June 11, 2012

Religious Institutions Update: June 2012

Holland & Knight Update
Nathan A. Adams IV | Kenneth A. Jenero

Religious institutions are afforded a limited exemption from the statutory prohibition against religious discrimination set forth in Title VII of the Civil Rights Act of 1964 (“Title VII”). This exemption permits religious institutions to require individuals hired to work in connection with the organization’s religious activities to adhere to the same religious beliefs as the employing organization. Religious institutions also may be able to rely on this exemption as a defense against claims alleging non-religion-based discrimination, such as sex or pregnancy discrimination. For example, a religious institution may assert that an employee was terminated, not because she was pregnant, but because she violated the organization’s religious tenets or code of conduct.

The courts will, however, carefully scrutinize the facts of each case to determine whether the employer’s challenged employment decision was motivated by an impermissible criterion (such as the employee’s pregnancy) or a permissible criterion (such as enforcing religious tenets). Religious institutions seeking to defend their actions based on the religious exemption must be able to show that their decision was based on the permissible criterion and was not influenced by the impermissible criterion. Sending “mixed messages” about the real reason for the decision will undercut the employer’s ability to secure summary dismissal of the employee’s claim. A good example of this is discussed below in Hamilton v. Southland Christian Sch., Inc. Religious institutions also must be able to show that they have uniformly applied the religious tenet, upon which the challenged employment decision was based, to males and females alike. Evidence of disparate treatment will defeat the organization’s defense and subject it to liability for sex discrimination.

Religious institutions also should remember that unless the “ministerial exception” applies, they are subject to all of the other prohibitions against employment discrimination set forth in Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and comparable state and local equal employment opportunity laws. This includes, but is not limited to, discrimination on the basis of race, color, sex, pregnancy, national origin, disability and age. Under a recent decision of the U.S. Supreme Court, the “ministerial exception” is an affirmative defense that must be raised and proven by the religious institution. In addition, the courts still are defining the precise contours of the ministerial exception, in terms of the employees to whom it applies, the employment decisions that it encompasses and the types of claims that it bars. Therefore, religious institutions are well advised to proceed cautiously when making and implementing employment decisions at any level.

Key Cases

Taxpayer Lacks Standing to Challenge Federal Investment in Subsidiaries Offering Islamic Financial Products

In Murray v. United States Dep’t of Treasury, No. 11-1063, 2012 WL 1958880 (6th Cir. June 1, 2012), the court held that the taxpayer lacked standing to challenge as an Establishment Clause violation the Department of the Treasury’s investment in financial subsidiaries of American International Group (AIG) which marketed and sold Sharia-compliant financing (SCF) products designed to satisfy the Islamic code. The Federal Reserve Bank of New York lent AIG $85 billion, took a $40 billion ownership stake in AIG and bought $70 billion in preferred stock. The plaintiff argued that SCF products are a form of religious indoctrination and that publicly financing them sends a message to the plaintiff that he is an outsider. The court held that the taxpayer lacked standing to challenge these investments under the Emergency Economic Stabilization Act of 2008 (EESA) because the Act does not “expressly contemplate” that some funds will go to projects involving religious groups. The court declined the plaintiff’s invitation to draw the inference that Congress knew EESA funds would support AIG’s SCF products by virtue of conferences held to educate policymakers about Islamic finance. The court concluded that it is only through executive discretion, which taxpayers may not second guess, that funds were transferred to AIG’s subsidiaries.

Professor States Claim for Religious Discrimination Against Community College

In Baiyasi v. Delta College, No. 11-13094-BC, 2012 WL 1648431 (E.D. Mich. May 10, 2012), the court held that a professor stated a claim against the community college where she worked for disparate treatment religious discrimination and retaliation, but not for a hostile work environment, procedural due process violation or violation of Section 1983. The professor alleged that the department chair disliked Christians and arranged for her to fail her tenure review because of her religious beliefs. She claimed to have complained to the dean, human resource director and others. The plaintiff neglected to allege a custom or practice on the part of the college as necessary to state a section 1983 claim against it and incorrectly identified the president of the college as the final relevant decisionmaker, rather than the board of trustees.

Teacher States Claims for Pregnancy Discrimination Against Religious School

In Hamilton v. Southland Christian Sch., Inc., No. 6:10-cv-00871-ACC-DAB (11th Cir. May 16, 2012), the court reversed summary judgment granted to a religious school on a teacher’s Title VII claim for pregnancy discrimination when she was terminated after becoming pregnant out of wedlock. The court ruled that the teacher had presented evidence that, in making the decision to terminate her, the school was more concerned about her pregnancy and her request to take maternity leave than about her admission that she had premarital sex. The principal stated in his deposition that, even though the teacher engaged in premarital sex, “if, in fact, she would have said to us I’m sorry that I’ve sinned against the Lord and this school, we would not be here.” The teacher testified that she had, in fact, said something like this, creating a genuine issue of material fact about the reason the school terminated her. The court ruled that the school abandoned the ministerial exception doctrine as a defense by failing to list it as an issue on appeal.

Contract Principal Fails to State Claim for Retaliatory Discharge Against School; School’s Ministerial Exception Defense Ignored

In Petschonek v. Catholic Diocese of Memphis, No. W2011-02216-COA-R9-CV, 2012 WL 1868212 (Tenn. Ct. App. May 23, 2012), the court overturned and remanded on interlocutory appeal the district court’s denial of the diocese’s motion for summary judgment on the question whether a former principal of a parochial school stated a common law retaliatory discharge claim for speaking out about what she viewed as the misuse of funds raised by parents to purchase computer equipment. The school terminated her due to a “loss of confidence in her leadership,” but compensated her through the end of her annual contract term. The court ruled that the teacher was a contract employee, notwithstanding a mutual contract provision enabling either party to terminate the contract at-will and specifying related liquidated damages. The court ruled that reserving the right to terminate a contract before the end of the contract term “does not transform an otherwise enforceable definite term contract into an at-will employment relationship, particularly where the definite term contract contains mutual rights to terminate the contract before the expiration of the contract term, and mutual obligations in case of early termination.” The court ruled that, because she was not an employee at-will, she could not state a claim for common law retaliatory discharge. The court declined to entertain the diocese’s secondary argument, not argued or pled in the trial court, that the principal’s claims were barred by the ministerial exception doctrine. The court noted that the United States Supreme Court in Hosanna-Tabor Evangelical Lutheran Church and Sch. v. Equal Emp’t Opportunity Comm’n, 132 S.Ct. 694 (2012), treated the argument as an affirmative defense, rather than jurisdictional bar. The court declined to opine whether the doctrine barred claims such as the plaintiff asserted, but observed that the courts “historically have ‘give[n] no greater or lesser deference to tortuous conduct committed on third parties by religious organizations than we do to tortuous conduct committed on third parties by non-religious entities.’”

City May Allocate Athletic Field Use Permits to Religious and Public Schools Alike

In Rogers v. Mulholland, No. 09-493 ML, 2012 WL 1565091 (D. R.I. May 4, 2012), the court disagreed with taxpayers including the athletic director of a public high school that the city defendants’ practice of allocating permits to public and religious schools to utilize athletic fields violated the Establishment Clause and Equal Protection Clause. The court applied the “Lemon test” and found that: (1) the city’s permitting policies implement the clearly secular purpose of allocating limited game and practice field space to all junior high and high school students within the city; (2) their effect did not advance or inhibit religion inasmuch as the fields themselves are wholly secular in nature, their ownership remains with the city, no funds are furnished to religious schools, and denying the religious schools access would be like denying them benefits such as police and fire protection, sewage facilities and streets and sidewalks; and (3) they led to limited interaction between city and religious authorities. The court also applied the endorsement test and found that a reasonable observer aware of the relevant circumstances and context of the city’s conduct would not perceive a message of governmental endorsement or sponsorship of religion. The court was not impressed that the only private schools benefiting from the permit process were Roman Catholic, because they were the only private schools in the city.

Court Grants Tax Exemption to 60 Percent of Church’s Facilities

In re Liberty Assembly of God, No. 2011-368, 2012 WL 1836376 (N.H. May 22, 2012), concerned a church’s appeal of the decision of the state Board of Tax and Land Appeals (BTLA) that only 60 percent of its main church facility qualified as tax-exempt. BTLA ruled not tax-exempt (1) the portion of the first floor of the main church facility, consisting of an apartment and additional room, available for missionaries on furlough; (2) the second floor of the main church facility consisting of an apartment utilized by the church caretaker, a room occupied by the grandson of the church treasurer, vacant apartments, “dorm” rooms used for storage, and a men’s restroom; and (3) that proportion of five acres not currently in use (dedicated to agricultural or forestry purposes) around which there was a “prayer trail” equal to the proportion of the facilities not utilized. The relevant code section exempted from taxation “houses of public worship, parish houses, church parsonages occupied by their pastors, convents, monasteries, buildings and the lands appertaining to them owned, used and occupied directly for religious training or for other religious purposes ... .” The church argued that the italicized language modified exclusively the last category of property, whereas houses of public worship and four other categories of property were exempt regardless of use. The court rejected this interpretation and held that the legislative scheme puts the burden on the applicant for exemption in all cases to prove entitlement thereto ? even within a single facility. The court also rejected the church’s argument that examining the religious uses and purposes of each room inside its facility violates the Establishment Clause. The court emphasized that the BTLA never questioned the validity of the taxpayer’s religion, but instead simply evaluated its use. Last, the court rejected the church’s argument that all of the uses to which it put its property were religious, deferring instead to the findings of fact by the BTLA. The court found no record evidence that the church was “singled out” for disparate treatment.

Religious Institutions in the News

Several faculty resigned a religious university when required to sign a personal lifestyle statement. http://www.washingtonpost.com/national/on-faith/faculty-leave-baptist-school-shorter-university-over-lifestyle-statement/2012/05/18/gIQAX5f8YU_story.html; http://www.insidehighered.com/news/2012/05/14/shorter-university-faculty-leaving-over-new-lifestyle-statements

Several Catholic dioceses, universities and other organizations filed suit over the HHS birth control mandate. http://www.washingtonpost.com/national/on-faith/catholic-groups-file-suit-over-hhs-birth-control-mandate/2012/05/21/gIQAtVrFgU_story.html

Study shows skepticism is high of politicians expressing religious views and pastors expressing political views. http://www.pewforum.org/Politics-and-Elections/more-see-too-much-religious-talk-by-politicians.aspx#church

Vatican documents have been leaked, leading to an arrest of the Pope’s butler and ouster of the president of the Vatican Bank. http://www.nytimes.com/2012/05/26/world/europe/popes-butler-arrested-in-vatican-letters-leak.html

A study shows different motivations for charity by religious and non-religious persons. http://www.washingtonpost.com/national/on-faith/studies-say-atheists-believers-both-do-good-but-for-different-reasons/2012/05/29/gJQAmSdlzU_story.html

Related Insights