
Lipscomb are an "integral part" of the religious mission of the
Churches of Christ. This is made clear repeatedly throughout
Lipscomb’s Faculty and Student Handbooks, as well as its
university catalogues.
Fifth, religious indoctrination is a "substantial purpose" at
Lipscomb. As set forth in Lipscomb’s corporate charter and
bylaws of the Board of Directors, "[t]he corporation was
organized for the purpose of teaching the word of God and the
various branches of the useful knowledge, commonly taught
in institutions of learning for the following general purpose:
. . . the support of public worship, the building of churches
and chapels and the maintenance of missionary undertakings."
Moreover, as the district court noted, "[t]he land on which the
construction projects funded by the bond proceeds were
undertaken is subject to restrictive covenants that require that
the property be used exclusively to further the religious
mission of the institution so long as the property is owned by
Lipscomb." Steele v. Indus. Dev. Bd. of the Metro. Gov. of
Nashville and Davidson County, 117 F.Supp.2d 693, 710
(M.D. Tenn. 2000).
Sixth, Lipscomb imposes religious restrictions on how and
what the faculty teach. As Lipscomb acknowledges, it does
not subscribe to the AAUP’s Statement of Principles on
Academic Freedom. Specifically, there was unrebutted

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Lipscomb fits the profile of a pervasively sectarian
educational institution
Viewing the undisputed facts, the district court properly
concluded that Lipscomb is, as a matter of law, a pervasively
sectarian educational institution. First, the record indicates
that Lipscomb places religious restrictions on admission, and
that more than 70% of the student body belongs to the
Churches of Christ. Lipscomb also places religious
restrictions on faculty and staff appointments, requiring that
all personnel, with limited exceptions, be members in good
standing of the Churches of Christ. Specifically, all members
of Lipscomb’s faculty and staff are expected to attend daily
chapel and adhere to church doctrines. Further, faculty
members are contractually bound to promote the beliefs of the
Churches of Christ, both in and out of the classroom, and if
any member leaves the church, it is an immediate ground for
termination of employment. As noted by the district court,
Lipscomb also reserves the right under Title VII of the Civil
Rights Act of 1964 (as amended) to discriminate, "where it is
necessitated by the specific religious tenets held by the
institution."
Second, Lipscomb enforces obedience to its religious
dogma, directing that the Bible be taught "every school day
to every student enrolled . . . by teachers who are sound in the
faith and faithful in their lives to its sacred truths." According
to Lipscomb, its "supreme purpose" is "to teach the Bible as
the revealed will of God to man and as the only and sufficient
rule of faith and practice, and to train those who will attend in
a pure Bible Christianity."
Third, Lipscomb requires its students to participate in daily
Bible study and attendance at chapel. According to
Lipscomb, "[t]he university has no authority to suspend [the
daily Bible] requirement for any student." As the district
court found, all students must take at least one Bible class
every day of each semester and are required to take at least
one course from each of the following four categories: The
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Circuit identified four "general areas of inquiry" in
determining whether a school is pervasively sectarian:
"(1) does the college mandate religious worship; (2) to what
extent do religious influences dominate the academic
curriculum, (3) how much do religious preferences shape the
college’s faculty hiring and student admission processes, and
(4) to what degree does the college enjoy ‘institutional
autonomy’ apart from the church with which it is affiliated."
Id. at 163. Although the Fourth Circuit asserted that a college
is not pervasively sectarian unless it possesses a "great many"
of the characteristics identified in the four-factor test, 159
F.3d at 163, there is nothing clearly stated in prior Supreme
Court precedent to the effect that a pervasively sectarian
instruction must possess "a great many" of the relevant
characteristics; rather, the focus of the inquiry is whether
religion so permeates the secular education functions
provided by a religious-affiliated educational institution that
its religious and secular educational functions are in fact
inseparable. Further, I take issue with the statement by the
Fourth Circuit in Columbia Union I that "because the
Supreme Court has never held any institution of higher
education to be ‘pervasively sectarian,’ we lack even a clear
‘general picture’ of a ‘pervasively sectarian’ college or
university." 159 F.3d at 163. In my view, the general profile
of a pervasively sectarian institution is not as difficult to
discern from Supreme Court jurisprudence as the Fourth
Circuit purports it to be. Although the Fourth Circuit
correctly recognized that "[n]either the Supreme Court, nor
any circuit court to our knowledge, has ever found a college
to be pervasively sectarian," id. at 169, it is clear that the
Supreme Court certainly left open this possibility. See Hunt,
413 U.S. at 743 (citing Tilton v. Richardson, 403 U.S. 672,
682 (1971)); see also Va. Coll. Bldg. Auth. v. Lynn, 260 Va.
608, 538 S.E.2d 682 (Va. 2000) (applying the elements of the
Roemer test to find that Regent University, created under the
auspices of the Christian Broadcasting Network, Inc., is a
pervasively sectarian institution).

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sectarian," the plurality opinion in Roemer noted that it was
necessary to "paint a general picture of the institution,
composed of many elements." Id. at 758. Summarizing the
elements of a sectarian profile set forth in the Court’s
majority opinion in Comm. for Public Educ. and Religious
Liberty v. Nyquist, 413 U.S. 756, 767-68 (1973), the plurality
in Roemer stated:
The elements of the "profile" were that the schools
placed religious restrictions on admission and also
faculty appointments; that they enforced obedience to
religious dogma; that they required attendance at
religious services and the study of particular religious
doctrine; and that they were an ‘integral part’ of the
religious mission of the sponsoring church; that they had
religious indoctrination as a ‘substantial purpose’; and
that they imposed religious restrictions on how and what
the faculty could teach.
Roemer, 426 U.S. at 753 n. 18 (citing Nyquist, 413 U.S. at
767-68).
In light of the views expressed in the majority opinions in
Hunt and Nyquist, the proper starting point for evaluating the
Establishment Clause challenge in this case is to adopt the
profile for a pervasively sectarian educational institution
stated by the plurality in Roemer, as this most closely adheres
to Supreme Court precedent expressed in majority opinions
on this topic. See Agostini, 521 U.S. at 237 (noting that "the
Court of Appeals should follow the case which directly
controls, leaving to this Court the prerogative of overruling its
own decisions").
It should be noted that this approach accords with that taken
by the Fourth Circuit in Columbia Union Coll. v. Clarke, 159
F.3d 151 (4th Cir. 1998) ("Columbia Union I"), which
adopted a four-factor test that is essentially a restatement of
the Supreme Court’s profile of a pervasively sectarian
educational institution. In Columbia Union I, the Fourth
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Aid normally may be thought to have a primary effect
of advancing religion when it flows to an institution in
which religion is so pervasive that a substantial portion
of its functions are [sic] subsumed in the religious
mission or when it funds a specifically religious activity
in an otherwise substantially secular setting.
Id. at 743. The Court in Hunt concluded that the aid did not
go to a pervasively sectarian institution, nor to fund
specifically religious activities, and thus would not "place the
Authority in the position of providing aid to the religious as
opposed to the secular activities." Id. at 744. Although Hunt
did not outline a test for identifying a pervasively sectarian
institution, the Court found that the Baptist college in
question was not pervasively sectarian inasmuch as "there are
no religious qualifications for faculty membership or student
admission, and that only 60% of the College student body is
Baptist, a percentage roughly equivalent to the percentage of
Baptists in that area of South Carolina." 413 U.S. at 743-44.
Notwithstanding the absence in Hunt of an explicit test for
identifying a pervasively sectarian educational institution, the
plurality opinion in Roemer v. Bd. of Public Works of Md.,
426 U.S. 736 (1976) set forth a profile of a pervasively
sectarian educational institution for evaluating Establishment
Clause claims. In Roemer, the Court considered an
Establishment Clause challenge to the constitutionality of a
Maryland statute providing public aid in the form of grants
("Sellinger grants") to colleges affiliated with the Roman
Catholic Church. In Roemer, the plurality noted that "the
focus of the debate" concerned whether the grant program had
the primary effect of advancing religion and creating
excessive church-state entanglement. As to the primary-effect
question, the plurality in Roemer noted that "Hunt requires (1)
that no state aid at all go to institutions that are so
‘pervasively sectarian’ that secular activities cannot be
separated from sectarian ones, and (2) that if secular activities
can be separated out, they alone may be funded." Id. at 755.
In determining whether an institution was "pervasively

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light least favorable to the non-moving party" in granting
summary judgment in favor of Plaintiffs. Lipscomb’s Br. at
7, n. 4. There is no merit to this claim because the district
court based its decision on the undisputed facts in the record,
which established as a matter of law that Lipscomb is a
pervasively sectarian educational institution and that the loan
transaction amounted to a direct economic benefit for
Establishment Clause purposes.
The profile of a pervasively sectarian educational
institution
In evaluating whether Lipscomb is a pervasively sectarian
institution, our attention should be directed in the first
instance to Hunt v. McNair, 413 U.S. 734 (1973), since it is
the only case dealing with the precise issue at hand that
yielded a majority opinion. In Hunt, the Supreme Court also
addressed the issue of state aid to a religious school in a
challenge to the validity of the South Carolina Educational
Facilities Authority Act ("the Act"), under which revenue
bonds were issued to the Baptist College at Charleston, South
Carolina, a Baptist-affiliated college. Through the issuance
of the revenue bonds, the Act provided assistance to higher
educational institutions in constructing and financing projects,
such as buildings, facilities, and site preparation, specifically
excepting "any facility used or to be used for sectarian
instruction or as a place of religious worship nor any facility
which is used or to be used primarily in connection with any
part of the program of a school or department of divinity for
any religious denomination." Id. at 736.
Applying the factors set forth in Lemon, the Court in Hunt
held that the Act did not violate the Establishment Clause,
finding in pertinent part that the statute did not have the
primary effect of advancing or inhibiting religion insofar as
the college did not have a significant sectarian orientation and
the projects were limited to those with a secular purpose. In
Hunt, the Supreme Court noted:
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&RQVWLWXWLRQ, I would find that the district court did not err in
granting Plaintiffs’ cross-motion for summary judgment,
denying the separate motions for summary judgment filed by
the Board and the Metropolitan Government ("Metro") and
entering a permanent injunction prohibiting the Board and
Metro from issuing additional tax-exempt bonds to Lipscomb
or tax-exempt bonds to any pervasively sectarian institution.
As will be conclusively demonstrated below, Lipscomb fits
the profile of a pervasively sectarian educational institution
by imposing religious restrictions on student admissions and
faculty and staff appointments; enforcing obedience to its
religious dogma, which is the "supreme purpose" of the
University; requiring daily Bible study and attendance at
chapel as an integral part of its religious mission; and placing
religious limitations on how and what the faculty teach. The
low-interest loan of $15 million originated by the Board at
Lipscomb’s request constituted a direct economic benefit
because it enabled Lipscomb to advance its sectarian mission
by funding improvements to the University. Given its
pervasively sectarian character, the direct economic benefit to
Lipscomb results in excessive governmental entanglement
with the religious mission of the University in violation of the
Establishment Clause.
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On appeal, Lipscomb first argues that the district court’s
grant of summary judgment in favor of Plaintiffs was
erroneous because it rested upon a finding that Lipscomb is
a pervasively sectarian educational institution. According to
Lipscomb, "whether an institution is ‘pervasively sectarian’
is no longer a factor to be considered by the courts in these
kinds of cases." Lipscomb’s Br. at 7. However, as the
majority opinion recognizes, the pervasively sectarian test has
not been abandoned. In Johnson v. Econ. Dev. Corp. of
County of Oakland, 241 F.3d 501, 510 n. 2 (6th Cir. 2001),
this Court pointed out:
The principle expressed in Hunt v. McNair, 413 U.S. 734
(1973), that government aid in the form of tax exempt
revenue bonds of the type involved in this case violates
the Establishment Clause--when provided to pervasively
sectarian institutions--has not been disavowed, at least to
my knowledge, by any subsequent majority opinion of
the Supreme Court. Accord Agostini v. Felton, 521 U.S.
203, 233 (1997) (recognizing that under the
Establishment Clause, the court must consider " ‘the
character and purposes of the institutions that are
benefitted’ . . . (e.g., whether the religious institutions
were ‘predominantly religious’")) (citing Hunt, 413 U.S.
at 734-44).
241 F.3d at 510 n. 2 (parallel citations omitted.) Although the
majority notes that the Court questioned "[t]he vitality of the
pervasively sectarian test" in Mitchell v. Helms, 530 U.S. 793
(2000), we noted in Johnson that "it is Justice O’Connor’s
opinion [in Mitchell], which does not abolish the distinction
between ‘pervasively sectarian’ and ‘sectarian’ institutions
and which expressly declines to adopt Justice Thomas’
expansive view, that is controlling upon this Court." Id.
Alternatively, Lipscomb claims that even if the pervasive
sectarian test remains relevant, the district court’s decision
must be vacated and remanded for an evidentiary hearing
because the court improperly "viewed ambiguous facts in a

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DISCUSSION
At the outset, it should be noted that Plaintiffs challenge
only the constitutionality of the Tennessee statute as applied,
which authorized the Board to issue tax-exempt bonds to
Lipscomb or any other pervasively sectarian institution.
Thus, the issue squarely presented on appeal is whether the
low-interest loan by the Board to Lipscomb funded through
the issuance of the tax-exempt bonds violates the
Establishment Clause because Lipscomb is a pervasively
sectarian educational institution and the loan amounts to
direct state aid.
The point of departure for analyzing whether the low-
interest loan to Lipscomb through the issuance of the tax-
exempt bonds by the Board violated the Establishment Clause
is the test set forth in Lemon v. Kurtzman, 403 U.S. 602, 612-
13 (1971), as refined by the Court in Agostini v. Felton, 521
U.S. 203, 232-33 (1997), which merged the excessive
government entanglement prong with the "primary effect"
analysis. As the majority opinion notes, the Lemon test, as
reformulated by Agostini, continues to have vitality. See
Zelman v. Simmons-Harris, 122 S. Ct. 2460, 2476 (2002)
(O’Connor, J. concurring opinion). In the present case, the
question before us concerns whether the governmental action
satisfies the "primary effect" test. Under this test, the Court
in Agostini stated that the governmental aid is permissible if
"it does not result in governmental indoctrination; define its
recipients by reference to religion; or create an excessive
entanglement." Id. at 234. In the matter before us, the
specific issue is whether the governmental aid results in
excessive entanglement. In assessing whether there is
excessive entanglement, the Court in Agostini stated that "we
have looked to ‘the character and purposes of the institutions
that are benefited, the nature of the aid that the State provides,
and the resulting relationship between the government and
religious authority.’" Id. at 232 (quoting Lemon, 403 U.S. at
615).
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BACKGROUND
Before addressing the substantive issues, it is helpful to
describe in detail the nature of Lipscomb, a private, not-for-
profit religious corporation affiliated with the Churches of
Christ, which was founded by David Lipscomb and James
Harding in 1891 and originally incorporated under the name
of "The Nashville Bible School."Characterizing itself as a
"small co-educational liberal arts university" with an
enrollment of approximately 2,500 students, Lipscomb states
that "its primary mission has been to integrate Christian faith
and practice with academic excellence." Among the
objectives of Lipscomb are "[t]o provide the very best in a
Christian liberal arts education under the direction of
Christian teachers in a distinctly Christian environment . . .
[t]o train future leaders in the church . . . [and] . . . [t]o hold
up Christ as the example to follow in every field of activity."
(J.A. at 38, 1249.)
According to Lipscomb’s corporate charter and the bylaws
of the Board of Directors,
The corporation was organized for the purpose of
teaching the word of God and the various branches of the
useful knowledge, commonly taught in institutions of
learning for the following general purposes: the support
of any literary or scientific undertaking, as a college or
university with power to confer degrees, an academy, a
debating society lyceum, the establishment of a library,
the support of a historical society, the promotion of
painting, music and the fine arts, the support of Board of
Trade or Chamber of Commerce or other objects of like

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nature, the support of public worship, the building of
churches and chapels and the maintenance of missionary
undertakings.
(J.A. at 805, 829-30). To this end, the bylaws of Lipscomb
state that "[t]he President, with the assistance of vice
presidents and principals, shall maintain a Christian college
that shall perpetuate the high Christian ideals inaugurated by
Harding and Lipscomb, the founders of David Lipscomb
College, in which the Bible is made the book of most
importance." (J.A. at 830-31.)
As noted in the President’s letter in the 1989-1990 edition
of the Student Handbook: "[W]e have a sincere interest in the
spiritual values of each student and faculty staff member.
Lipscomb has been built on Christian ideas. Daily Bible
study and chapel provide direction but only you can make the
commitment to grow closer to God." (J.A. at 293.)
Lipscomb’s Faculty Handbook also provides:
The mission of David Lipscomb University is to serve
its students so that they may master knowledge and skills
appropriate to them and become Christlike in attitude and
behavior.
It must be kept firmly in the consciousness of all
connected with the institution % administration, faculty,
students, and patrons % that Lipscomb is a Christian
school. In the original appeal for support, written by
David Lipscomb, it was made clear that the Bible was to
be the foundation upon which all else would center:
The supreme purpose of the school shall be to
teach the Bible as the revealed will of God to man
and as the only and sufficient rule of faith and
practice, and to train those who will attend in a pure
Bible Christianity, excluding from the faith all
opinions and philosophies of men, and from the
work and worship of the church of God all human
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of its functions is subsumed in its religious mission, and that
the $15 million dollars in tax-exempt revenue bonds had the
impermissible effect of promoting religion as a matter of law.
In support of their motion for summary judgment, Plaintiffs
submitted a statement of the undisputed facts. Thereafter, on
July 3, 2000, Lipscomb submitted its verified response to
Plaintiffs’ statement of undisputed material facts in support of
their motion for summary judgment.
On October 24, 2000, the district court entered a
memorandum and order granting Plaintiffs’ cross-motion for
summary judgment and denying Lipscomb and Metro’s
respective motions for summary judgment. The district court
also issued a permanent injunction enjoining the Board and
Metro from issuing any additional tax-exempt revenue bonds
for the benefit of Lipscomb or any other pervasively sectarian
institution. The district court further awarded Plaintiffs’
nominal damages in the amount of $1.00 each and authorized
attorneys’ fees for Plaintiffs. Defendants then filed timely
notices of appeal. Subsequently, Defendants filed a motion
to stay further proceedings on the matter of attorneys’ fee
pending this appeal. On October 31, 2000, the district court
granted the motion to stay proceedings on the attorneys’ fee
issue.
Metro also asked for a stay of the permanent injunction
issued by the district court enjoining the Board and the Metro
from issuing any additional tax-exempt revenue bonds for the
benefit of Lipscomb or any other pervasively sectarian
institution. On July 13, 2001, the district court denied
Metro’s motion for a stay pending appeal. Thereafter, in a
motion filed on August 13, 2001, Metro appealed the district
court’s denial of its motion for a stay pending appeal. In an
order entered on September 25, 2001, this Court denied the
motion for a stay pending appeal.

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at public hearings and meetings of the Board held on April
10, April 16, and May 30, 1990.$WWKHPHHWLQJV3ODLQWLIIV
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Eventually, on October 9, 1998, Metro and Lipscomb
separately moved for summary judgment, alleging that the
issuance of the tax-exempt revenue bonds did not violate the
Establishment Clause. In support of their respective motions
for summary judgment pursuant to Rule 56 of the Federal
Rules of Civil Procedure, both Metro and Lipscomb
submitted separate statements of the undisputed material facts
on October 9, 1998 and October 16, 1998, respectively.
Plaintiffs responded to Defendants’ statements of the
undisputed material facts and filed documents in opposition
to Defendants’ motions for summary judgment. Plaintiffs
also filed a statement of additional undisputed material facts
in opposition to Defendants’ motions on November 9, 1998.
Both Defendants then responded to Plaintiffs’ statement of
additional undisputed material facts on November 20, 1998
and December 2, 1998, respectively.
At oral argument on May 10, 2000, the district court
requested that Plaintiffs submit a cross-motion for summary
judgment. Pursuant to the district court’s order, Plaintiffs
filed a motion for summary judgment on May 30, 2000,
alleging that the issuance of the tax-exempt revenue bonds to
Lipscomb violated the Establishment Clause because
Lipscomb is so pervasively sectarian that a substantial portion
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inventions and devices. Such other branches of
learning may be added as will aid in the
understanding and teaching of the Scriptures and as
will promote usefulness and good citizenship among
men.
(J.A. at 1627.) (emphasis in original.) The Faculty Handbook
continues by stating,
This purpose was further set forth in the deed
conveying the property on Spruce Street for the use of
the school as follows:
. . . that the property shall be used for maintaining a
school in which, in addition to other branches of
learning, the Bible as the recorded will of God and the
only standard of faith and practice in religion, excluding
all human systems and opinions and all innovations,
inventions, and devices of men from the service and
worship of God, shall be taught as a regular daily study
to all who shall attend said school and for no other
purpose inconsistent with this object. The condition
being herein inserted at the request of the founders of the
proposed Bible School, the same is hereby declared
fundamental and shall adhere to the premises conveyed
as an imperative restriction upon their use so long as the
same shall be owned by said Bible School, or its
Trustees, and to any and all property which may be
purchased with the proceeds of said premises in case of
sale or reinvestment, as hereinafter provided.
David Lipscomb University is not, therefore, merely an
institution which requires every student to take a lesson
in the Bible each day; this study is the wellspring from
which the university issued.
(J.A. at 1627-28.)

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These ideas about the central importance of the Bible are
echoed throughout Lipscomb’s catalogues. For example, in
the university catalogue for 1988-1989, Lipscomb states:
The Bible has always been considered the most
important area of study for all students at DLC [David
Lipscomb College]. The founders and those who have
followed them have held it to be important that every
student study the Bible in a class every day. Whatever
one’s major interest or life work, a thorough knowledge
of the biblical life principles is needed.
In daily classes the Bible is taught as the inspired word
of God. With the Bible itself as the text, students are
encouraged to apply the Bible principles of right living
to all aspects of personal and professional life.
In view of the daily Bible classes, it can be said that
every Lipscomb graduate unofficially "majors in Bible."
Those who formally major in Bible may give special
emphasis in one of the following areas: Biblical
Languages, Missions, Preaching, Religious Education, or
Youth Ministry.
(J.A. at 41-42.) These points are reinforced in the 1990-1991
university catalogue:
The Daily Bible Requirement
The supreme purpose of David Lipscomb University
is "to teach the Bible as the revealed will of God to man
and as the only and sufficient rule of faith and practice,
and to train those who will attend in a pure Bible
Christianity." To help fulfill this purpose, each regular
student must be enrolled in a Bible class each school day
and also attend daily chapel services.
Every college or university has a right and even an
obligation to be unique and distinctive based upon its
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DGPLQLVWUDWLYHRIILFHVFRQVWUXFWDQLQWUDPXUDOEXLOGLQJ RU
VWXGHQWDFWLYLW\FHQWHU DQLQWUDPXUDOILHOG four new tennis
courts, and a baseball stadium; construct an addition to the
Swang Business Center; make parking, landscaping and
walkway improvements; and acquire computer and fiber optic
equipment.
At a public meeting on April 10, 1990, the Board approved
Lipscomb’s request for the loan, which was financed by the
issuance of $15 million in tax-exempt industrial development
bonds, pursuant to the Board’s authority under Tenn. Code
Ann. § 7-53-101(11)(A)(vii). After another public hearing on
May 30, 1990, the Board formally approved the issuance of
the bonds. On May 31, 1990, Nashville Mayor Bill Boner
approved the issuance of the bonds, as required for tax-
exempt status under 26 U.S.C. § 147(f), thus certifying that
the bonds served a public purpose.
The tax-exempt bonds were then sold to private investors
(bondholders), and the proceeds from the bonds were loaned
to Lipscomb, pursuant to the loan documents. According to
the loan agreement, Lipscomb was not to use the project
funds for sectarian instruction or religious worship.
Lipscomb is also obligated to pay all sums due on the bonds.
In January of 1991, the bonds were replaced by revenue
refunding bonds titled "Educational Facilities Revenue
Refunding Bonds, Series 1991."
Defendant Sovran Bank, as trustee for the bondholders, was
assigned the loan documents. Sovran Bank provided the
principal security for the bonds through a $15,969,453
irrevocable letter of credit for the account of Lipscomb to
Sovran Bank, N.A. as trustee for the bondholders. Additional
security was provided by a promissory note and loan
agreement entered into by Lipscomb and the Board.
Plaintiffs are state and local taxpayers residing in Davidson
County, Tennessee, who objected to the issuance of the bonds

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The Board is a public corporation created under the authority of
Tenn. Code Ann. § 7-53-101 - § 7-53-311. Metro approved the creation
of the Board by resolution as provided in Tenn. Code Ann. § 7-53-201.
By law, all amendments to the corporate charter of the Board must also
be approved by Metro. Tenn. Code Ann. § 7-53-204 (1985). Under the
statute, the Board has the authority to enter into loan agreements with
third parties; it can sue and be sued; it can sell any of its properties; it can
issue bonds and borrow money from banks and other financial institutions
by issuing notes. Tenn. Code Ann. § 7-53-204. In addition, the Board has
the authority to issue tax-exempt revenue bonds for various public work
projects, including
[a]ny nonprofit educational institution in any manner related to
or in furtherance of the educational purposes of the institution,
including, but not limited to classroom, laboratory, housing,
administrative, physical education and medical research and
treatment facilities.
Tenn. Code Ann. § 7-53-101(11)(A)(vii)(1990 Supp.). After the approval
and sale of the tax-exempt bonds under the statute, the municipal
governments that approve them are not liable for repayment of the debt.
Tenn. Code Ann. § 7-53-306 (1985).
members of the Churches of Christ, particularly during chapel
service. (J.A. at 1606-07.) Moreover, while Lipscomb
provided its students with a list of local churches in the
community, it only named those affiliated with the Churches
of Christ. (J.A. at 835-36.) Lipscomb also acknowledges that
it prohibits students from dancing, consuming alcohol, using
tobacco, among other things, because it regards such conduct
as being "un-Christian conduct." (J.A. at 308-309, 835, 1191-
92, 1472-74.)
In response to recommendations made by the Southern
Association of Colleges and Schools, Lipscomb undertook a
major development project in the early 1990s to expand and
renovate its campus to accommodate an increase in
undergraduate enrollment to 3,000. To fund the project,
Lipscomb applied for a $15 million, low-interest loan from
the Board. /LSVFRPE UHTXHVWHG IXQGLQJ WR FRQVWUXFW DQG
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individual purpose. Few, if any, other colleges today
require students to take regular daily classes in Bible
study. Students who choose to attend David Lipscomb
University should be interested and supportive of the
daily Bible requirement. The university has no authority
to suspend this requirement for any student.
(J.A. at 1253.) Lipscomb’s 1990-91 catalogue further
provides:
Although the daily Bible requirement is important enough
to be listed as a separate part of each student’s academic
program, it is also considered an integral part of the general
education program at David Lipscomb College. No body
of knowledge or study of any kind is as important as the
study of the Bible itself.
(J.A. at 41, 1254.)
Accordingly, taking and passing a daily Bible class is a
"fundamental requirement for attendance" at Lipscomb. (J.A.
at 39-40.) As set forth in Lipscomb’s student bulletin for
1991-92:
The Bible has always been considered the most
important area of study for all students at David
Lipscomb University. The founders, and those who have
followed them, have held it to be important that every
student study the Bible. Whatever their major interest or
life work, a thorough knowledge of Biblical principles is
needed.
In daily classes, Bible is taught as the inspired word of
God. Students are encouraged to apply the Bible
principles of right living to all aspects of personal and
professional life.

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(J.A. at 836-37, 1260.) These ideas were continually
expressed in the editions of the Student Handbook from 1988
through 1992:
Because the Bible is the heart of Lipscomb’s
curriculum, every regular student studies the Bible every
school day. Offerings in the Department of Bible are
arranged so that a student can, in four years, have
exposure to the entire Bible.
Any student who fails Bible is automatically placed on
probation for the succeeding semester. Probation must
be removed by passing each Bible course carried during
the semester of probation. Failure to meet this
requirement means that the student will be dropped at the
end of the semester.
(J.A. at 303, 1189, 1212, 1235.) As explained by Dr. Joe Mac
Lynn, the head of Lipscomb’s Bible Department, each student
is required to have two credit hours of Bible each semester in
order to graduate from Lipscomb. (J.A. at 1504-5.) From
1988 until September 1992, approximately 100 undergraduate
students were on "Bible probation." (J.A. at 834.) As noted
in the Student Handbooks, students who do not pass every
Bible course carried while on probation are subject to
dismissal from the school.
In addition to daily Bible study, Lipscomb also requires
every full-time student to attend chapel each school day.
(J.A. at 833.) As stated in Lipscomb’s Faculty Handbook:
Chapel
The heart of each day’s activities at David Lipscomb
University is the chapel service. It is here that the entire
Lipscomb family gains strength and inspiration for the
tasks of the day. Since attendance at chapel is
compulsory for all students, it is expected that each
faculty member will attend chapel regularly. No
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During the years from 1990 to1992, at the time of the
issuance of the bonds, more than 77% of the undergraduate
students at Lipscomb were members of the Churches of
Christ. (J.A. at 837, 1181.) According to the affidavit of W.
Craig Bledsoe, the Provost at Lipscomb since 1997, 78.97%
of the student body indicated that they were members of the
Churches of Christ in 1991, while 71.42% of the student body
so indicated in 1997. (J.A. at 502.) Student applications for
admission to Lipscomb during these years "required a
character reference from a minister, youth minister or leader
at church," without specifying the denomination of the church
or the religion. (J.A. at 837.) As expressed in a brochure
from Lipscomb, "[o]ne common thread that binds students
together is their commitment to Christ. At Lipscomb a
student’s love for the Lord is strengthened by this special
association with other students, the majority of whom share
the same spiritual values." (J.A. at 1635.) In his affidavit,
Bledsoe also stated that "there are numerous other religions
represented in the student body including, for example,
Buddhism, Lutheran, Muslim, Russian Orthodox, Hindu,
Catholic, Mormon, Baptist, and Nazarene." (J.A. at 502). In
his supplemental affidavit, Bledsoe averred that "Lipscomb
does not discriminate against students on the basis of
religion." (J.A. at 775.) Nevertheless, Dr. Sinclair testified
in her deposition that students were pressured to become

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(J.A. at 1305.) According to Dr. Sinclair, who has had a long
association with Lipscomb in addition to teaching there, the
administration at Lipscomb directed members of the faculty
to teach certain religious doctrines or views in courses given
in the Biology and Physics Departments, where faculty
members are "instructed to teach creationism." (J.A. at 1616-
17.),QKHUDIILGDYLW'U6LQFODLUDOVRVWDWHG
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arrangements should be made which require regular
chapel absences of one or more times each week without
prior written approval of the dean.
(J.A. at 1401.) (emphasis in original.) As set forth in the
editions of the Student Handbook from 1988 through 1992, a
student with eleven absences from chapel during a semester
is placed on "chapel probation." (J.A. at 303, 1189-90, 1212-
13, 1235-36.) From 1990 through 1992, an average of 40 to
60 students were on "chapel probation" each semester. (J.A.
at 833, 1463.) The Student Handbooks also provide that "[i]f
flagrant disregard for chapel attendance persists, a student is
subject to immediate suspension." (J.A. at 304.) In his
deposition, Dr. Dennis Loyd, the Dean of Students at
Lipscomb, testified that every full-time student "knows he
goes to chapel," and that failure to do so results in dismissal.
(J.A. at 1455-59.)
As stated in the bylaws of the Board of Directors, each
director at Lipscomb must be a member of the Churches of
Christ in good standing in the congregation. (J.A. at 110.)
The Board of Directors elects the president to be its chief
executive officer in charge of "its business and Christian
education affairs." (J.A. at 115.) The bylaws also provide
that "great care should be exercised in the selection and
development of [] teaching personnel." (J.A. at 116.)
Moreover, all personnel, with the exception of employees of
its services, building and grounds departments, shall be
members in good standing of the Churches of Christ. (J.A. at
832.) Lipscomb also reserves the right under Title VII of the
Civil Rights Act of 1964 (as amended) to discriminate,
"where it is necessitated by the specific religious tenets held
by the institution." (J.A. at 834, 1250.)
In addition, Lipscomb President Harold Hazelip
acknowledged in his deposition testimony that all of its
faculty must be members in good standing of the Churches of
Christ, and that leaving the church is grounds for termination
of employment. (J.A. at 1167, 1169.) In a letter to Nashville

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Mayor Boner opposing the bond issue, Norman Parks, the
former dean of Lipscomb, remarked:
No person can be employed at Lipscomb who is not a
member of the mainline Church of Christ. He cannot be
a premillennialist or believe that instrumental music is
acceptable for worship of God. He must believe that a
divorced person cannot remarry and continue in church.
He must believe that a woman cannot teach a class in
religion to men.
(J.A. at 1142.) In this regard, Dr. Lynn, the head of
Lipscomb’s Bible Department, testified in his deposition that
a divorced teacher may be allowed to remain as a teacher at
the university, but "[a] person who divorces and remarries
during the [] employment relationship to [sic] the University
would be subject to discipline or to dismissal." (J.A. at 1539.)
According to Dr. Susan Dennison Sinclair, she was informed
by the department chairman when she was hired as an adjunct
professor in the English Department for one semester in 1990
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