High Court to Reconsider 1985 School-Tutor Ruling

WASHINGTON — The Supreme Court announced Friday that it will reconsider a controversial 1985 ruling that bars public school tutors from teaching disadvantaged children in parochial schools.

A new ruling, expected by July, again could allow public and parochial schools to cooperate in providing extra help for their poor and low-achieving children. That would be good news for leaders of big-city public school districts and Catholic school systems, as well for thousands of children who are forced to travel between two school buildings.

Meanwhile, the high court also agreed to rule on an important stock-fraud case and to determine whether people who trade on inside information can be prosecuted, even if they are not corporate insiders.

Federal stock regulators have been interpreting the law broadly to prohibit the “misappropriation” of inside information, going after anyone who is shown to have used inside tips to make profits. But this theory was rejected by a federal appeals court in St. Louis, which ruled in August that the law only prohibits insider trading by insiders, not by others who learn of inside information.

The school case presents a church-state dispute, the kind that have closely divided the justices for more than two decades.

In 1985, a liberal majority, led by then-Justice William J. Brennan, said that the use of public school tutors in parochial schools was unconstitutional because it promoted religion and fostered an “excessive entanglement of church and state.”

The four conservative dissenters denounced what they saw as hypersensitivity about church-state cooperation. These “gossamer abstractions” on the 1st Amendment should not be used to “prohibit sorely needed assistance” to poor children, wrote Justice William H. Rehnquist.

Now, as chief justice, Rehnquist probably has a majority to overrule the 1985 decision.

Recently, a group of New York parents and city school officials declared that the earlier decision had proved unworkable and should be overruled. Because of the 1985 ruling, thousands of inner-city Catholic pupils must travel to public school sites for tutoring in reading or math, instead of having public tutors come to their schools. New York school officials said that they have spent an extra $100 million as a result.

In October, Clinton administration lawyers urged the court to hear the challenge. On Friday, the justices agreed and set arguments for April in the case (Agostini vs. Felton, 96-552).

The dispute grew out of a compromise that led to the passage of the landmark federal aid to education law in 1965. Earlier proposals had foundered over conflicts between leaders of public and Catholic schools.

To quell the conflict, then-President Lyndon B. Johnson decided that federal funds would flow to public school districts but they in turn would be obliged to provide remedial instruction for all disadvantaged children in their areas, regardless of whether they attend private or public schools.

Until the 1985 decision, most urban school districts sent a tutor to inner-city Catholic schools for a few hours each week. Since then, they have struggled to find other ways to accomplish the same goal.

The insider-trading case also revisits a long-festering controversy. James O’Hagan, a Minneapolis lawyer, made a $4.3-million profit by trading on Pillsbury stock at the time of its takeover by Grand Metropolitan in 1988. His firm had been hired to represent Grand Metropolitan, a British firm.

But the U.S. 8th Circuit Court of Appeals threw out his conviction because, the judges ruled, O’Hagan did not “breach a fiduciary duty” when he used insider information.

In its appeal, Clinton administration lawyers said that the decision impairs the government’s ability to prosecute insider trading.

The case (United States vs. O’Hagan, 96-842) also will be heard in April.