Timely Topics
In the 1990s, plaintiffs brought clergy malpractice and professional negligence claims against ministers, churches and denominations. The claims required allegations that a clergy member failed to exercise the standard of care that a minister of that denomination and training in the community should exercise, or that the minister violated the standard of care of a reasonably prudent clergy person in the exercise of the minister's profession. Courts routinely dismissed these claims due to the church autonomy doctrine and non-entanglement principle, reasoning that deciding the disputes would require the courts to consider church doctrine and orthodoxy and entangle them in theological controversy. Since then, new breach of fiduciary duty and fraudulent concealment claims have emerged that some courts considered the equivalent of clergy malpractice when they were introduced, but have since gained independent status in many states. The fiduciary duty imposed under this line of cases is relatively undefined and, in fact, may be looser than for clergy malpractice.
The Uniform Fiduciary Act of 1922 was the first uniform body of law to concern itself with fiduciaries. The Act assumed a trust-bailment relationship, so that a fiduciary was essentially a trustee, money or property manager, executor of an estate or receiver in bankruptcy. Consequently, another reason many courts gave for dismissing breach of fiduciary duty claims when plaintiffs originally filed them against pastors, churches and denominations was that there ordinarily is no commercial or financial relationship or interest between the minister and plaintiff. Many courts no longer consider this an obstacle. Instead, they find that a fiduciary relationship can arise from a relationship that is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other. They have also found a fiduciary relationship between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of that relationship. Subject relationships may certainly include pastoral-penitent and counselor-counselee relationships, but obviously encompass a wide variety of potential other relationships between professionals and patients, clients, students or customers.
The fiduciary duty doctrine has been utilized successfully to avoid the limitations on employer liability that the theory of respondeat superior otherwise imposes. Under the doctrine of respondeat superior, liability arises for an employer when the employee's tort is committed within the course and scope of his employment, but denominations and associations without any direct relationship to a church employee — and sometimes no knowledge at all of the employee — have been held presumptively responsible for a church's employment practices. Once a court finds a fiduciary relationship between two persons, the plaintiff may often also plead fraudulent concealment, which ordinarily requires an affirmative act or representation, but not in the context of a fiduciary relationship. Silence or a failure to report facts upon which the other party relies may be sufficient to state a claim for fraudulent concealment when the defendant had a fiduciary relationship with the plaintiff.
They say "bad facts make bad law." Most of the cases giving rise to the expansion of the fiduciary duty doctrine involve sexual relationships arising between ministers and adults or children in counseling relationships, but the implications of fiduciary duty law are much broader. If you have not had church-state counsel review your counseling and other professional protocols recently, you should consider it.
Key Cases
First Amendment Challenges to Contraception Insurance Mandate Have Mixed Results
1. Plaintiffs Dismissed
In Nebraska v. U.S. Dep't of Health and Human Servs., Case No. 4:12CV3035, 2012 WL 2913402 (D. Neb. July 17, 2012), the court ruled that various religious institutions, individuals and states lack standing to challenge under the First Amendment and Religious Freedom Restoration Act (RFRA) the final rules issued by the U.S. Department of Health and Human Services in order to implement the new federal healthcare law, the Patient Protection and Affordable Care Act. The plaintiffs allege the final rules will coerce them to directly subsidize contraception, abortifacients, sterilization and related services in contravention of their religious beliefs. But the regulations exempt "grandfathered plans." The court ruled that plaintiffs Catholic Social Services, Pius X parochial school, and a nun and Catholic missionary made a "naked assertion" without sufficient facts to show their health plans are not grandfathered and dismissed them for this reason. Plaintiff Catholic Mutual, an insurance company, admitted its plan is grandfathered. The court rejected as insufficient Catholic Mutual's speculation that the company is "trapped" in its current plan.
The court also found that the individual plaintiffs failed to allege facts indicating that their employers do not qualify for the rule's religious employers exemption. That exemption applies to a religious employer that: (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a church, its integrated auxiliaries, and conventions or associations of churches, as well as the exclusively religious activities of any religious order. Nebraska, Florida, South Carolina, Texas, Ohio and Oklahoma argued that the rule would threaten their budgetary stability when religious organization employers drop coverage for their employees pushing them into Medicaid. The court ruled that this was mere speculation, that the states failed to allege "direct injuries" resulting from the defendants' challenged conduct, and that the states do not fall within the zone of interests protected by the First Amendment or RFRA.
In addition, the court ruled that the plaintiffs' claims were not ripe. The defendant announced a "temporary enforcement safe harbor" applicable to "group health plans sponsored by non-profit organizations that, on and after February 10, 2012, do not provide some or all of the contraceptive coverage otherwise required ... because of the religious beliefs of the organization...." Furthermore, on March 12, 2012, the defendant published an advance notice of proposed rulemaking to consider broadening the religious exemption. The plaintiffs argued that they have to prepare now for rule implementation, but the court disagreed, observing, "The plaintiffs face no direct and immediate harm, and one can only speculate whether the plaintiffs will ever feel any effects from the Rule when the temporary enforcement safe harbor terminates."
2. Plaintiffs Granted an Injunction
In Newland v. Sebelius, Case No. 1:12-cv-1123-JLK, 2012 WL 3069154 (D. Colo. July 27, 2012), the court enjoined application of the rules against Hercules Industries, Inc., a for-profit Colorado S-corporation engaged in the manufacture and distribution of heating, ventilation and air conditioning. The owners, also plaintiffs, are Catholic and seek to run their business in a manner consistent with their sincerely held religious beliefs. Because the Catholic Church condemns the use of contraception, the company's self-insured health plan does not cover abortifacient drugs, contraception or sterilization. Hercules sued to challenge the rules as a violation of RFRA, the First Amendment, the Fifth Amendment and the Administrative Procedure Act.
The court ruled that Hercules' plan does not qualify for grandfathering or the religious employers exemption. Although the rules are not effective until November 1, 2012, the court also ruled that: (1) the plaintiffs will suffer imminent irreparable harm from the implementation of the rules due to the planning they must undertake to comply with the proximate implementation date; (2) the balance of the harms weighed against the defendant because the infringement of the plaintiffs' constitutional and statutory rights is a greater harm than the harm from not enforcing the rules against them; (3) entry of the injunction is not contrary to the public interest inasmuch as the Act already incorporates multiple exemptions exempting 190 million health plan participants; and (4) the plaintiffs are likely to prevail on their RFRA claim because the government has no compelling interest in uniform enforcement of the Act against them while it exempts millions of others, and because the Act is not the least restrictive means of applying the preventive care coverage mandate.
The plaintiffs proposed alternatives that the court ruled the government did not adequately refute to include creation of a contraception insurance plan with free enrollment, direct compensation of contraception and sterilization providers, creation of a tax credit or deduction for contraceptive purchases, or imposition of a mandate on the contraception manufacturing industry to give its items away for free. The government argued that the plaintiffs' proposals were not feasible, but the court observed the government already provides free contraception to women. The court did not decide whether an S-corporation may "exercise religion."
Salvation Army May Be "Principally Engaged in Providing Social Services" for Purposes of Rehabilitation Act
In Doe v. Salvation Army, Case No. 11-3019, 2012 WL 2816809 (6th Cir. July 11, 2012), the court ruled that religious organizations are not categorically exempt from the Rehabilitation Act and that fact issues precluded summary judgment in favor of Salvation Army as to whether the organization is exempt from the Act as not "principally engaged in providing social services." The plaintiff claimed the Salvation Army discriminated against him in violation of the Act, when it asked him in an interview for a position as a truck driver what kind of medications he was taking and refused to hire him after the plaintiff responded that he was taking "psychotropic" medications. The Rehabilitation Act prohibits "any program or activity receiving Federal financial assistance" from discriminating against an "otherwise qualified individual with a disability ... solely by reason of her or his disability." Within the meaning of this Act, a "program or activity" includes "all of the operations of ... an entire corporation, partnership, or other private organization" if, inter alia, the organization "is principally engaged in the business of providing education, health care, housing, social services, or parks and recreation," and any part of the organization receives federal financial assistance.
The court ruled that the Act incorporates no express or implied exemption for religious institutions inasmuch as they have historically provided education, health care and social services. Furthermore, the court ruled that the plaintiff alleged facts sufficient to suggest that the Salvation Army may be primarily engaged in the provision of social services. It considered immaterial the Salvation Army's spiritual motivation for the services and intention to use them to spread the gospel: "The issue in this case is not whether the Salvation Army is religious or views these services as worship — we do not doubt that it does. The sole issue is whether these activities could be considered "social services," and whether the Salvation Army's primary business is to engage in social services."
Public School Graduation Held at Church Violates the Establishment Clause
In Doe v. Elmbruck Sch. Dist., Case No. 10-2922, 2012 WL 2996743 (7th Cir. July 23, 2012), the en banc court ruled that the school district's practice of holding high school graduation ceremonies and related events at a Christian church rented by the district for the occasion violated the Establishment Clause. The court held that the practice amounted to religious endorsement and coercion. The church grounds incorporate a cross and other religious symbols and names. Inside, the church would not allow the school to veil the large cross at the front of the church where school officials and students participating in the ceremony were seated, although the church did remove any non-permanent religious symbols from the dais in front. In the lobby, through which graduates passed, tables and stations included evangelical literature addressing children, teens and others and there were religious banners, symbols and posters. One year, church members manned information booths containing the literature and another year church members passed out religious literature in the lobby. The pews contained Bibles, hymnals and religious literature including membership and giving cards and envelopes not put there specifically for the graduation. The district argued the venue was the most attractive for the price.
The court ruled that "[t]he same problem attends pervasive displays of iconography and proselytizing material at a public secondary school graduation" as in public school classrooms. According to the court, the reasonable observer "could reasonably conclude that the [d]istrict would only choose such a proselytizing environment aimed at spreading religious faith — despite the presence of children, the importance of the graduation ceremony, and, most importantly, the existence of other suitable graduation sites — if the [d]istrict approved of the [c]hurch's message." It also ruled that the fact that seniors voted for the church venue over others was immaterial because a "student election does nothing to protect minority views...." With respect to religious coercion, the court found that graduation ceremonies are effectively obligatory even if attendance is technically voluntary. It worried about state officials, in effect, directing the performance of a formal religious exercise at a graduation ceremony and even requiring a person to "go to ... church against his will."
Nativity Display in Median Is Constitutional
In Satawa v. Macomb Cnty. Rd. Comm'n, Case No. 11-1612, 2012 WL 3104511(6th Cir. Aug. 1, 2012), the court ruled that the Macomb County Road Commission did not have a compelling interest in denying a resident's application for a permit to display a nativity scene on a road median separating four lanes of southbound and northbound traffic. The court ruled that the 60-foot-wide median, which was accessible by sidewalk with adequate space for pedestrians and sojourners, benches and historical displays of farm equipment and plaques, was a traditional public forum used by citizens for a variety of expressive purposes. The plaintiffs and their forebears erected the nativity on the same site every year beginning in 1945. It was 9.5 feet tall, 8 feet wide and 8 feet deep. On the crèche is a sign that reads: "A Blessed Christmas, St. Anne Parish." It is illuminated at night.
The court ruled that compliance with the Establishment Clause was not a compelling public interest justifying denial of the plaintiff's application to engage in private religious speech. It was skeptical of the commission's claim that it denied the application for safety reasons, but even if true, held this reason neither a compelling interest nor narrowly tailored to ensure safety. The court observed, "A hypothetical traffic-safety concern resting on aberrant behavior, which has never happened — nor has there been any record of it being threatened — in sixty years does not qualify as significant government interest." Therefore, the court reversed the district court's grant of summary judgment to the commission on the plaintiff's free speech claim. Finding that the commission did not take steps to remove other items from the median until after the litigation began, the court also reversed the district court's grant of summary judgment to the commission on the plaintiff's equal protection claim, but affirmed the summary judgment against the plaintiff with respect to his claim that the denial of his application amounted to disfavoring religion in violation of the Establishment Clause. The court held that the commission had a secular reason for denying the plaintiff's application: bad legal advice.
Instructors' Employment Discrimination and Breach of Contract Claims Not Actionable Under Ministerial Exception Doctrine
1. Discrimination Claims Dismissed
In Herzog v. St. Peter Lutheran Church, Case No. 11 C 5480, 2012 WL 3134337 (N.D. Ill. Aug. 1, 2012), the court granted the church's motion for summary judgment on the basis of the "ministerial exception" doctrine against a former teacher's age, sex, and marital status employment discrimination claims. The church alleged that it terminated Herzog due to budget constraints. The court treated as controlling Hosanna-Tabor Evangelical Lutheran Church & Sch. v. EEOC, 132 S. Ct. 694 (2012). It found that: (1) the church held Herzog out as a minister; (2) Herzog received theological training followed by a formal process of commissioning as a "called teacher"; (3) Herzog held herself out as a minister of the church and claimed a ministerial housing allowance; and (4) Herzog's job duties reflected a role in conveying the church's message and carrying out its mission. Herzog tried to distinguish Hosanna-Tabor on the grounds that the plaintiff in that case was terminated for religious reasons, whereas Herzog was terminated for economic ones. The court ruled that the Supreme Court in Hosanna-Tabor made clear "the reasons underlying a church's employment decisions are wholly immaterial to determining whether the ministerial exception applies in the first instance." Herzog also argued that her role was "largely secular," but the court found that in Hosanna-Tabor the Supreme Court "cautioned against placing too much emphasis on a plaintiff's secular duties." In addition, the court observed that Herzog's "status as a called teacher permeated through to her secular responsibilities."
2. Breach of Contract Claims Dismissed
In Kirby v. Lexington Theological Seminary, Case No. 2010-CA-001798-MR, 2012 WL 3046352 (Ky.App. July 27, 2012) and Kant v. Lexington Theological Seminary, Case No. 2011-CA-000004-MR, 2012 WL 3046472 (Ky. App. July 27, 2012), the same court affirmed dismissal for lack of subject matter jurisdiction of two former professors' claims for breach of contract and breach of an implied duty of good faith and fair dealing. Jimmy Kirby also asserted a claim for race discrimination. Neither professor was a member of the Christian church with which the seminary affiliated. Laurence Kant is Jewish and was tenured. Nevertheless, the seminary terminated both when it restructured for financial reasons in 2009. The seminary offered to allow Kant to teach an additional semester in exchange for a release, but he refused and was terminated.
In Kirby, the court held that the ecclesiastical abstention doctrine prevented it from delving into Kirby's claims, because the court would have to consider the seminary's internal affairs regarding the restructuring of its curriculum to reflect the goals of the seminary's religious mission. In addition, the court held that the ministerial exception doctrine as articulated in Hosanna-Tabor precluded their claims. The court held that Kirby's "role as a 'called' teacher at the seminary carrying out his ministry by serving as Instructor of Church and Society ... is sufficient to apply the ministerial exception...." It ruled that Kirby: (1) "was entrusted to further the spiritual education of the next generation of church leaders at the Seminary"; and (2) led religious worship services; opened classes with prayer; taught biblically-based classes; and was evaluated based on religious criteria.
In Kant, the court ruled likewise that Kant's claims would require an inquiry into an ecclesiastical matter in violation of the ecclesiastical abstention doctrine. The court considered especially influential the inherently religious character of the seminary. It rejected Kant's claim that his primary duties were not religious as "untenable," because they involved teaching religious-themed courses at a seminary and preparing students for Christian ministry. The court considered Kant's Jewish faith "irrelevant," because he acknowledged that his position at the seminary was to fulfill its mission. In her dissent, Judge Michelle Keller disagreed. She also considered material the ecumenical character of the seminary and economic, not religious reason for Kant's termination, so that, in her view, the court could decide the matter without interpreting church law.
Concurring in both cases, then-Chief Judge Glenn Acree took the position that the court had jurisdiction to consider Kirby's challenge to the application of the ministerial exception to his claim, despite lacking jurisdiction to address the ecclesiastical matter of the seminary's curricular and administrative restructuring. He signaled that the court could adjudicate the rights under an employment contract of a non-minister without interpreting church doctrine by engaging in a narrow review of the specific church decision.
Ministerial Exception Doctrine Inapplicable to For-Profit Kosher Caterer
In Altman v. Sterling Caterers, Inc., Case No. 11-21829-CIV, 2012 WL 2921516 (S.D. Fla. July 17, 2012), the court ruled that a for-profit kosher catering service may not assert the ministerial exception doctrine to avoid a mashgiach's claim for overtime and minimum wages under the Fair Labor Standards Act (FLSA). A mashgiach is "a person who certifies that food is kosher." The court observed that the defendant is not a religious order, provides kosher food to the Jewish community as well as non-kosher food, and that the plaintiff is not a rabbi or member of a religious order. The court did not decide whether the ministerial exception doctrine bars an FLSA claim, but noted that neither the Eleventh Circuit nor any of its district courts have ruled on the subject.
Court Dismisses Minister's Breach of Contract Claim
In DeBruin v. St. Patrick Congregation, Case No. 2010AP2705, 2012 WL 2849271 (Wis. July 12, 2012), a fragmented court affirmed dismissal of a minister's breach of contract claim against his former church. The plaintiff entered into a one-year employment contract for him to become the Director of Faith Formation. Roughly three months later the church terminated him. Three justices affirmed dismissal of the plaintiff's claim on the basis of the ministerial exception doctrine and considered Hosanna-Tabor controlling. They ruled, "[T]he First Amendment gives St. Patrick the absolute right to terminate DeBruin for any reason, or for no reason, as it freely exercises its religious views." They added that Article I, Section 18 of the Wisconsin Constitution provided an additional, independent basis for dismissing the complaint. One of the concurring justices, Justice David Prosser agreed that Hosanna-Tabor is instructive, but rested his decision on the illusory character of a single clause of the contract; i.e., the termination clause. He determined that the plaintiff was an at-will employee and, more than this, that the church specifically reserved the right in the contract to freely exercise its religious prerogative to terminate him. The other justice in the concurrence, Justice N. Patrick Crooks, concluded the contract was unenforceable as a promise that its "future conduct will be in accord with [its] own future will, just as it would have been had nothing at all been said." (emphasis original). In her dissent, Justice Ann Bradley disagreed that Hosanna-Tabor has any bearing on this case dealing with breach of a contract. In her view, the church voluntarily entered into the contract with the minister; therefore, enforcing it would not be akin to regulating the hiring and firing of a ministerial employee by virtue of an antidiscrimination statute. The dissent acknowledged that the plaintiff could wade into doctrinal waters, but would have permitted summary judgment as to this to avoid excessive entanglement with religion. The dissent would have found the contract enforceable to mean that the plaintiff could not be discharged without "good and sufficient cause," meaning an employee's failure to perform duties under the contract.
Housing Non-Profit Denied Injunction Against Zoning Code
In Affordable Recovery Housing v. City of Blue Island, Case No. 12-cv-4241, 2012 WL 2885638 (N.D. Ill. July 13, 2012), the court denied injunctive relief to the plaintiff, a non-profit, faith-based organization that provides recovery and housing services to adult men. The city issued an order evicting the plaintiff when an inspection revealed it was housing more than 70 residents and no sprinklers had been installed in a residential district. The plaintiffs sued claiming violations of the First Amendment, Fifth Amendment and the Illinois Religious Freedom Restoration Act. The court ruled that the plaintiff is unlikely to prevail on the merits because the zoning code is neutral and of general applicability consistent with the First Amendment, and requires only a "modest burden" that the plaintiff obtain a special use permit and install sprinklers. The court also ruled that the public interest favored enforcement of the safety code to protect the men housed at the facility.
Injunction Requires County to Process Mosque's Certificate of Occupancy Request
In United States v. Rutherford Cnty, Tenn., Case No. 3:12-0737, 2012 WL 2930076 (M.D. Tenn. July 18, 2012), a federal district court issued an injunction to prevent compliance with orders of a state court in violation of the Religious Land Use and Institutionalized Persons Act (RLUIPA), and to require the county to process the Islamic Center of Murfreesboro's request for a certificate of occupancy. If the building complies with applicable codes, the court required the county to issue the certificate of occupancy before the beginning of Ramadan in two days or immediately notify the Islamic Center of any deficiencies and promptly re-inspect the building upon notice they have been corrected. The court ruled that the United States demonstrated: (1) a substantial likelihood of success on the merits in showing that failing to process the Islamic Center's certificate of occupancy application substantially burdened the Islamic Center's free exercise of religion; (2) the Islamic Center will otherwise suffer immediate and irreparable injury outweighing any harm to the county inasmuch as the mosque is necessary to accommodate the number of worshipers during Ramadan; and (3) the public interest favors enforcement of RLUIPA.
Impeding Access to Religious Site Does Not Violate RFRA
In La Cuna de Aztlan Sacred Sites Protection Circle Advisory Comm. v. U.S. Dep't of the Interior, Case No. 2:11-cv-00395-ODW, 2012 WL 2884992 (C.D. Cal. July 13, 2012), the court ruled that the plaintiffs failed to demonstrate that a solar generation project to be located on federal land violated, among other provisions, the Religious Freedom Restoration Act (RFRA) by interfering with access to sites and possession of sacred objects guaranteed by the California Desert Conservation Area. The court observed that the plaintiffs "do not plead that they must abandon their religious principles or else forfeit a benefit. There is no evidence that [d]efendants have pressured [p]laintiffs to make any choice between receiving a benefit and practicing their religion.... Neither do [p]laintiffs demonstrate how the [p]roject forces them to act contrary to their religious beliefs." Rather, the court found that the plaintiffs plead no more than that the project will have a "subjective effect on their religion" and found that impeding access to a religious site is not enough to state a claim under RFRA.
Court Dismisses Claim that Ethics Course Violates Establishment Clause
In Smith v. Arizona, Case No. CV 11-1437-PHX-JAT, 2012 WL 3108818 (D. Ariz. July 31, 2012), the court granted in part the State of Arizona and Arizona State Board of Education's motion to dismiss plaintiff's claim that they violated the Establishment Clause when they allowed an instructor to teach a community college course on ethics allegedly from a Christian perspective. The court gave as reasons that: (1) the plaintiff's constitutional claims were moot and not capable of repetition, because the plaintiff completed the course and would not have to retake it; and (2) the college officials he sued were entitled to qualified immunity, because "what is allowed when using religious materials in a classroom and teaching from a religious perspective are not entirely clear"; therefore, the officials did not violate any clearly established law. The court also referred to the importance of academic freedom in deciding the appropriate curriculum for the classroom.
Religious Institutions In the News
The Department of State issued the 2011 International Religious Freedom Report, indicating that almost half of the world's governments "either abuse religious minorities or did not intervene in cases of societal abuse." http://www.washingtonpost.com/national/on-faith/state-department-highlights-global-religious-restrictions-in-new-report/2012/07/30/gJQAg7f7KX_story.html
The U.S. Court of Appeals for the Eleventh Circuit upheld a Georgia ban on guns in church. http://chronicle.augusta.com/news/metro/2012-07-24/appeals-court-upholds-georgia-ban-guns-church
A new report examines the religious beliefs of Asian Americans and finds them distinctive. http://www.pewforum.org/Asian-Americans-A-Mosaic-of-Faiths.aspx
