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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
KEVIN J. MURRAY,
Plaintiff,
Civil No. 08-15147
Hon. Lawrence P. Zatkoff

v.
TIMOTHY F. GEITHNER and
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM,

Defendants.
________________________________________________/
OPINION AND ORDER
AT A SESSION of said Court, held in the United States Courthouse,
in the City of Port Huron, State of Michigan, on January 14, 2011
PRESENT: THE HONORABLE LAWRENCE P. ZATKOFF
UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
This matter is before the Court on Plaintiff’s motion for summary judgment [dkt 57],
Defendants’ motion for summary judgment [dkt 66/67],1 and Plaintiff’s motion to strike [dkt 79].
The parties have fully briefed the motions. The Court finds that the facts and legal arguments are
adequately presented in the parties’ papers such that the decision process would not be significantly
aided by oral argument. Therefore, pursuant to E.D. Mich. L.R. 7.1(f)(2), it is hereby ORDERED
that the motions be resolved on the briefs submitted. For the reasons set forth below, Plaintiff’s
motion for summary judgment is DENIED, Defendants’ motion for summary judgment is

1

Defendants filed two nearly identical motions for summary judgment—the difference
being that the latter [dkt 67] is redacted to comply with a protective order. In deciding
Defendants’ motion, the Court will consider the un-redacted papers filed in connection
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GRANTED, and Plaintiff’s motion to strike is DENIED.
II. BACKGROUND
The basic facts surrounding the government’s assistance to American International Group,
Inc. (“AIG”) are a matter of public record. In the fall of 2008, what the parties describe as a largescale economic crises erupted, purportedly threatening the liquidity and stability of financial
institutions both domestically and abroad. At that time, AIG was one of the world’s largest and most
complex financial institutions, prompting officials from the Board of Governors of the Federal
Reserve System (“Board of Governors”), in consultation with the United States Department of the
Treasury (“Treasury Department”), to conclude that AIG’s failure would be “catastrophic” for the
United States and the world economy.
On September 16, 2008, the Federal Reserve Bank of New York (“FRBNY”), with
authorization from the Board of Governors, agreed to create a credit facility that enabled AIG to
draw up to $85 billion for general corporate purposes, including as a liquidity source, pursuant to
the “unusual and exigent circumstances clause” of Section 13(3) of the Federal Reserve Act
(“FRA”), 12 U.S.C. § 343—purportedly the only mechanism then available for providing
government financial assistance to institutions such as AIG. In return for the credit facility, AIG
signed a trust agreement whereby it agreed to pay interest and fees to the FRBNY and to issue Series
C preferred stock to a trust—the AIG Credit Facility Trust (“Trust”)—that would hold the stock for
the benefit of the Treasury Department. The trust agreement provided that holders of Series C
preferred stock were entitled to 79.9% (subsequently reduced to 77.9%) of the dividend payments
and 79.9% (subsequently reduced to 77.9%) of the aggregate voting power of the common stock.
The trust agreement permitted the Board of Governors to terminate or amend the Trust pursuant to

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its authority under the FRA.
In AIG’s Form 8-K filed with the United States Securities and Exchange Commission
(“SEC”) in March 2009, AIG reported the transfer of the preferred shares of its stock to the Trust.
The filing stated that “[a]s a result of the Transaction, a change in control of AIG has occurred.
Pursuant to the Purchase Agreement, AIG and AIG’s Board of Directors are obligated to work in
good faith with the Trust to ensure corporate governance arrangements satisfactory to the Trust.”
In AIG’s annual report to the SEC, it explained that “the Trust, which is overseen by three
independent trustees, will hold a controlling interest in AIG, [and] AIG’s interests and those of
AIG’s minority shareholders may not be the same as those of the Trust or the United States
Treasury.”
On October 3, 2008, Congress enacted the Emergency Economic Stabilization Act of 2008
(“EESA”), 12 U.S.C. § 5201 et seq., with the following stated purpose:
[T]o immediately provide authority and facilities that the Secretary
of the Treasury can use to restore liquidity and stability to the
financial system of the United States . . . in a manner that (A) protects
home values, college funds, retirement accounts, and life savings; (B)
preserves homeownership and promotes jobs and economic growth;
(C) maximizes overall returns to the taxpayers of the United States;
and (D) provides public accountability for the exercise of such
authority.
12 U.S.C. § 5201.
To accomplish this purpose, the EESA provides the Secretary of the Treasury Department
(“Secretary”) with the authority “to establish the Troubled Asset Relief Program (or ‘TARP’) to
purchase, and to make and fund commitments to purchase, troubled assets from any financial
institution, on such terms and conditions as are determined by the Secretary.” 12 U.S.C. §
5211(a)(1). The EESA defines “troubled assets” as, inter alia, “financial instrument[s] that the
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Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve
System, determines the purchase of which is necessary to promote financial market stability.” 12
U.S.C. § 5202(9)(B). In exercising this authority, the Secretary must “take into consideration”
several goals, including, inter alia, “protecting the interests of taxpayers,” “providing stability and
preventing disruption to financial markets in order to limit the impact on the economy and protect
American jobs, savings, and retirement security,” and “ensuring that all financial institutions are
eligible to participate in the program, without discrimination based on size, geography, form of
organization, or the size, type, and number of assets eligible for purchase.” 12 U.S.C. § 5213.
Despite the credit given to AIG under the FRA, the Board of Governors believed that AIG
remained extremely vulnerable to an ongoing and intensifying financial crisis due to falling asset
prices and substantial losses on its balance sheet. On November 25, 2008, the Secretary exercised
the authority granted to him under the EESA to purchase $40 billion of newly issued AIG Series D
preferred stock on the condition that AIG use the proceeds solely to pay down it’s indebtedness to
the FRBNY. The Treasury Department paid the $40 billion purchase price for the Series D preferred
stock directly to the FRBNY.
On March 2, 2009, when AIG reported a net loss of $61.7 billion for the fourth quarter of
2008, the Treasury Department announced that it would further restructure the government’s
assistance to AIG. Accordingly, on April 17, 2009, the Secretary entered into an agreement to
purchase AIG Series F preferred shares (“Series F SPA”) pursuant to the EESA. The Series F SPA
created an equity capital commitment (“Commitment”) of just under $30 billion, which allows AIG
to draw capital from the Commitment over time. As of the date of Plaintiff’s summary judgment
motion, AIG had drawn down approximately $7.5 billion from the Commitment.

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As required by the Series F SPA, AIG provided a capital use plan prior to the closing of the
agreement (“Initial Capital Use Plan”), which stated that the capital provided by the Commitment
would be used to achieve four objectives: (1) maintaining adequate capital levels at its principal
insurance operations; (2) facilitating divestitures and restructuring; (3) supporting and accelerating
the orderly wind-down of AIG Financial Products; and (4) paying general corporate expenses related
to the rationalization of AIG’s operations. AIG is a holding company that is the corporate parent
to approximately 290 direct and indirect subsidiaries that operate around the world. EESA funds
are distributed to AIG, which is then able to divert funds to its subsidiaries. The Series F SPA
requires AIG to certify the manner in which it actually diverts funds.
AIG has advertised itself as the market leader in Sharia-compliant financing (“SCF”), i.e.,
financial and insurance products that comply with certain dictates of Islamic law, such that Islamic
adherents are not prohibited from purchasing the products for religious reasons.2 AIG defines
“Sharia” as “Islamic law based on Quran [sic] and the teachings of the Prophet (PBUH).”3 A
prominent example of SCF is Takaful—a form of insurance acceptable to purchase by certain
Islamic adherents because: (1) policyholder funds are separated from shareholder funds; (2) funds
are not invested in anything that is haram, i.e., prohibited elements in Islam according to Sharia; (3)
a certain percentage of any net surplus, if any, derived from the collection of premiums is paid to
charitable organizations, and (4) policyholder funds are not used to borrow, lend, or enter into any

2

In the parties’ papers, they refer to “Sharia,” “Shariah,” “Shari’a,” and “Shari’ah.” While
the Court will hereinafter refer to “Sharia,” the Court takes no position on the correct spelling of
the term.
3

The Court takes judicial notice that “PBUH” is an acronym meaning “Peace be upon
him” and that practicing Muslims often include the acronym after naming a prophet of Islam.
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financial transaction that is “unislamic.” AIG, through several of its subsidiaries, offers products
that comply with Sharia by employing or otherwise engaging individuals knowledgeable in Sharia
(“Sharia authorities”), who act as “Sharia Supervisory Committees.” The role of the Sharia
authorities is to review AIG’s operations, supervise its development of SCF, and determine whether
AIG’s products comply with Sharia. In December 2008, AIG issued a press release announcing the
“First Takaful Homeowners Products for U.S.” The press release stated that “[a]ccording to Ernst
& Young’s 2008 World Takaful Report, Takaful was estimated to be a $5.7 billion market globally
with over 130 providers in 2006. The Takaful market is estimated to be in excess of $10 billion by
2010.” Of AIG’s approximate 290 subsidiaries, six have engaged in SCF since the enactment of the
EESA.
In the Court’s opinion and order denying Defendants’ motion to dismiss, the Court held that
Plaintiff has standing to bring an as-applied challenge to the EESA on the basis that the
“appropriated funds are being used to finance Sharia-based Islamic religious activities in violation
of the Establishment Clause.” Plaintiff asks the Court to declare that (1) Defendants violated the
Establishment Clause of the First Amendment, (2) Congress’ disbursement of EESA funds violated
the Establishment Clause of the First Amendment, and (3) Defendants’ endorsement of SCF violates
the Establishment Clause of the First Amendment. Plaintiff also seeks to permanently enjoin (1) the
disbursement of EESA funds to AIG, (2) Defendants’ policy and practice of endorsing SCF, and (3)
the United States’ ownership and control of AIG. Defendants maintain that Plaintiff has not stated
a cognizable Establishment Clause claim.
III. LEGAL STANDARD
“The court shall grant summary judgment if the movant shows that there is no genuine

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dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). A party must support its assertions by:
(A) citing to particular parts of materials in the record, including
depositions, documents, electronically stored information, affidavits
or declarations, stipulations (including those made for purposes of the
motion only), admissions, interrogatory answers, or other materials;
or;
(B) showing that the materials cited do not establish the absence or
presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.
Fed. R. Civ. P. 56(c)(1). “The court need consider only the cited materials, but it may consider other
materials in the record.” Fed. R. Civ. P. 56(c)(3).
The moving party bears the initial burden of demonstrating the absence of any genuine
dispute as to a material fact, and all inferences should be made in favor of the nonmoving party.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party discharges its burden by
“‘showing’—that is, pointing out to the district court—that there is an absence of evidence to
support the nonmoving party’s case.” Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004) (citing
Celotex, 477 U.S. at 325)).
Once the moving party has met its initial burden, the burden then shifts to the nonmoving
party, who “must do more than simply show that there is some metaphysical doubt as to the material
facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). “[T]he mere
existence of a scintilla of evidence in support of the [nonmoving party’s] position will be insufficient
[to defeat a motion for summary judgment]; there must be evidence on which the jury could
reasonably find for the [nonmoving party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252
(1986).

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IV. ANALYSIS
A. CROSS MOTIONS FOR SUMMARY JUDGMENT
The Establishment Clause of the First Amendment provides that “Congress shall make no
law respecting an establishment of religion.” U.S. CONST. amend. I. “The defining principle of
Establishment Clause jurisprudence is that the ‘First Amendment mandates government neutrality
between religion and religion, and between religion and nonreligion.’” ACLU v. Grayson Cnty., 591
F.3d 837, 844 (6th Cir. 2010) (citing McCreary Cnty. v. ACLU, 545 U.S. 844, 860 (2005) (quoting
Epperson v. Arkansas, 393 U.S. 97, 104 (1968))). “Neutrality, however, ‘is not so narrow a channel
that the slightest deviation from an absolutely straight course leads to condemnation.’” Grayson
Cnty., 591 F.3d at 844 (citing McCreary Cnty., 545 U.S. at 876 (quoting Sherbert v. Verner, 374
U.S. 398, 422 (1963) (Harlan, J., dissenting)). That “government must remain neutral in matters of
religion does not foreclose it from ever taking religion into account.” Lee v. Weisman, 505 U.S. 577,
627 (1992) (Souter, J., concurring).
As the parties agree, the Court must examine Plaintiff’s Establishment Clause challenge
under the test first articulated in Lemon v. Kurtzman, 403 U.S. 602 (1971). Under the Lemon test,
a statute will be upheld under the Establishment Clause if (1) it has a secular legislative purpose, (2)
its principal or primary effect neither advances nor inhibits religion, and (3) it does not foster an
excessive government entanglement with religion. Id. at 612–13 (citations and quotation marks
omitted).

Recent Supreme Court decisions have modified the test slightly by “fold[ing]

entanglement analysis into the effect analysis because ‘entanglement is . . . an aspect of the inquiry
into a statute’s effect.’” Smith v. Jefferson Cnty. Sch. Bd. of Comm’rs, 549 F.3d 641, 656 (6th Cir.
2008), rev’d in part on other grounds, 549 F.3d 641 (quoting Agostini v. Felton, 521 U.S. 203, 233

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(1997)). When determining the purpose of government action or the effect of its implementation,
the Court must view the evidence from the perspective of a reasonable observer. See Am. Atheists,
Inc. v. Detroit Downtown Dev. Auth., 567 F.3d 278, 292–95 (6th Cir. 2009). A reasonable observer
is credited with knowledge of “readily discoverable fact,” including “the traditional external signs
that show up in the ‘text, legislative history, and implementation of the statute,’ or comparable
official act.” McCreary Cnty., 545 U.S. at 860, 862 (quotations omitted).
1. Purpose
The Court must first analyze whether a reasonable observer would conclude that the EESA,
as applied to the Secretary’s purchase of AIG preferred stock, has had “the ostensible and
predominant purpose of advancing religion.” McCreary Cnty., 545 U.S. at 860 (citing Corp. of
Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327, 335 (1987)).
“[A]though a legislature’s stated reasons will generally get deference, the secular purpose required
has to be genuine, not a sham, and not merely secondary to a religious objective.” McCreary Cnty.,
545 U.S. at 864 (citations omitted); see also Grayson Cnty., 591 F.3d at 848 (“‘Even if the text and
official history of a statute express no secular purpose, the statute should be held to have an
improper purpose only if it is beyond purview that endorsement of religion or a religious belief ‘was
and is the law’s reason for existence.’’”) (quoting Wallace v. Jaffree, 472 U.S. 38, 75 (1985)
(O’Connor, J., concurring) (quoting Epperson, 393 U.S. at 108)).
Plaintiff argues that a reasonable observer would conclude that the government purchased
AIG stock under the EESA with the purpose of advancing religion because “Defendants intended
for AIG to use federal funding to support all of its activities, including SCF, which Defendants
favorably endorse.” However, this lone statement constitutes the extent of Plaintiff’s argument with

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respect to the government’s purpose in purchasing AIG preferred stock under the EESA.
Defendants, on the other hand, have presented evidence that the government enacted the EESA for
the secular purpose of restoring liquidity and stability to the financial system of the United States,
and that the Secretary purchased AIG preferred stock pursuant to his authority under the EESA
because he believed that AIG’s failure would be catastrophic for the United States and the world
economy. Furthermore, Defendants have presented evidence showing that AIG’s SCF activities
accounted for less than 0.03% of AIG’s consolidated revenue when the Treasury Department first
provided funds to AIG. Even assuming government officials were aware of AIG’s SCF activities,
the Court finds it highly unlikely that a reasonable observer would determine that the government’s
ostensible and predominant purpose in providing financial assistance to AIG was to support such
a small aspect of AIG’s business. Thus, the Court finds that Plaintiff has failed to produce evidence
sufficient for a reasonable observer to conclude that the government’s stated reasons for purchasing
AIG preferred stock under the EESA are disingenuous, a sham, or merely secondary to a religious
objective.
2. Primary Effect/Entanglement
The unique facts of this case impact the Court’s analysis of the Lemon test’s “effect” prong.
The Supreme Court has analyzed the effect prong differently depending on whether the challenge
relates to a government-aid program, e.g., grants to parochial schools, or direct governmental action,
e.g., displaying the Ten Commandments. See Mitchell v. Helms, 530 U.S. 793, 808 (2000) (plurality
opinion); Cnty. of Allegheny v. ACLU, 492 U.S. 573, 597 (1989). Although unspecified in Plaintiff’s
papers, it appears that Plaintiff’s challenge to the EESA is twofold: (1) Plaintiff challenges the
EESA as a government-aid program, inasmuch as EESA funds have been used to support SCF

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activities; and (2) Plaintiff challenges the EESA to the extent funds have been used to gain
ownership and control of AIG, purportedly rendering AIG’s SCF activities direct governmental
action.
However, the Court finds that Plaintiff’s second basis for challenging the EESA is unfounded
and irrelevant. Whatever ownership interest the government has in AIG, it was not created by the
appropriation of EESA funds. The evidence clearly indicates that the Trust holds the 77.9%
ownership interest in AIG for the benefit of the Treasury Department, and that the Trust’s ownership
interest was established by actions taken pursuant to Section 13(3) of the FRA—not the EESA. See
Pl.’s Br. Summ. J. at 7 (acknowledging that the government gained ownership and control over AIG
pursuant to the Trust Agreement established under the FRA). Thus, to the extent Plaintiff objects
to the government’s purported entwinement with AIG, this occurred prior to the enactment of the
EESA, which merely permitted the Secretary to purchase troubled assets. Therefore, the Court will
not consider Plaintiff’s argument that AIG’s sale of SCF products is direct governmental action due
to the government’s ownership interest in AIG, as this is irrelevant to Plaintiff’s as-applied challenge
to the EESA.
The Supreme Court has identified three criteria for evaluating whether the effect of a
government-aid program impermissibly advances religion: (1) whether it results in religious
indoctrination attributable to the government; (2) whether it defines its recipients by reference to
religion; and (3) whether it creates an excessive entanglement with religion. See Mitchell, 530 U.S.
at 808 (plurality opinion) (citing Agostini, 521 U.S. at 234); see also Am. Atheists, Inc., 567 F.3d at
291–94. Plaintiff contends that factors one and three are present here. Plaintiff also argues that the
effect of the Secretary’s purchase of AIG preferred shares pursuant to the EESA was exacerbated

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by the Treasury Department’s independent acts demonstrating its endorsement of SCF.
a.) Religious Indoctrination Attributable to the Government
i.) Religious Indoctrination
Before the Court considers whether the government is responsible for religious
indoctrination, the Court must determine whether religious indoctrination has occurred in the first
place. In the Establishment Clause context, religious indoctrination occurs where the recipient of
government funds provides instruction in religious beliefs for the purpose of instilling those beliefs
in others or furthering a religious mission. See Agostini, 521 U.S. at 226–27 (“As we have
repeatedly recognized, government inculcation of religious beliefs has the impermissible effect of
advancing religion.”) (emphasis added); Zobrest v. Catalina Foothills Sch. Dist., 509 U.S. 1, 18
(1993) (Blackmun, J., Concurring) (noting that a Roman Catholic school indoctrinated religion in
students where its stated purpose was to “instill a sense of Christian values” and inculcate its
students with “the faith and morals of the Roman Catholic Church”). See also Mitchell, 530 U.S.
at 840 (O’Connor, J., concurring) (noting that in prior cases, “we rested our approval of the relevant
programs in part on the fact that the aid had not been used to advance the religious missions of the
recipient schools”) (emphasis added) (citations omitted). Mere recitation of religious doctrine does
not constitute indoctrination. Id. at 823 (plurality opinion) (noting that “a government interpreter
does not herself inculcate a religious message—even when she is conveying one”).
Not surprisingly, allegations of religious indoctrination frequently accompany challenges to
government-aid programs involving churches or parochial schools. In such cases, indoctrination is
often presumed by courts without discussion, and the focus generally shifts to whether the
acknowledged indoctrination is attributable to the government. See id. at 809 (“The question

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whether governmental aid . . . results in governmental indoctrination is ultimately a question whether
any religious indoctrination that occurs . . . could reasonably be attributed to governmental action.”)
(collecting cases). Here, Plaintiff asks the Court to take a similar approach, arguing that the present
facts are comparable to an “unrestricted grant of taxpayer money to a Church.” Thus, Plaintiff
argues, Defendants’ assertion that the sale of SCF products does not constitute religious
indoctrination is “verifiably false” and “overwhelmingly contradicted by the undisputed evidence
and warrants no further response.”
However, the Court finds that the circumstances of this case are not comparable to a grant
of taxpayer money to a church or religious institution, such that the Court should presume AIG has
engaged in religious indoctrination. Despite its recent financial difficulties, AIG is, after all, a
profit-motivated company.4 Moreover, Defendants have placed this issue in dispute, arguing that
AIG’s sale of SCF products does not result in religious indoctrination because consumers are not
provided religious instruction, and that AIG does not develop or sell SCF products with the purpose
or effect of instilling religious beliefs in consumers or furthering a religious mission.

4

Plaintiff attempts to use expert testimony to demonstrate that AIG’s secular business
purpose is “inextricably intertwined” with “an Islamic religious mission.” However, expert
testimony is irrelevant with respect to how a reasonable observer would view the conduct at
issue. See Gaylor v. United States, 74 F.3d 214, 217 (10th Cir. 1996) (rejecting the applicability
of expert testimony in determining a reasonable observer’s perception); Brown v. Woodland
Joint Unified Sch. Dist., 27 F.3d 1373, 1382 (9th Cir. 1994) (“Instead of engaging in a ‘battle of
the experts’ in deciding Establishment Clause cases, courts have relied upon assumptions about a
‘hypothetical observer’ . . . to determine whether a government action conveys an endorsement
of religion.”). Moreover, as Defendants point out, Plaintiff’s purported experts rely heavily on
their knowledge of SCF generally, but offer little, if any, discussion on how AIG’s use of SCF
affected their opinions. See Adland v. Russ, 307 F.3d 471, 483 (6th Cir. 2002) (stating that
whether the Establishment Clause has been violated “hing[es] on the factual specifics of each
case”). Plaintiff also declined to rebut Defendants’ assertion that his experts formed their
opinions before reviewing AIG’s SCF activities.
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Plaintiff is reminded that the summary judgment stage is the time at which parties must
designate facts in support of their claims. Plaintiff cannot defeat Defendants’ motion for summary
judgment, or prevail on its own, by arguing that the evidence in support of his claim is so
overwhelming that he need not present any to the Court. In the absence of evidence showing that
AIG’s development and sale of SCF products has resulted in the instruction of religious beliefs for
the purpose of instilling those beliefs in others or furthering a religious mission, Plaintiff has failed
to demonstrate that a reasonable observer could conclude that AIG has engaged in religious
indoctrination by supplying SCF products.
ii.) Government Attribution
Even assuming, arguendo, that AIG, through several of its subsidiaries, has engaged in
religious indoctrination by supplying SCF products, the Court finds that any such indoctrination
would not be attributable to the government. In determining whether religious indoctrination is
attributable to the government, courts must examine whether the recipient of government funds is
pervasively sectarian. See Hunt v. McNair, 413 U.S. 734, 743 (1973); Am. Atheists, Inc., 567 F.3d
at 295–96 (noting that “six members of the [Supreme] Court have questioned whether the religious
nature of an aid recipient is helpful, or even appropriate, in evaluating neutral government aid
programs under the Establishment Clause” but that “no majority opinion of the Court has overruled
the pervasively sectarian doctrine, and that means we must follow it”) (citations omitted). An
institution is pervasively sectarian when “a substantial portion of its functions are subsumed in [a]
religious mission,” Hunt, 413 U.S. at 743, such that its “religious functions cannot be separated from
its non-religious functions.” Johnson v. Economic Dev. Corp., 241 F.3d 501, 510 (6th Cir. 2001).
When the recipient of government funds is pervasively sectarian, it is presumed that, without

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evidence to the contrary, religious indoctrination is attributable to the government due to “the risk
that direct government funding, even if it is designated for specific secular purposes, may
nonetheless advance the pervasively sectarian institution’s ‘religious mission.’” Bowen v. Kendrick,
487 U.S. 589, 610 (1988) (citation omitted); Am. Atheists, Inc., 567 F.3d at 295 (“[T]he Court has
presumed that direct aid to a pervasively sectarian institution will inevitably result in government
sponsored indoctrination because the institution is so ‘subsumed in the religious mission’ that it is
impossible to separate the religious from the secular and to channel aid only to the latter.”) (citations
omitted).

When the recipient of government funds is not pervasively sectarian, religious

indoctrination is attributable to the government only when it is proven that (1) government funds
have actually resulted in religious indoctrination, Hunt, 413 U.S. at 743, and (2) the diverted funds
are not de minimus in relation to the total amount distributed. See Am. Atheists, Inc., 567 F.3d at 294
(stating that “a program may have the primary effect of advancing religion if the recipient ‘divert[s]’
secular aid to further its religious mission[,]” but that evidence of diversion of “‘less than one
percent of the total allocation’ of aid under [a] program . . . is ‘too insignificant to affect the
constitutional inquiry.’”) (quoting Mitchell, 530 U.S. at 866–67 (O’Connor, J., concurring)).
The Court finds that evidence is lacking to support the conclusion that AIG is substantially
subsumed with furthering a religious mission, such that it could be considered a pervasively
sectarian institution. Plaintiff has not even presented evidence showing that a substantial portion
of AIG’s activities are subsumed with SCF. Instead, the evidence reflects that SCF is a de minimus
aspect of AIG’s business, accounting for approximately 0.022% of AIG’s consolidated revenue in
2009. Thus, Plaintiff must prove that EESA funds were actually diverted to support AIG’s SCF
activities and that the diverted funds were not de minimus in relation to the total amount distributed.

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In examining AIG’s distribution of EESA funds, the Court first notes that the Secretary’s $40
billion purchase of Series D preferred shares is not at issue, as these funds were paid directly to the
FRBNY. Thus, the challenged appropriations relate solely to AIG’s use of the $30 billion
Commitment under the Series F SPA. AIG has drawn down from the Commitment on four
occasions between May 2009 and February 2010, for a total of approximately $7.5 billion.
Of AIG’s approximate 290 subsidiaries, AIG has identified six that have offered SCF
products since the enactment of the EESA. Plaintiff argues that AIG has diverted over $1 billion
to two of those subsidiaries—American Life Insurance Company (“ALICO”) and Lexington
Insurance Company (“Lexington”)—while receiving taxpayer funds. ALICO maintains branch
offices in countries around the world, including Japan, the United Kingdom, Aruba, and Saudi
Arabia. The Japan, United Kingdom and Aruba branches do not offer SCF products. Pursuant to
a request from a client, ALICO’s Saudi Arabia branch agreed to modify one of its products, until
June 2010, to make it Sharia-compliant as specified by the client. Plaintiff alleges that ALICO
received a total of $409 million from AIG after the EESA was enacted in two distributions: (1) in
March 2009, a subsidiary of AIG (AIG Funding, Inc.) provided ALICO with a loan of $300 million;
and (2) in March 2010, AIG repurchased over $109 million of AIG stock held by ALICO.5
However, the March 2009 loan of $300 million occurred before AIG made its first drawdown from
the Commitment. Thus, there is no evidence to support the conclusion that the loan was made with
EESA funds.

5

Plaintiff also contends that AIG gave ALICO an additional $600 million in the form of
capital contributions in September 2008, but since this occurred prior to the enactment of the
EESA, the Court finds that this evidence is irrelevant to Plaintiff’s as-applied challenge to the
EESA.
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The $109 million repurchase of stock, on the other hand, occurred pursuant to AIG’s
February 19, 2010, drawdown from the Commitment. The shares that AIG repurchased from
ALICO were held in ALICO’s home office in Delaware, and by its branches in Japan, the United
Kingdom, and Aruba. According to Defendants, this evidence fails to show that (1) EESA funds
were used to support the only ALICO branch that has engaged in SCF, and (2) even if EESA funds
benefitted the Saudi Arabia branch, such funds were used to support the sale of its lone SCF product.
The Court agrees. Without evidence that EESA funds have been used to support ALICO’s SCF
activities, Plaintiff cannot demonstrate that the alleged religious indoctrination is attributable to the
government. See Am. Atheists, Inc., 567 F.3d at 296 (“The Supreme Court has repeatedly rejected
‘the recurrent argument that all aid is forbidden because aid to one aspect of an institution frees it
to spend its other resources on religious ends.’”) (quoting Hunt, 413 U.S. at 743 ). Furthermore, the
$109 million at issue constitutes significantly less than 1% of the total amount of EESA funds
authorized for AIG’s use ($70 billion) and the total amount of EESA funds distributed to AIG ($47.5
billion).
Like ALICO, Lexington sells a single SCF product among a host of non-SCF products, and
that SCF product accounted for 0.0006% of Lexington’s gross premiums in 2009.6 While Plaintiff
contends that AIG diverted nearly $44 million in capital contributions to Lexington after enactment
of the EESA, Plaintiff presents no evidence that these contributions originated from the EESA or

6

Lexington’s “Takaful Homeowners Policy” differs from a standard insurance policy in
two ways: (1) premiums and technical reserves are placed into a non-interest bearing account;
and (2) after a specified period of time, a certain percentage of the net surplus, if any, derived
from the collection of premiums is paid out to either the National Children’s Fund or the
International Federation of Red Cross & Red Crescent Societies. Defendants contend that these
organizations were selected precisely because they lack religious affiliations.
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were used to support the sale of Lexington’s lone SCF product.7 Once more, the $44 million at issue
is significantly less than 1% of the total amount of EESA funds authorized for AIG’s use ($70
billion), as well as the total amount distributed to AIG ($47.5 billion).8
Plaintiff also argues that AIG is free to divert EESA funds in the future to support Islamic
religious activities because there are no government-imposed restrictions that would prevent such
diversions. However, the Supreme Court has only required the imposition of such restrictions when
the recipient of government funds is a sectarian institution, i.e., when there is a substantial risk that
funds will be used for religious purposes. See Bowen, 487 U.S. at 612 (1988) (citation omitted)
(“Only in the context of aid to ‘pervasively sectarian’ institutions have we invalidated an aid
program on the grounds that there was a ‘substantial’ risk that aid to these religious institutions
would, knowingly or unknowingly, result in religious indoctrination.”); id. at 614 (“[W]e have never
stated that a statutory restriction is constitutionally required.”); Comm. for Public Educ. & Religious
Liberty v. Nyquist, 413 U.S. 756, 774 (1973) (“Absent appropriate restrictions on expenditures for
these and similar purposes, it simply cannot be denied that this section has a primary effect that
advances religion in that it subsidizes directly the religious activities of sectarian elementary and
secondary schools.”) (emphasis added). Given that Plaintiff has failed to present evidence sufficient
for a reasonable observer to conclude that AIG is a sectarian institution or that AIG’s SCF activities
have resulted in religious indoctrination, a reasonable observer would not consider there to be a

7

Plaintiff also contends that AIG provided Lexington capital contributions in the amount
of $7.5 million in September 2008, but since this occurred prior to the enactment of the EESA,
the evidence is irrelevant.
8

The combined total of EESA funds allegedly distributed to ALICO and Lexington ($153
million) also constitutes less than 1% of the total amount of EESA funds authorized for AIG’s
use and the total amount of EESA funds distributed to AIG.
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substantial risk that federal funds will be used to indoctrinate religion even absent restrictions
explicitly preventing such diversions.
iii.) Conclusion
Accordingly, the Court finds that Plaintiff has failed to present evidence that would allow
a reasonable observer to conclude that the EESA, as applied to the Secretary’s purchase of AIG
stock, has resulted in religious indoctrination attributable to the government.
b.) Excessive Entanglement
While Plaintiff states in his motion for summary judgment that the EESA has created an
excessive entanglement, Plaintiff declined to analyze this prong of the Lemon test with any degree
of specificity. Plaintiff also declined to respond to the arguments advanced in Defendants’ motion
for summary judgment that the EESA has not created an excessive entanglement with religion.
Thus, the Court finds that Plaintiff concedes this issue. See Ctr. For Biological Diversity v. Rural
Utils. Serv., No. 5:08-292-JMH, 2009 WL 3241607, at *3 (E.D. Ky. Oct. 2, 2009) (“When a party
fails to respond to a motion or argument therein, the Sixth Circuit has held that the lack of response
is grounds for the district court to assume opposition to the motion is waived, and grant the
motion.”) (citing Humphrey v. U.S. Attorney General’s Office, 279 Fed. Appx. 328, 331 (6th Cir.
2008)).
Nevertheless, the Court agrees with Defendants that the EESA has not created an excessive
entanglement with religion. “Not all entanglements, of course, have the effect of advancing or
inhibiting religion. Interaction between church and state is inevitable, and [the Supreme Court] ha[s]
always tolerated some level of involvement between the two. Entanglement must be ‘excessive’
before it runs afoul of the Establishment Clause.” Agostini, 521 U.S. at 233 (internal citations

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omitted). “[T]o assess entanglement, [the Supreme Court] ha[s] looked to ‘the character and
purposes of the institutions that are benefited [sic], the nature of the aid that the [government]
provides, and the resulting relationship between the government and religious authority.’” Agostini,
521 U.S. at 232 (quoting Lemon, 403 U.S. at 615). Courts have found excessive entanglement where
government-aid programs require the government to make inspections or evaluations of the religious
content of a religious organization, delegate government power to a religious body, or closely
monitor contact between secular and religious bodies. See Am. Atheists, Inc., 567 F.3d at 294 (“The
program did not require city officials to make judgments about the religious content of particular
projects, nor did it impose a scheme of ‘comprehensive, discriminating, and continuing state
surveillance’ that required the city to stay enmeshed in the churches’ affairs on an ongoing basis.”)
(emphasis added) (citing Lemon, 403 U.S. at 619–20).
Here, the Secretary’s purchase of AIG stock did not require AIG, let alone the government,
to inspect or evaluate the religious content of religious organizations, delegate power to a religious
body, or closely monitor the contact between AIG and a religious body. Cf. Commack Self-Service
Kosher Meats, Inc. et al. v. Weiss et al., 294 F.3d 415, 425–30 (2d Cir. 2002) (holding that laws
prohibiting the sale of food products represented to be “kosher” that had not been prepared in
accordance with “Orthodox Hebrew religious requirements” excessively entangled government and
religion because they “(1) t[ook] sides in a religious matter, effectively discriminating in favor of
the Orthodox Hebrew view of dietary requirements; (2) require[d] the State to take an official
position on religious doctrine; and (3) create[d] an impermissible fusion of governmental and
religious functions by delegating civic authority to individuals apparently chosen according to
religious criteria”). While Plaintiff contends that AIG’s subsidiaries must interpret Islamic law to

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supply SCF products, Plaintiff has not demonstrated that EESA funds have been appropriated for
such a purpose. Furthermore, since AIG’s SCF activities account for approximately 0.022% of its
consolidated revenue, and less than 1% of the funds distributed to AIG under the EESA allegedly
benefitted AIG’s subsidiaries that have engaged in SCF, any interaction between government and
religion has been incidental at best. Therefore, a reasonable observer would not conclude that the
EESA excessively entangled government with religion such that the primary effect of the EESA has
been the advancement of Islamic religious beliefs.
c.) Treasury Department Acts Unrelated to the EESA
Plaintiff argues that the effects of the EESA were exacerbated by the Treasury Department’s
independent acts demonstrating the government’s endorsement of SCF. Plaintiff maintains that the
Treasury Department has given its stamp of approval on Sharia-based Islam by: (1) posting on its
website a published writing titled, “Overview of Islamic Finance”; (2) providing an “Islamic Finance
Scholar-in-Residence Program”; (3) posting on its website a press release advertising the Under
Secretary of the Treasury Department’s key note address at a forum on Islamic Finance at Harvard
University, which stated that the government promotes Islamic finance, has deepened its
engagement in Islamic finance, and calls for harmonization of Sharia standards at the national and
international levels; and (4) sponsoring an “Islamic Finance 101” conference. The Court, however,
finds these alleged acts insufficient to demonstrate an Establishment Clause violation.
First, the Court notes that Plaintiff brings an as-applied challenge to the EESA. Thus,
Plaintiff must show that the alleged wrongful acts were related to the EESA. Plaintiff, however, is
unable to make such a showing because the alleged wrongful acts occurred prior to the enactment
of the EESA. The EESA was enacted in October 2008, but the first three alleged wrongful acts

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occurred in 2004 and 2006. The fourth alleged wrongful act took place shortly after the EESA was
enacted, but the evidence indicates that it was planned and organized in early August 2008—nearly
two months before the EESA was enacted. Moreover, Plaintiff has not presented any evidence that
EESA funds were used to support these activities.
Second, and more importantly, the Court finds that the alleged wrongful acts fail to show that
the government favorably endorses Sharia-based Islam or religion in general, as Plaintiff contends.
With respect to the published writing, titled “Overview of Islamic Finance,” the writing states that
its does not reflect statements of the U.S. Government, the Department of the Treasury, or
Administration policy, and reflects solely the views of the authors. With respect to the “Islamic
Finance Scholar-in-Residence Program,” the press release advertising the program makes clear that
it was offered to “promote broader awareness of Islamic finance practices internationally and
domestically for U.S. government policymakers, regulators, and the public at large.” (emphasis
added). With respect to the press release advertising the Under Secretary of the Treasury
Department’s key note address at the forum on Islamic Finance at Harvard University, the writing
indicated that the purpose of the forum was to generate a “strong platform to generate critical
thinking to inform academics and policymakers on Islamic finance.” Lastly, with respect to the
“Islamic Finance 101” conference, the evidence clearly indicates that it was organized for the
purpose of providing “the regulatory and policy communities . . . with some basic information about
Islamic finance.”
Viewing Plaintiff’s allegations collectively, there is no evidence to suggest that the
government used the writings, forums or conferences to encourage others to adhere to Islamic tenets
or that the government otherwise commented on the propriety of Islam or Islamic financing. The

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Court finds that a reasonable observer would not, after considering this evidence, conclude anything
other than that the government merely endorsed the study of Islamic finance due to the increasingly
significant role Islamic finance plays in the financial industry and world economy. See, e.g.,
Grayson Cnty., 591 F.3d at 848, 855 (holding that a county’s display of the Ten Commandments
“endorse[d] an educational message, rather than a religious one,” due to the display’s emphasis on
the historical significance of the Ten Commandments); Stone v. Graham, 449 U.S. 39, 42 (1980)
(per curiam) (“[T]he Bible may constitutionally be used in an appropriate study of history,
civilization, ethics, comparative religion, or the like.”); Epperson, 393 U.S. at 106 (“[S]tudy of
religions and of the Bible from a literary and historic viewpoint, presented objectively as part of a
secular program of education, need not collide with the First Amendment’s prohibition.”).
3. Conclusion
Accordingly, the Court finds that the evidence is insufficient for a reasonable observer to
conclude that the EESA, as applied to the Secretary’s purchase of AIG preferred stock, has had an
unlawful purpose or effect under the Establishment Clause.
B. MOTION TO STRIKE
In his motion to strike, Plaintiff seeks to exclude evidence that Defendants submitted to
Plaintiff after the discovery deadline under Fed. R. Civ. P. 37(c)(1). Plaintiff also requests
reasonable attorney fees incurred in connection with bringing this motion. On July 14, 2009,
Plaintiff served his request for production of documents on Defendant Geithner. On May 11, 2010,
Defendants produced documents responsive to Plaintiff’s request, with an accompanying letter
stating that Defendants had completed their search for documents and that the attached documents
constituted their final production. The letter also stated that should Defendants locate additional

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documents responsive to Plaintiff’s request, they would timely produce such documents after
reviewing them for privilege and information subject to protective orders. The period for discovery
ended on May 15, 2010.
On June 7, 2010, Plaintiff and Defendants filed motions for summary judgment. In
Defendants’ motion, Defendants relied on evidence produced during the discovery period regarding
the actual use of the Series F SPA funds, which included the distribution to ALICO. Plaintiff,
however, argued in his motion that Defendants were unable to account for the Series F SPA
distributions. In preparing their response to Plaintiff’s motion, Defendants assert that they
uncovered additional evidence certifying the manner in which the Series F SPA funds were
used—evidence that was created on May 7, 2010, after Defendants had completed their search for
documents responsive to Plaintiff’s request, and which Defendants did not discover until Friday,
June 18, 2010. On Monday, June 21, 2010, Defendants produced these documents to Plaintiff,
stating that they had been recently discovered. Plaintiff argues that this evidence should be excluded
from consideration, both at trial and for purposes of dispositive motions, pursuant to Fed. R. Civ.
P. 37(c)(1).
Fed. R. Civ. P. 37(c)(1) provides:
If a party fails to provide information or identify a witness as required
by Rule 26(a) or 26(e), the party is not allowed to use that
information or witness to supply evidence on a motion, at a hearing,
or at a trial, unless the failure was substantially justified or is
harmless.
Fed. R. Civ. P. 26(e) provides:
A party who has made a disclosure under Rule 26(a)—or who has
responded to an interrogatory, request for production, or request for
admission—must supplement or correct its disclosure or response:

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(A) in a timely manner if the party learns that in some material
respect the disclosure or response is incomplete or incorrect, and if
the additional or corrective information has not otherwise been made
known to the other parties during the discovery process or in writing;
or
(B) as ordered by the court.
In his motion to strike, Plaintiff claims that Defendants offered no explanation for why they
failed to produce the disputed evidence prior to the discovery deadline. As described above,
Defendants respond that they did not disclose the discovery prior to the discovery deadline because
(1) it was created eight days prior to the discovery deadline and after they had completed their
search for documents, and (2) they did not discover it until after the discovery deadline. This is
supported by the fact that Defendants did not rely on the disputed evidence in their motion for
summary judgment. Furthermore, Defendants respond that their conduct did not constitute a
violation of Rules 26 or 37. According to Defendants’ unrebutted argument, they first learned of
the evidence on a Friday and produced it for Plaintiff the following Monday. Thus, Defendants
argue, they timely supplemented their production in accordance with Rules 26 and 37. The Court
agrees, and finds that the exclusion of evidence and an award of attorney fees would not be proper
under the circumstances.
Plaintiff also seeks to exclude a declaration that accompanied the evidence purportedly
certifying AIG’s use of Series F SPA funds on the basis that the individual making the declaration
was not listed as a witness prior to the witness-list exchange deadline. In its scheduling order, the
Court ordered the parties to exchange witness lists by May 3, 2010, and stated that no witness may
be called at trial unless that witness’s name and address is listed.
While the declarant at issue here was not listed as a witness prior to May 3, 2010, the Court

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finds that Defendants have not violated the Court’s scheduling order. Notably, Defendants assert
that they do not wish to call the declarant as a witness at trial. According to Defendants, the
declaration is provided for the sole purpose of authenticating evidence submitted in opposition to
Plaintiff’s summary judgment motion. See Ryder Auto. Carrier Group, Inc. v. Gen. Teamsters Sales
& Serv. & Indus. Union Local No. 654, Nos. 96-3712, 96-3738, 1997 WL 540893, at *3 (6th Cir.
Sept. 2, 1997) (Table Opinion) (“We agree . . . that Rule 56 of the Federal Rules of Civil Procedure
does not require that affiants be included in a witness list before their affidavits may be used to
support a motion for summary judgment.”).
Moreover, the Court finds that Plaintiff’s motion is moot because exclusion of the challenged
evidence would not alter the disposition of this case. The challenged evidence relied upon by
Defendants in their response to Plaintiff’s motion for summary judgment purports to certify the
manner in which AIG distributed the Series F SPA funds. However, Defendants have produced
other evidence regarding AIG’s actual use of the Series F SPA funds, and there is no indication that
the challenged evidence provides any link between the Series F SPA funds and SCF activities. The
insignificance of the challenged evidence is further reflected in Plaintiff’s decision to ignore such
evidence in both his response to Defendants’ motion for summary judgment and his reply.
Defendants produced the challenged evidence, which is by no means voluminous, to Plaintiff
approximately one week before Plaintiff’s response was due and approximately three weeks before
his reply was due, yet Plaintiff did not find it significant enough to address. Therefore, Plaintiff’s
motion is denied.
V. CONCLUSION
Accordingly, IT IS HEREBY ORDERED that Plaintiff’s motion for summary judgment [dkt

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57] is DENIED.
IT IS FURTHER ORDERED that Defendants’ motion for summary judgment [dkt 66/67]
is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s motion to strike [dkt 79] is DENIED.
IT IS SO ORDERED.

S/Lawrence P. Zatkoff
LAWRENCE P. ZATKOFF
UNITED STATES DISTRICT JUDGE
Dated: January 14, 2011
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of this Order was served upon the attorneys of record
by electronic or U.S. mail on January 14, 2011.

S/Marie E. Verlinde
Case Manager
(810) 984-3290

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