In Gaddy v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, (D UT, March 28, 2023), a Utah federal district court, in a 56-page opinion, dismissed a Second Amended Complaint in a class action lawsuit brought by former members of the LDS Church. The suit alleges that the Church has fraudulently misrepresented its founding to its members while its leaders did not have a sincere religious belief in the narrative. It also alleges that the Church made fraudulent misrepresentations about the use of money received from members' tithing. The court said in part:
The court has twice considered and rejected Plaintiffs’ arguments that fraud-based claims directed towards the Church’s alleged misrepresentations and omissions concerning the First Vision, Church History, translations of the Books of Mormon and Abraham, and locations of events in the Book of Mormon are not subject to the church autonomy doctrine. The court also previously rejected Plaintiffs’ theory that they can avoid the church autonomy doctrine by arguing the sincerity of the Church’s beliefs or basing their claims on a theory of fraudulent omissions....
By pleading even more facts concerning Joseph Smith, Plaintiffs seek to have the court adjudicate the truth or falsity of the Church’s beliefs and teachings concerning its founder by challenging the accuracy of facts surrounding those beliefs. But again, “[i]f religious events themselves sit beyond judicial purview, religious beliefs concerning the details of those events must enjoy the same protection.”...
The court agrees with the Church that Plaintiffs’ fraud in the inducement claim fails, not for running into a First Amendment bar on the falsity or reliance elements, but for a more fundamental failure to plead the claim with the specificity required under Rule 9(b)....
The court agrees with the Church that Plaintiffs fail to state a claim for fraudulent nondisclosure on the tithing theory because Plaintiffs cannot show that a legal duty exists between the Church and its members requiring disclosure of material financial information....
The court is unaware of any case law supporting the proposition that “constructive fraud based on a breach of promises of future performance” is an independent, recognized cause of action in Utah....
Because the UCSA [Utah Charitable Solicitation Act] does not appear create a private cause of action, and because effectively Plaintiffs concede this point in their Opposition, the court dismisses Plaintiffs’ claim for violation of the UCSA....
The court agrees with the Church that Plaintiffs have failed to plead a cognizable civil RICO claim....
