March 2010

Religious Institutions Update: March 2010

Holland & Knight Update
Nathan A. Adams IV

Timely Topics

Chances are that if you work for a faith-based organization, its expectations concerning your conduct and the conduct of other officers, directors, employees, volunteers or students are more extensive than those of a secular enterprise. For-profit businesses are certainly concerned about the conduct of their agents during working hours that bears upon worker productivity or that could violate the law, but they rarely care about the after-hours and off-premises conduct of agents who are not competitive with the enterprise or fail to impact its bottom-line. In fact, when for-profit companies take adverse action against an employee for after-hours conduct, they may be subject to liability for discrimination or retaliation.

The legal tide pushes heavily against religious institutions that would buck the trend, which makes it even more important that a faith-based organization ask a church-state lawyer to review their employment and admissions policies every few years to be sure that these policies are adjusted to changes in the law; also, that they maximize available legal defenses specific to religious institutions, such as the church-autonomy doctrine or the ecclesiastical abstention doctrine. The best policies are not modeled after those of Fortune 500 companies; these policies may actually disadvantage religious institutions that seek to implement countercultural limitations. The best policies a church-state lawyer can draw up articulate institutional limitations on agents in keeping with core religious tenets.

Key Cases

Juvenile Officials Lacked Sovereign Immunity for Raid on Academy

In Heartland Academy Cmty. Church v. Waddle, No. 08-3723, 2010 WL 424441 (8th Cir. Feb. 8, 2010), the court held that state juvenile officials had no qualified immunity against money damages for obtaining ex parte removal orders reportedly on false pretenses, allegedly causing 30 law enforcement officers to raid Heartland Academy Community Church’s campus in northeastern Missouri and seize 150 students. After parents arrived at detention facilities in far-flung locations in the state to retrieve their children, they reportedly received stern letters advising them against boarding them at Heartland and implying that to do so could cause them to lose custody of their children. The court did not decide the validity of the allegations, but held that, if true, they were “so outrageous we are presented with a case in which the civil rights defendants acted in a ‘plainly incompetent’ manner or in ‘a knowing violation of a clearly established precedent’” under the First Amendment (association rights), Fourth Amendment (search and seizure rights) and Fourteenth Amendment (due process, parental, and en loco parentis rights).

Church Board Member Derivative Lawsuit Barred


In Ad Hoc Comm. of Parishioners of Our Lady of the Sun Catholic Church v. Reiss, Nos. 1 CA-CV 08-0360, 1 CA-CV 09-0079, 2010 WL 653035 (Ariz. App. Div. 1 Feb. 23, 2010), the board of directors of a congregational church organized outside of the structure of the Diocese of Phoenix to conduct the Tridentine Latin Mass elected with one dissenting vote Father Paul Andrade as a director and president. The dissenting and former board member, together with another member, brought a derivative lawsuit claiming that the board breached its fiduciary duties to the church and was grossly negligent by acting contrary to its bylaws in failing to ascertain whether Father Andrade was duly ordained according to pre-1968 rites. The plaintiff also demanded declaratory relief to be reinstated as a director and to force other directors to resign. The appeals court affirmed the lower court’s ruling that the ecclesiastical abstention doctrine deprived it of subject matter jurisdiction over the dispute. It found that the determination whether Andrade was a duly ordained priest according to the pre-1968 rites was exclusively an ecclesiastical matter governed by the church. And the appellate court likewise indicated that it was proper for the trial court to dismiss counts addressing the use of church funds, as it was not proper for the “court to look over the shoulder of the Board and see if funds are being spent in conformity with church purposes.”

Insurance Policy Exclusion Applied to Student-on-Student Abuse

In Erie Ins. Exchange v. First United Methodist Church, No. 3:09-CV-79-GCM, 2010 WL 455017 (W.D. N.C. Feb. 3, 2010), the court held that an insurance company was entitled not to defend a church and preschool under its Abuse and Molestation Exclusion contained within the insured’s Commercial General Liability Policy and Umbrella Policy when the church enrolled a three-year-old in the preschool with knowledge that the child “had been sexually abused and had a history of acting-out sexually with other children” and the child perpetrated sexually against a six-year-old classmate.

Delay in Awarding Permit to Recreational and Living Facility Did Not Violate RLUIPA

World Outreach Center purchased a building from the YMCA in Roseland, a poor Chicago neighborhood, with the objective of operating it as a recreational and living facility. But the Chicago alderman responsible for the area was reportedly upset that the building had not been sold instead to a developer who was a financial backer, and proposed that the zoning committee rezone the property. Before rezoning, World Outreach needed only a Special Use Permit to operate the facility; afterward, no such permit could be granted to enable the center to operate, but the facility was still a legal nonconforming use. Nevertheless, the city filed a suit in state court against World Outreach, claiming that it needed a Special Use Permit, then voluntarily dismissed the case. In World Outreach Conf. Ctr. v. City of Chicago, Nos. 08-4167, 09-2142, 2009 WL 5125822 (7th Cir. Dec. 30, 2009) (Posner, J.), World Outreach brought a federal case premised, inter alia, on the Religious Land Use and Institutionalized Persons Act (RLUIPA), seeking an injunction and damages because the Federal Emergency Management Agency offered premium rent to house 150 Hurricane Katrina victims on-site, conditioned on World Outreach’s obtaining the permit. After the case was filed, the city issued the permit. The appellate court disagreed with the district court that World Outreach had failed to exhaust its administrative remedies under the circumstances. But it found that in this case, the discrimination against World Outreach was not religious, but financial in favor of the developer. As a result, the court did not award damages for lost rent to World Outreach under RLUIPA, and sovereign immunity precluded any award under the Equal Protection Clause. The court also denied Rule 11 or other sanctions against the city.

Religious Institutions in the News

The Salvation Army reached a settlement in a case filed in 2004 on behalf of former and current employees; the organization agreed to be monitored for two years to ensure that it does not share its beliefs with recipients of government-funded services. See Salvation Army Reaches Settlement in Church-State Suit.

In East Texas, arsonists are blamed for a series of church fires, which burned churches to the ground. See Arsonists Blamed for Series of Texas Church Fires; ATF Blames Texas Church Fires on Serial Arsonist; Texas church fires blamed on serial arsonist.

Three young men in black-hooded sweatshirts walked into the sanctuary of a Richmond, California Pentecostal church and shot two brothers. See Richmond church shooting victims aid police; Victims aid police in Richmond church shooting; Police: Victims aid police in Calif. church attack.

A court awarded a former teacher at the Wakulla Christian School in Crawfordville, Florida, $120,000 on grounds that she was discriminated against because she was pregnant. See Federal court awards former Wakulla teacher $120,000 in discrimination case.

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