The State of Illinois recently enacted a civil union bill, effective in June 2011, that banned discrimination based on sexual orientation. Catholic Charities, recipient of over four decades of funding from the State of Illinois to provide foster care and adoption services, tried to continue receiving state funds without complying with state law.
Catholic Charities alleged that the Religious Freedom Protection act and the Civil Unions Act permitted Catholic Charities to refuse to work with openly gay families and instead refer them elsewhere. The State of Illinois disagreed and cancelled their contract causing the transfer of 2000 children to agencies In Illinois that do not discriminate.
Catholic Charities sued and argued that the act provided an exemption. The state defended the act and argued that the exemption narrowly applies to religious clergy who do not want to officiate civil unions.
The Court focused on the property rights issues and did not rule on the religious aspects of the case. In the ruling, the Judge held that the four decade contract between the state and Catholic Charities did not create a property right entitling Catholic Charities to automatic contract renewal. Thus, the contract could be cancelled.