The Kentucky Supreme Court on Nov. 18 declared the Kentucky Commission on Human Rights (KCHR) has statutory authority to investigate private clubs for discrimination in membership policies and practices. If such conduct is found, the court said, club members will be disallowed from deducting club payments on their state taxes.
The Pendennis Club of Louisville, Louisville Country Club, and Idle Hour Country Club of Lexington, the three clubs named in the case, must now open their membership records to KCHR for investigation.
“Private clubs in Kentucky should sit up and take notice that the Kentucky Revenue Cabinet will deny business expense deductions regarding payments to private clubs that are found by the commission to discriminate,” said Morgan G. Ransdell, acting executive director for KCHR.
Director Ransdell was co-counsel in the private clubs case along with Kentucky Assistant Attorney General Brent Irvin, who presented the case on behalf of KCHR.
Commenting on the court victory Mr. Irvin said: "This is a great decision to advance civil rights in Kentucky. The Supreme Court's opinion should encourage private clubs to eliminate racial restrictions on membership or in the use of their facilities and thus advance Rev. Martin Luther King's dream that one day in America people will be judged by the content of their character and not by the color of their skin."
The high court’s decision reversed a series of lower court rulings and marks the successful end to a 13-year legal battle for KCHR. There is no appeal from statutory construction decisions of the Kentucky Supreme Court.
The commission has long had jurisdiction to investigate places of public accommodation for discrimination, but private clubs are specifically exempt from being classified as a public accommodation in Kentucky Revised Statute (KRS) 344, The Kentucky Civil Rights Act.
In the opinion issued by the 6-1 majority, Chief Justice Joseph Lambert wrote that KCHR’s authority with regard to the clubs rests in another state statute, KRS 141.010(11)(d), part of 1990 amendments in Kentucky’s state tax code.
The amendments prohibit taxpayers from taking: “[a]ny deduction for amounts paid to any club, organization, or establishment which has been determined by the courts or an agency established by the General Assembly and charged with enforcing the civil rights laws of the Commonwealth, not to afford full and equal membership and full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to any person because of race, color, religion, national origin, or sex.”
Otherwise, under state law, members of private clubs can deduct as business expenses at least a portion of payments made to their clubs for meals, entertainment and use of the club’s facility.
Attorneys for the three prestigious clubs argued that KCHR was not specifically named in KRS 141 as the “agency” charged with enforcing the civil rights laws of Kentucky. However, the Supreme Court said the General Assembly’s intention is clear and the commission’s investigatory powers, though not explicitly created, exist by implication in the statute.
“Thirteen years ago the Kentucky General Assembly resolved that members of discriminatory clubs should have no sanctuary in the tax code,” the chief justice wrote. “This court has now clarified KCHR authority to progress toward fulfillment of that public policy.”
Furthermore, “KCHR can investigate any club – public, quasi-public, or private – to determine whether it denies full and equal enjoyment of its membership and benefits on account of race,” Chief Justice Lambert wrote.
In addition to race, the decision authorizes the commission to investigate clubs with regard to the other protected classes listed in the amendments. However, there is a proviso that these sections of the revenue code don’t apply to deny deductions for amounts paid to “any religious or denominational group or establishment or organization operated solely for charitable or educational purposes which restricts membership to persons of the same religion or denomination in order to promote the religious principles for which it is established or maintained.”
The case originated in 1991 when Louisville civil rights activist Rev. Louis Coleman filed complaints with KCHR, alleging membership practices at the three clubs were racially discriminatory. The commission dismissed the complaints, reasoning that the clubs were exempt from KRS 344. One month later, then State Rep. Anne Northup (now a U.S. representative), and a sponsor of the 1990 tax code amendments, asked the Attorney General’s Office for an opinion. The opinion said the commission was not barred from investigating private clubs, although the clubs could not be held liable for damages under KRS 344. Two years later, then Commissioner Mae Cleveland filed complaints on behalf of KCHR alleging unlawful discrimination by the clubs. The clubs won in two lower courts. The Supreme Court’s decision reversed the rulings and sent the case back to Jefferson County Circuit Court for further proceedings.
Director Ransdell said KCHR would now push for the clubs to turn over the racial and gender makeup of their memberships. The clubs have been unwilling to provide the information, he said.
Chief Justice Lambert wrote that the case was not about the rights of clubs or their members. He said that Kentucky private clubs do have the statutory right to discriminate in affording benefits of membership.
He said private clubs must comply with The Kentucky Civil Rights Act when it comes to employment, however: “For example, while a private club that racially discriminates in affording full and equal enjoyment of its benefits may not be held liable for damages, a private club with eight or more employees could be civilly liable if it discriminated on the basis of race in its employment practices. In such a situation the KCHR would have authority to exercise its power under KRS 344.180 and KRS 344.190 [sections on employment], and the club would be held accountable for its iniquitous employment practices,” the chief justice wrote.
The chief justice said the case did not deal with whether the three named clubs had been discriminatory, noting that no evidence had yet been heard and that it is unknown whether the clubs discriminate in membership practices.