Kohn ran a private school that
specialized in dealing with troubled students. Massachusetts sometimes
sent students to the school for special education, and paid their tuition.
In fact, most of the school's income came from the State.
Massachusetts had a Statute
(Chapter 766) that allowed them
to do that.
Rendell-Baker worked at the
school, but disapproved of some of Kohn's policies. He organized a
student protest and attempted to form a union. Kohn fired him.
Rendell-Baker sued, claiming
that Kohn was violating his 1st Amendment right to free speech, and
without due process.
Kohn argued that he was a
private entity, and was not bound by Constitutional restraints like the
government was (aka the State Action Doctrine).
Rendell-Baker argued that
because the school performed a public function, it was covered under the Public
Function Exception to the State
Action Doctrine.
Rendell-Baker argued that
because Massachusetts paid to send students to the school, the State was
'entangled' in the private business and therefore the Entanglement
Exception to the State
Action Doctrine applied.
The US Supreme Court found for
Kohn.
The US Supreme Court found
that Kohn's decision to fire Rendell-Baker was not compelled or
influenced by State regulation, so the Entanglement Exception did not apply.
The Court found that acts of
private companies do not become acts of the government by reason of their
significant or even total engagement in performing public contracts, so
the Public Function Exception did
not apply.
In a dissent it was argued
that when a private entity is not only heavily regulated and funded by the
State, but also provides a service that the State is required to provide,
there is a very close nexus with the State, and it is not inappropriate to
treat the private entity as an arm of the State.
