January 2011

Religious Institutions Update: January 2011

Holland & Knight Update
Nathan A. Adams IV

Timely Topics

On New Year’s Eve, many of us made resolutions to diet, exercise more or improve relationships. But how many of these resolutions did you make: resolved that in the new year, we will examine our faith-based policies and procedures to ensure they are: (1) clearly articulated and applicable across-the-board against similarly-situated persons; (2) distinguishable from our aspirations for these persons, which may not be fully enforceable; (3) rooted in religious doctrine and clearly stated as such; (4) consistent with and taking advantage of federal, state and local statutory and common law exemptions and privileges; resolved further that we will not avoid providing services due to anxiety over the potential legal ramifications caused by a less than fully informed understanding of them; resolved further that we shall preserve the institution’s faith-based character for future generations through appropriate changes to governance documents and adoption of leadership transition plans; resolved further that we will steward institutional resources by identifying and beginning to mitigate the institution’s greatest legal risks stemming from its faith-based character; resolved further that we shall analyze the federal tax implications of various financial policies and practices of the organization to avoid adverse penalties; wherefore, in consideration of the above, we hereby covenant and agree to contact counsel familiar with religious institutions or church-state law about our particular circumstances before related litigation occurs? If you have not adopted these resolutions, should you?

Key Cases

Plaintiffs State Religious Discrimination and Failure to Accommodate Claims When Terminated Over Their Opposition to Removing Religious Artwork

In Dixon v. Hallmark Cos., Inc., Case No. 10-10047 (11th Cir. Dec. 9, 2010), the U.S. Court of Appeals for the Eleventh Circuit reversed the district court’s holding that the plaintiffs, a husband-and-wife property management and maintenance team, failed to state a claim under Title VII against their rental complex company for intentionally discriminating against them, and failing to accommodate their sincerely held religious beliefs. Ms. Dixon, the property manager, hung on the wall a picture of flowers with the words, “Remember the Lilies … Matthew 6:28.” Her supervisor, Christina Saunders, noticed the picture when visiting the property to inspect it for compliance with U.S. Department of Agriculture rental assistance eligibility requirements. When Ms. Dixon confirmed for Ms. Saunders that Matthew 6:28 is a Bible citation, she directed Ms. Dixon to remove the artwork from the wall in the belief that it violated the Fair Housing Amendments Act of 1988. Rather than immediately comply, Ms. Dixon stated that she wanted to talk first with her husband. In her absence, Ms. Saunders called her supervisor, who directed her to remove the picture from the wall herself. When Ms. Dixon returned with her husband a dispute ensued, and Ms. Saunders fired them both allegedly for insubordination. The Dixons testified that when Ms. Saunders terminated the husband, she stated, “You’re fired too. You’re too religious.” The district court granted summary judgment to Hallmark. It held that no reasonable jury could conclude from Ms. Saunders’ alleged comment that the Dixons were fired because of their religion. The court observed that the comment was not “You’re fired too because you’re too religious.” But the Eleventh Circuit reversed in light of comparable precedent involving remarks about age found to be direct evidence of discrimination.

The failure to accommodate claim required the plaintiffs to establish that: (1) they held a bona fide religious belief that conflicted with an employment requirement; (2) they informed Hallmark of that belief; and (3) they were discharged for failing to comply with the conflicting employment requirement. Once again, the Eleventh Circuit reversed the district court’s conclusion that plaintiffs failed to state such a claim, observing, “The Dixons have presented evidence that they are sincere, committed Christians who oppose efforts to remove God from public places. Determining their credibility on this point is a matter for the jury, not the court.” The court likewise found the other elements of a prima facie case satisfied, observing that “if Saunders was aware of the tension between her order and the Dixons’ religious beliefs – and there is ample evidence that she was – her awareness would satisfy the second prong.” The court vacated and remanded the district court’s grant of summary judgment and called for factual findings on whether the Dixons’ religious beliefs were “reasonably accommodated” or the employer faced “undue hardship” for doing so.

On the other hand, the court affirmed summary judgment on the Dixons’ retaliation claim for the reason that they could not have an objectively reasonable belief that the rental company was violating the law by requiring them to remove the artwork, as there is “no statutory or case law that can reasonably be believed to prohibit a private employer from keeping its own workplace free of religious references.” The court also sustained the district court’s award of summary judgment on the Dixons’ claims of retaliation and housing discrimination under the Fair Housing Act (FHA). The court found that the FHA does not provide a right to hang religious artwork in Hallmark’s rental office and that Hallmark had not discriminated on grounds of religion in the provision of brokerage services by denying housing to a protected class on this basis.

Colorado Church and Landowner Held Liable when Youth Broke Her Back During “Winterama 2005”; Judgment Could Not Be Reduced by Insurance Limits

Grace Community Church (Grace) contracted with the Seventh-day Adventist Association of Colorado (SDA) to hold “Winterama 2005” at Glacier View Ranch in Ward, Colorado. Grace paid SDA for rooms, meals and use of the ranch. A member of Grace’s youth group asked the plaintiff to attend Winterama 2005. The plaintiff’s father paid Grace $40 and received a scholarship for the difference owed. The plaintiff’s father also signed a “registration and information” form stating, inter alia, “I will not hold Grace Community Church or it’s [sic] participants responsible for any liability which may result from participation.” The plaintiff ‘s back was broken when the inner tube in which she was riding pulled by an all terrain vehicle (ATV) across a frozen lake crashed into a boulder embedded in the lake. The plaintiff testified that she knew the activities would include riding on the tube but that her mother did not know this. Grace’s youth pastor testified that he had walked the lake to inspect it for potential hazards before conducting the activity. Another chaperone testified that he had towed people on the lake, including his daughter, perhaps 700 to 1,000 times without incident, and took the same precautions this time.

For the plaintiff’s injuries, the jury returned a verdict against Grace totaling more than $4 million, but the court reduced the total to $2 million, or the limits of Grace’s insurance. On appeal in Wycoff v. Grace Cmty. Church of the Assemblies of God, Case No. 09CA1151, 09CA1200, 09CA1222, 2010 WL 5054410 (Colo. App. Dec. 9, 2010) (“Wycoff I”), the court generally affirmed, but ordered the trial court to enter judgment in the higher amount unreduced by insurance limits. A Colorado statute controlled the validity of the release or waiver. It provided that parents have a “fundamental right to make decisions on behalf of their children, including deciding whether the children should participate in risky activities.” § 13-22-107(1)(a)(I)-(V), C.R.S (2010). It added that “’[s]o long as the decision is voluntary and informed, the decision should be given the same dignity as decisions regarding schooling, medical treatment, and religious education.’” §13-22-107(1)(a)(V). But the statute did not permit a parent to waive a child’s prospective claim for “’willful and wanton, … reckless, … [or] grossly negligent’ acts or omissions.” § 13-22-107(4). The Court of Appeals held that the registration form was legally insufficient as a release or waiver because the parental decision was not informed as there was no information at all describing the event activities, much less the associated risks. In addition, the exculpatory clause contained no reference to waiving personal injury claims based on the activity engaged in. The dissent disagreed that the statute should be interpreted to mean “made with full knowledge of the risks involved,” instead arguing that it should be construed in light of the statutory intent to expand children’s access to activities involving risk and contract the liability exposure of entities providing those activities. The dissent also argued that it was reversible error when the trial court precluded the jury from considering the affirmative defense of parental waiver.

The Court of Appeals also held that Grace was covered under the Premises Liability Act, although not the landowner, because Grace was “legally responsible … for the activities conducted … on real property.” § 13-21-115(1), C.R.S. (2010). In addition, the court held that the plaintiff was an “invitee” of Grace within the meaning of the act, not merely a “licensee” or “social guest” with a lesser duty of care owed to plaintiff. Under Colorado law, the principal distinction between an “invitee” and a “licensee” turns on whether that person’s presence on the land was affirmatively invited or merely permitted. The court held that “Grace affirmatively encouraged, and did not simply permit, the presence of plaintiff and other youth attendees.” Grace argued that the plaintiff was not an invitee, because her invitation did not involve transacting business and was not extended to the general public, but the Court of Appeals disagreed. The court found that the payment of $40 to Grace involved transacting business, notwithstanding that Grace did not profit from the transaction. Furthermore, the court held that commercial activity is not essential to invitee status. The dissent disagreed. In a separate appeal in Wycoff v. Seventh Day Adventist Ass’n of Co., Case No. 09CA1034, 09CA1065, 2010 WL 5054408 (Colo.App. Dec. 9, 2010), the Court of Appeals overturned the trial court’s ruling that the plaintiff was merely a licensee of SDA. The trial court thought that, because the plaintiff had no direct financial dealings with SDA, she could not be its invitee. As such, the trial court entered judgment for SDA. But the Court of Appeals held that direct dealings were not necessary; it was enough that the plaintiff’s father paid Grace, which, in turn, paid SDA. Due to this error, the court reversed and remanded the case against SDA for a new trial.

The trial court reduced the verdict against Grace in light of a statute providing, in effect, that funds held in “trust” for charitable purposes could not be “depleted” by a tort judgment. §7-123-105, C.R.S. (2010). The protection was not extended to insurance funds. But the Court of Appeals in Wycoff I held that under the statute’s plain terms, “the existence and amount of liability insurance provides no basis for limiting a judgment against a nonprofit or charitable defendant. Rather, the issue of liability insurance is relevant only when a plaintiff seeks to levy and execute on a judgment.” Thus, the court in Wycoff I vacated the judgment against Grace as to the lesser amount of its insurance limits and remanded the case against Grace for entry of a new judgment unreduced by these limits.

Seminarian Denied Claim under Minimum Wage Act

In Alcazar v. Corp. of the Catholic Archbishop of Seattle, Case No. 09-35003, 2010 WL 5029533 (9th Cir. Dec. 10, 2010), the U.S. Court of Appeals for the Ninth Circuit, sitting en banc (or in its entirety), agreed with the panel decision reported on in Holland & Knight’s Religious Institutions Update for April 2010, that a Catholic seminarian could not state a claim under Washington’s Minimum Wage Act because the seminarian was a “minister” subject to the ministerial exception to the general rule that churches must adhere to state and federal employment laws. The court held that the seminarian was so obviously a minister that it was unnecessary for the court to adopt a general test (such as the “primary duties” test) at this time for determining whether a person is a “minister.” To this extent, the en banc court vacated the panel’s earlier opinion, announcing just such a test. Otherwise, the court held “the First Amendment considerations relevant to an ordained minister apply equally to a person who, though not yet ordained, has entered into a church-recognized seminary program to become a minister and who brings suit concerning employment decisions arising from work as a seminarian.” The court stated in dicta that the ministerial exception would not apply if a church labeled a person a religious official as a mere subterfuge and might not apply if a seminarian obtained employment with a church outside the scope of his seminary training. In this case, the court found that the complaint alleged that the seminarian performed maintenance duties as part of his seminary training. The court held, “That some of his duties may have encompassed secular activities is of no consequence. A church may well assign secular duties to an aspiring member of the clergy, either to promote a spiritual value (such as diligence, obedience, or compassion) or to promote its religious mission in some material way.”

Indiana Church Property Dispute Decided in Favor of Presbytery

In Presbytery of Ohio Valley, Inc. v. OPC, Inc., Case No. 82A02-1003-MF-339, 2010 WL 5087816 (Ind. App. Dec. 14, 2010), the court concluded that: (1) the local congregation was part of the national church and accepted the benefits of being part of a national organization; (2) the local congregation acknowledged in its bylaws that it was bound by the national church constitution and could not amend its bylaws to conflict with that document; and (3) the church constitution contains a clause providing that all property titled to local congregations is held in trust for the use and benefit of the national church; therefore, judgment must be entered in favor of the governing judicatory bodies of the national church. The court held it was proper to apply the neutral principles of law approach, rather than the polity approach, but found that the trial court had done so incorrectly by focusing exclusively upon the language of the deed and ruling in favor of the local congregation, rather than also examining the church charters and constitution. The court of appeals reversed the judgment of the trial court and remanded with instructions to enter judgment in favor of the Presbytery, together with a declaratory judgment that the congregation has no right, title or interest in the property, and a constructive trust on the property in favor of the Presbytery.

Federal RLUIPA Claim Held Not Ripe for Failure to Seek Michigan Zoning Board Decision

Miles Christi, an international Catholic religious order, owned a five-bedroom house in a residential neighborhood in Northville, Michigan, and conducted private daily masses in a small 18-person chapel inside the house, as well as regular Bible studies. Neighbors complained about the automobile traffic and number of parked cars. After conducting surveillance of the property, a city official told the Order that the house was operating as “something other than [a] single family residence” and that “they needed to provide … an operations plan to support and justify the amount of parking they [were] provid[ing].” When Miles Christi advised that it could not provide additional parking in the rear, city officials told them they would have to: (1) request a variance from the zoning board of appeals to allow parking in the front yard; and (2) submit a site plan to the Northville Parking Commission detailing the intended expansion of parking spaces and sufficient landscaping to block the view of parked cars from neighboring properties. Miles Christi failed to do this by the deadline and was ticketed and directed to appear in state court. The state district court proceedings developed an extensive record and dismissed the case, ruling that the regulation was overly vague and subjective, but the state circuit court reversed and remanded. On remand, the parties agreed to hold the case in abeyance after the order filed an action in federal district court challenging the application of the Northville zoning ordinance to it and the conduct of township officials under the First and Fourteenth Amendments, the Religious Land Use and Institutionalized Persons Act (RLUIPA) and the Michigan Constitution.

In Miles Christi Religious Order v. Township of Northville, Case No. 09-1618, 2010 WL 515645 (6th Cir. Dec. 21, 2010), the U.S. Court of Appeals for the Sixth Circuit agreed with the federal district court that the case was not ripe for adjudication by the federal court, because Miles Christi had not yet asked the zoning board: (1) whether it put its house to a “more intensive use” within the meaning of the city code; (2) whether the house is a “church” within the meaning of the city code; and (3) whether a site plan was required or a variance feasible. The court asked, “How can we know whether the township ‘has gone too far’ … until we ‘know how far the regulation goes’ … and indeed which regulations apply?” It held that there would be no chilling effect on Miles Christi’s religious activities, but the dissent disagreed. It was the dissent’s view that, although Miles Christi had not exhausted its opportunities for administrative relief by virtue of seeking a decision from the zoning board, it was not required to do so to bring its claims and had obtained a final decision sufficient to ripen them. All judges agreed that the township’s following statement at oral argument was troubling in its implications: “’football parties and tailgate parties’ do not change ‘the residential nature of the use; whereas, what they’re doing here, they’re doing religious education and they’re worshipping.’” Said the majority, “While the United States Code contains a Religious Freedom and Restoration Act and a Religious Land Use and Institutionalized Persons Act, one will search in vain for a Freedom to Watch Football on Sunday Afternoon Act.”

Religious Institutions in the News

For a summary of one reporter’s top religion stories for 2010, see http://www.kansascity.com/2010/12/31/2553279/for-years-top-religion-stories.html

The Catholic Church severed ties with St. Joseph’s Hospital in Phoenix, Arizona over the liberties hospital administrators took authorizing abortions and sterilization. See http://online.wsj.com/article/SB100014240529702037310045760464

The Palm Beach County Circuit Court sanctioned an attorney for filing repeated lawsuits against the organization Jews for Jesus. See http://www.dailybusinessreview.com/PubArticleDBR.jsp?id=1202474957045&hbxlogin=1  

The United States Tax Court ruled that the housing allowance exclusion for ministers may apply to more than one residence at the same time. See http://www.ustaxcourt.gov/InOpHistoric/Driscoll.TC.WPD.pdf.

For the sixth consecutive year, the United Nations General Assembly passed a resolution on religious “defamation.” See http://www.cnsnews.com/news/article/un-passes-religious-defamation-resolutio

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