10th Circuit Hears Oral Arguments in Fraud Suit Against LDS Church

Yesterday, the U.S. 10th Circuit Court of Appeals heard oral arguments (audio of full arguments) in Gaddy v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints. In the case, a Utah federal district court dismissed a Second Amended Complaint in a class action lawsuit brought by former members of the LDS Church. The suit alleged 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 alleged that the Church made fraudulent misrepresentations about the use of money received from members' tithing. (See prior posting.) Courthouse News Service reports at greater length on the oral arguments.

Suit For Misappropriating Church Funds Not Precluded by Church Autonomy Doctrine

In Buck v. Peace Apostolic Church, Inc., (CA Super. Ct., March 8, 2024), a California trial court rejected the contention that the church autonomy or ecclesiastical abstention doctrine precludes the court from adjudicating a claim that two church officers and directors improperly spent church funds.  The court said in part:

The First Amendment does not immunize the Church or the individual defendants from illegal acts that apply equally to everyone, religious or not. The Plaintiffs alleged and proved that Defendants committed fraud and engaged in false advertising. Defendants solicited donations from the public promising that “no part of the income or assets of this corporation shall ever inure to the benefit of any director, officer, or member thereof or to the benefit of any private person.”... Prince used her position in the church and the representations made by her and by the church to enrich herself. While Brown did not enrich herself, she facilitated the enrichment of her son, Howard Woods. The defendants cannot take money based on a representation that it would be used for charitable purposes and church mission and use it for personal benefit. That's not internal church governance. That's fraud. The activities that occurred in that case are not protected by the First Amendment.... 

On December 19, 2023, the Court ordered injunctive relief. In part, PAC was ordered to post warnings that read “WARNING: A Jury has found that Tamara Swancy-Prince, Priscilla Woods Brown and Peace Apostolic Church have improperly misappropriated donations.” PAC objects to the injunction arguing that the Court misapplied the law.... The Court is simply not convinced that similar abuses won’t recur.

7th Circuit: Refusal to Dismiss Under Church Autonomy Doctrine Is Not Appealable Interlocutory Order

 In Garrick v. Moody Bible Institute, (7th Cir., March 18, 2024), the U.S. 7th Circuit Court of Appeals, in a 2-1 decision, held that that an order refusing to dismiss a Title VII employment discrimination case under the church autonomy doctrine is not an appealable interlocutory order. The suit was brought by a former communications instructor who claimed sex discrimination.  According to the Bible Institute, the instructor's firing resulted from her disagreement with the Institute's doctrine that only men should serve as clergy. Plaintiff contended that this was merely a pretext for sex discrimination. In denying appealability, the court said in part:

... Moody’s argument that it will experience irreparable harm without immediate review and reversal of the district court’s order is unavailing. Religious autonomy to shape and control doctrine will not be threatened. Within its discretion to manage discovery, the district court should limit discovery to instances of discriminatory treatment in situations not implicated by Moody’s complementarian beliefs.

Judge Brennan dissented, arguing that the interlocutory dismissal order should be appealable. Americans United issued a press release announcing the decision.

OK Supreme Court: Church Autonomy Doctrine Requires Dispute Over Disaffiliation to Be Dismissed

In Oklahoma Annual Conference of the United Methodist Church v. Timmons, (OK Sup. Ct., Oct. 24, 2023), the Oklahoma Supreme Court held that under the church autonomy doctrine, a state trial court lacked subject matter jurisdiction to issue the temporary injunction it had entered in a dispute between the United Metodist Church and a local congregation, some of whose members wished to have the congregation disaffiliate from the parent body.  The initial vote by the Church of the Servant congregation fell slightly short of the number needed under United Methodist Book of Discipline to disaffiliate. The District Superintendent refused to exercise the discretion he had under Church rules to call another vote on the matter within a specified time period. The trial court concluded that the District Superintendent was biased against the congregation and ordered the parent body to allow a revote, even though it was beyond the time specified for it in the Book of Discipline.  The Supreme Court said in part: 

In ordering the temporary mandatory injunction in favor of Church of the Servant, Respondent found the church was likely to succeed on the merits and would be irreparably harmed without the injunction.... In so finding, the District Court interpretated the Book of Discipline church doctrine and procedures for UMC and fashioned a remedy contrary to Book of Discipline procedures.

Church Member's Defamation Suit Dismissed on Church Autonomy Grounds

In David v. South Congregational Church, (MA Super. Ct., Sept. 1, 2023), a Massachusetts trial court dismissed on church autonomy grounds a defamation suit against a Church, its Pastor and its Moderator brought by a Church member who was removed from the Church's Leadership, Finance and Investment Committees.  Plaintiff, a financial advisor, claims that he was inaccurately charged with unethical conduct in handling the funds of another church member. He seeks damages and other remedial action, including reinstatement on church committees. The court said in part:

... [T]here is no evidence that the defendant Moderator Figueroa's email to six Church leaders advising of the plaintiff's removal from the three Church leadership committees was ever communicated or published by the defendant Church officials beyond those leadership officials.... The sole disciplinary action taken by the church defendants was the plaintiff's removal from Church committees and positions of [Church] leadership.... Plaintiff's claimed defamation damages ... are necessarily limited exclusively to his reputation amongst the internal Church leadership.

But even limiting the scope of plaintiff's tort damage claim will not save his cause of action against the defendant Church, its Pastor and Moderator. A jury ... may not be permitted to second-guess church officials' and require them to pay damages because the jury disagrees with internal church discipline decisions...

The plaintiff is improperly asking this court to interject itself into-- and moreover reverse-- the internal disciplinary action imposed by the Church Pastor and Moderator upon another Chruch member.

[Thanks to John Egan for the lead.]

Church Autonomy Bars Court Adjudicating Dispute Over Withdrawal from Parent Body

 In Deutsche Evangelisch Lutherische Zions Gemeinde v. Evangelical Lutheran Church in America, (Kings Cty NY Sup. Ct., Aug. 16, 2023), a New York state trial court dismissed a suit brought by a German Lutheran church in Brooklyn that claims it has broken away from its parent bodies, the Evangelical Lutheran Church in America (ELCA) and ELCA's Metropolitan New York Synod over the parent bodies' stance accepting same-sex marriage and ordination of gay clergy. The parent bodies claim that the church is still affiliated with them. Plaintiff asks the court to determine that its membership with the parent bodies has been terminated and that the parent bodies lack authority to take control of church property. It also alleges in defamation claims that false statements about its affiliation injure its reputation and dissuade new members from joining. In rejecting those claims, the court said in part:

... [T]he neutral principles of law approach cannot be applied to adjudicate plaintiff's property claims which directly call into question the authority that has been vested in the synod to impose synodical administration which would allow it to dissolve the church and take control over its property....

The MNYS's power to impose synodical administration is far broader, however, than its authority to take control over a local church's property.... Plaintiff's argument ... ignores the inherent religious elements.... [T]he decision to impose synodical administration over a church involves consideration by the Synod of such issues as church governance, religious doctrine and practice, scripture, and the spiritual well-being of the local church's remaining members. Thus, it concerns subject matter with which this court is forbidden from entangling itself pursuant to the First Amendment. Indeed, synodical administration is an inherently religious matter although it incidentally concerns a local church's property.....

In order to resolve the dispute of whether plaintiff terminated its membership with defendants, this court would necessarily intrude into areas of church polity, religious doctrine, practice, and scripture in order to force the Synod to accept the votes taken by plaintiff's congregation in 2008 and 2009 to terminate the relationship. Whether plaintiff remains a member church of the ELCA and the MNYS is more than just a mere associational question but a religious one.

Church Autonomy Doctrine Does Not Shield Criminal Conduct

 In Hochstetler v. State of Indiana, (IN App., July 27, 2023), an Indiana state appellate court held that criminal conduct is not shielded by the church autonomy doctrine. In the case, three Old Order Amish bishops were convicted of misdemeanor intimidation for threatening to place an Amish wife under a bann if she did not remove herself from a protective order she had obtained to protect her and her children from her husband.

Church Autonomy Doctrine Requires Dismissal of Title VII Claim By Non-Ministerial Employee

In McMahon v. World Vision Inc., (WD WA, June 12, 2023), a Washington federal district court dismissed a Title VII sex discrimination suit, finding it is barred by the Church Autonomy Doctrine.  A Christian ministry's job offer to plaintiff for the full-time position of Donor/Customer Service Representative Trainee was rescinded when defendant learned that plaintiff was in a same-sex marriage. The court discussed the relationship between the Church Autonomy Doctrine and the Ministerial Exception, concluding that the Church Autonomy Doctrine may be invoked when a non-ministerial employee brings a Title VII action.  The court said in part:

... [T]he Church Autonomy Doctrine requires the court to abstain from resolving employment discrimination claims where a religious institution takes an adverse action pursuant to a religious belief or policy—regardless of whether the employer allegedly discriminated on religious or other protected grounds—unless it is possible for the court resolve the claims without resolving underlying controversies over religious doctrine or calling into question the reasonableness, validity, or truth of a religious doctrine or practice....

The court joins other courts ... in cautioning religious employers against over-reading the impact of the court’s holding. It is by no means the case that all claims of discrimination against religious employers are barred....  [I]f a religious employer does not offer a religious justification for an adverse employment action against a non-ministerial employee or if the plaintiff presents sufficient secular evidence that would allow a factfinder to conclude that the religious justification was pretext without wading into the plausibility of the asserted religious doctrine, it is unlikely that serious constitutional questions will be raised by applying Title VII.

Fraudulent Misrepresentation Claims Against LDS Church Are Dismissed

 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....

2nd Circuit Denies En Banc Review in Church Autonomy Case

In Belya v. Kapral, (2d Cir., Feb. 8, 2023), the U.S. 2nd Circuit Court of Appeals denied en banc review of a 3-judge panel decision which held that the collateral order doctrine does not allow appeal of an interlocutory order rejecting a church autonomy defense. The defense was raised in an action in which plaintiff contended that he was defamed when defendants publicly accused him of forging a series of letters regarding his appointment as Bishop of Miami in the Russian Orthodox Church Outside Russia. Judge Lohier, joined by Judges Lee, Robinson, Nathan and Merriam, filed an opinion concurring in the denial of review, saying in part:

[T]he panel’s decision regarding appellate jurisdiction at this stage in the case poses no threat to the church autonomy doctrine, which has thrived without help from the expansion of the collateral order doctrine that the dissent proposes.

Senior Judge Chin filed a statement in support of denying review, saying in part:

While the church autonomy doctrine provides religious associations with "independence in matters of faith and doctrine and in closely linked matters of internal government," ... it does not provide them with "a general immunity from secular laws"...

Judge Cabranes dissented, citing the exceptional importance of the issues involved.

Judge Park, joined by Chief Judge Livingston and Judges Sullivan, Nardini and Menashi, filed a dissenting opinion, saying in part:

This case arises from a minister’s suspension by his church. The church autonomy doctrine, which is rooted in the Religion Clauses of the First Amendment, generally requires courts to stay out of such matters. But the panel decision leaves the church defendants subject to litigation, including discovery and possibly trial, on matters relating to church governance. This imperils the First Amendment rights of religious institutions. Denials of church autonomy defenses should be included in the narrow class of collateral orders that are immediately appealable.

Reuters reports on the decision.

Church Autonomy Doctrine Bars Catholic High School Teacher's Suit Against Archdiocese

In Payne-Elliott v. Roman Catholic Archdiocese of Indianapolis, Inc., (IN Sup. Ct., Aug. 31, 2022), the Indiana Supreme Court held that the church autonomy doctrine bars a suit by a former Catholic school teacher against the Catholic Archdiocese for interfering with his employment contract with a Catholic high school. The suit alleges that the Archdiocese pressured the school to fire plaintiff because he had entered a same-sex marriage. Citing a 2003 decision, the court said in part:

[U]nder the church-autonomy doctrine a civil court may not (1) penalize via tort law (2) a communication or coordination among church officials or members (3) on a matter of internal church policy or administration that (4) does not culminate in a criminal act.

Becket issued a press release announcing the decision.

Yeshiva University Asks Supreme Court For Stay While State Court Ruling On Recognizing LGBTQ Group Is Appealed

Yesterday, an emergency Application for a Stay Pending Appellate Review (full text) was filed in Yeshiva University v. YU Pride Alliance, (Sup. Ct., filed 8/29/2022). In the case,  a New York state trial court held that New York City's public accommodation law requires Yeshiva University to officially recognize as a student organization an LGBTQ group, YU Pride Alliance. (See prior posting.) State appellate courts refused to stay the ruling. The petition contends that Yeshiva University is likely to succeed on its contention that forcing it to recognize the group violates the University's free exercise rights and the principles of church autonomy. The filing asks that alternatively it be treated as a petition for certiorari. Becket issued a press release announcing the filing of the Application.

Church Autonomy Doctrine Bars Inquiry Into Pretext Claim In Catholic School's Firing Of Teacher

In Butler v. St. Stanislaus Kostka Catholic Academy, (ED NY, June 27, 2022), a New York federal district court dismissed a sexual orientation discrimination lawsuit brought by Cody Butler, a teacher of English Language Arts and Social Studies who was fired from his Catholic school teaching position shortly after he was hired. After his first teacher orientation session, Butler e-mailed the principal saying that the orientation made him uncomfortable because he is homosexual and plans in the future to marry his boyfriend. Within days, Butler was given a letter of termination.  The court dismissed the suit on both ministerial exception and church autonomy grounds. As to the ministerial exception, the court said in part:

[E]xtensive evidence leaves no doubt that Butler’s job did, and would have continued to, include important ministerial duties....

Butler argued that the school's claim he was fired because his intended same-sex marriage which violated church doctrine was a pretext for firing him because of his sexual orientation. The court said in part:

[T]he only way for the jury to find pretext would be to question the Church’s explanation of religious doctrine, or to question how much that particular religious doctrine really mattered to the Church. To do so, however, would violate the church-autonomy principle.... 

The bottom line is that courts have long recognized the church-autonomy doctrine, and no binding authority has ever said that the ministerial exception eclipses this doctrine in employment-discrimination cases.... I am constrained to conclude that no such limitation exists. Under controlling case law, the church autonomy doctrine applies in the employment-discrimination context, as it does elsewhere. And this principle forecloses judicial inquiry  into the plausibility of St. Stans’ asserted religious justifications in this case....

[Thanks to Mark Chopko for the lead.]

District Court Affirms Bankruptcy Court's Ruling On Property Dispute Between Two Rabbis

In Zaks v. Mosdos Chofetz Chaim Inc., (SD NY, Dec. 7, 2021), a New York federal district court affirmed a bankruptcy court's decision in a dispute between two rabbis, who are brothers, over the transfer of real property in Spring Valley, New York under the Plan of Reorganization of Mosdos Chofetz Chaim. Among other things, the court rejected appellant's argument that by applying the "common corporate structure" test, the Bankruptcy Court violated the First Amendment right of Mosdos to have its ecclesiastical leadership control all facets of its governance in compliance with its religious obligations.

Huntsman's Fraud Claim Against Mormon Church Dismissed

In Huntsman v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, (CD CA, Sept. 10, 2021), a California federal district court dismissed a fraud suit brought by James Huntsman against the LDS Church. Huntsman, a prominent LDS Church member, alleged that the Church falsely claimed that no tithing funds would be used in its development of commercial real estate in Salt Lake City. Huntsman claims this was false because the Church used earnings on invested tithing funds for the project. First the court held that the church autonomy doctrine does not require dismissal of the case because the dispute is purely secular. It does not involve an analysis of Church policy or doctrine. However, the court concluded that no reasonable juror could conclude that defendant made a misrepresentation. The President of the Church, while stating that no tithing funds would be used, added that earnings of invested reserve funds will be used. The court also rejected a fraud claim relating to a second project. A Notice of Appeal of the decision to the 9th Circuit has been filed.

Pretextual Religious Reasons For Firing Not Protected By Religious Autonomy Doctrine

In Garrick v. Moody Bible Institute, (ND IL, Oct. 13, 2020), an Illinois federal district court allowed a former Instructor of Communications at Moody Bible Institute (MBI) to move ahead with her Title VII disparate treatment and retaliation claims, but not her hostile work environment claim. Plaintiff Janay Garrick says she encountered rampant gender discrimination and harassment, and that MBI used disagreement with her religious views as a pretext for her firing. Rejecting in part MBI's religious autonomy defense, the court said:

Garrick alleges that Moody expected female teachers of secular subjects to perform more demanding duties and submit to more onerous performance reviews than similarly situated male teachers.... Under those circumstances, a reasonable inference can be made from the allegations that Moody fired Garrick because it held female teachers to higher standards than their male counterparts, not because it disapproved of her egalitarian religious views.

The court had dismissed an earlier version of plaintiff's complaint on church autonomy grounds. (See prior posting.)

British Pastors Sue Challenging Government COVID-19 Orders Which Closed Churches

In Britain, a group of 26 Christian pastors and activists have filed suit challenging the closure of churches as part of the response to COVID-19, even though the government has allowed reopening of churches as of July 4.  The complaint (full text) in The Queen on application of Omooba v. Secretary of State for Health and Social Care, (QB, filed 6/23/2020), contends in part:

The Claimants do not for a moment suggest that churches should have continued to operate as before notwithstanding the Coronavirus epidemic. Rather, the Claimants’ concern is that, as a matter of principle, the imposition of appropriate anti-epidemic measures in the Church is ultimately a matter for Church authorities rather than secular state authorities.

Christian Concern issued a press release announcing the filing. Free Thinker blog has additional reporting.

Defamation Suit Dismissed Under Ecclesiastical Entanglement Doctrine

In Lippard v. Holleman, (NC App., May 19, 2020), the North Carolina Court of Appeals affirmed the dismissal of a defamation suit brought by a former church pianist and vocalist against the Baptist church's pastor and its minister of music. A dispute over assignment of a vocal solo had escalated leading to plaintiff's dismissal. Plaintiff sued over various statements made in connection with her termination. The court held:

... [D]etermining the truth or falsity of Defendants’ alleged defamatory statements—where the content of those statements concerns whether Plaintiffs complied with [Diamond Hill Baptist Church's] practices—would require us to interpret or weigh ecclesiastical matters, an inquiry not permitted by the First Amendment....

We affirm the trial court’s order on the ground that all statements Plaintiffs challenge are barred by the ecclesiastical entanglement doctrine.

Chief Justice McGee concurred in part and dissented in part.  [Thanks to Will Esser via Religionlaw for the lead.]

Court Refuses To Dismiss Catholic School Teacher's Suit On Church Autonomy Grounds

In Payne-Elliott v. Roman Catholic Archdiocese of Indianapolis, Inc., (IN Super. Ct., May 1, 2020), an Indiana trial court refused to dismiss a lawsuit against the Catholic Archdiocese brought by a teacher who claims that the Archdiocese interfered with his contractual relationship with Cathedral High School, an independent school that had a relationship with the Archdiocese. The teacher was ordered to be fired by a directive from the Archdiocese issued after the teacher entered a same-sex marriage. The school feared that if it did not comply, the Archdiocese would no longer recognize it as a Catholic institution. The Archdiocese argued that the lawsuit should be dismissed under the "church autonomy" doctrine. The court said in part:

In civil dispute involving church as party, the court has jurisdiction to resolve the case if it can be done without resolving an ecclesiastical controversy. The court can avoid the religious controversy by deferring to the highest authority within the ecclesiastical body....

... [T]his Court cannot determine that the directive by the Archdiocese to terminate Payne-Elliott was made by the highest authority in the ecclesiastical body of Cathedral or of the Roman Catholic Church.“

The court also questioned whether the case involved an ecclesiastical controversy at all:

... [A] letter from the President and Chairman of the Board of Cathedral elaborates as to ”What is at stake?” Therein, Cathedral states: ”Furthermore, Cathedral would lose its 501(c)(3) status thus rendering Cathedral unable to operate as nonprofit school." This rational for firing Payne-Elliott is important,... If Payne-Elliott was terminated by Cathedral for an economic benefit to Cathedral at the direction of the Archdiocese, then that is different matter than Catholic doctrine.

The court also refused to accept several other grounds for dismissal put forward by the Archdiocese.  Indiana Lawyer reports on the decision.

Court Dismisses Claims That Mormon Doctrines Are Fraudulent

In Gaddy v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, (D UT, March 31, 2020), a Utah federal district court dismissed on 1st Amendment grounds a suit alleging fraud by the LDS Church.  In the suit, a former LDS Church member alleged that several basic teachings of the Church involve misrepresentations.  The court said in part:

Each of these alleged misrepresentations directly implicates the Church’s core beliefs. Because a statement’s falsity is an essential element of fraud claims, adjudicating these claims would require the court to do exactly what the Supreme Court has forbidden—evaluate the truth or falsity of the Church’s religious beliefs. This court can no more determine whether Joseph Smith saw God and Jesus Christ or translated with God’s help gold plates or ancient Egyptian documents, than it can opine on whether Jesus Christ walked on water or Muhammed communed with the archangel Gabriel. The First Amendment prohibits these kinds of inquiries in courts of law.

Courthouse News Service reports on the decision.