October 9, 2014

Religious Institutions Update: October 2014

Lex Est Sanctio Sancta
Holland & Knight Update
Nathan A. Adams IV

Timely Topics

Church splits and property disputes are not new, but they have certainly grown in number in recent years. In the seminal case on church property disputes, Watson v. Jones, 80 U.S. (13 Wall.) 679, 20 L. Ed. 666 (1871), the U.S. Supreme Court ruled that the lower court lacked subject matter jurisdiction to decide whether the pro-slavery or anti-slavery faction of Walnut Street Presbyterian Church in Louisville, Kentucky, "owned" the church. Church splits today occur over different theological issues, but the process is perhaps as painful. The Episcopal Diocese of Virginia reported losing congregations that collectively contributed $10.4 million to the diocese in the 20-year period before the dispute erupted. Some congregants never return to church.

In addition, denominations and churches are spending millions in legal fees in today's cases. One analyst reported that through 2009, the Episcopal Church in the United States of America had spent $40 million on attorneys' fees and costs associated with the (then) 60 plus lawsuits in which it was involved. The breakaway churches, such as Falls Church Anglican Church, are also spending a hefty amount on legal fees. http://www.washingtonpost.com/wp-dyn/content/article/2008/12/03/AR2008120303065.html. Case settlement values are also substantial. Grace Presbytery, the regional governing body of the Presbyterian Church (USA) reported settling its dispute with Highland Park Presbyterian Church for $7.8 million. The value of the property at issue ranged from $70 million to $120 million. http://thescoopblog.dallasnews.com/2014/09/highland-park-presbyterian-church-reaches-property-litigation-settlement.html/

Episcopalians, Presbyterians and Lutherans have all been affected recently by schism, and now there is talk of it in the United Methodist Church. Denominations and churches can learn several lessons from the litigation of the past 20 years not fully reflected in their governing documents, which those considering lawsuits should evaluate well in advance of litigation. Church counsel can assist with pre-litigation and litigation planning, as well as those looking for an alternative path through alternative dispute resolution and modifications to bylaws designed to eliminate ambiguity about property ownership.

No First Amendment Violation to Require Residential Facility to Accompany Client to Religious Services

In Williams v. State of Cal., No. 12-55601, 2014 WL 4090545 (9th Cir. Aug. 19, 2014), the court affirmed the District Court's dismissal of the plaintiff's complaint alleging that defendants violated the plaintiff's First Amendment right to freedom of religion by forcing them, consistent with California's Lanternman Developmental Disabilities Services Act (the Act), to provide direct staff support to a developmentally disabled client who wished to attend Jehovah's Witness services. The Act grants the developmentally disabled the right to religious freedom and practice, the right to attend religious services or to refuse attendance, and the right to participate in worship or not to participate in worship. Plaintiffs, residential community care facilities that are licensed by the state to serve as vendors under the Act, argued that the Act requires them merely to provide an opportunity to attend Jehovah's Witness worship services through drop-off and pick-up, rather than to accompany them to the religious services. The regional center disagreed, cited the plaintiffs, and, as a result, the plaintiffs could no longer receive client referrals. The court ruled that the regulations requiring accompaniment are neutral because their object is to allow developmentally disabled persons to approximate the lives of nondisabled persons – not to infringe upon practices because of their religious motivation and because the laws serve to accommodate the rights of developmentally disabled persons to free exercise of religion. The court also found the regulations generally applicable because they apply to all vendors, irrespective of their religion. Finally, the court ruled that the regulations are rationally related to a legitimate governmental purpose. The plaintiffs alleged that two of its employees are Catholic and cannot attend any other religious service, however, the court ruled this an inadequate basis for a free exercise violation. Once more, the court ruled the Act and regulations have a secular purpose, the primary effect of neither advancing nor inhibiting religion and they do not foster excessive government entanglement with religion. Furthermore, the court ruled that the plaintiffs have failed to allege any facts supporting a plausible inference of unlawful retaliation under the First Amendment or violation of Title VII.

Order Preventing Criminal Defendant from Attending Church Services Upheld

In Ex Parte Herrera, No. 05-14-00598-CR, 05-14-00626-CR, 05-14-00627-CR, 2014 WL 4207153 (Tex.App.-Dallas Aug. 26, 2014), the court upheld a trial court's order denying the defendant's request to modify the conditions of electronic monitoring to allow him to attend regular church services pending a hearing and reconsideration if the defendant presented evidence showing the pastor of the church did not object to his attendance and that an adequate monitoring service was in place. Nobody from the church testified. In 2013, defendant was charged in Dallas County with three offenses in 2000 of aggravated sexual assault of a child under age 14. In 2014, Denton County issued a warrant for his arrest for committing an indecency with a child offense against a second victim in 2007. The defendant argued that the order violated his state and federal constitutional rights to the free exercise of religion. Without deciding the question, the court treated those rights as identical for lack of briefing on the subject, although Texas' free exercise rights are generally broader. The court concluded as follows: "Considering the government's compelling interest to protect children from becoming potential victims of sexual assault and the fact appellant brought no evidence to show he could attend services without having unsupervised contact with minors, we cannot conclude the trial court imposed excessive bail or abused its discretion in releasing him upon the condition that he not attend church services."

Police Officer Coerced to Pray States Claim for Establishment Clause Violation

In Marrero-Méndez v. Pesquera, No. 13-1203, 2014 WL 4109518 (D. Puerto Rico Aug. 19, 2014), the commander summoned 40 police officers to formation that he typically closed by asking for a volunteer to pray. The plaintiff objected to the prayer. In response, the commander ordered the plaintiff to abandon the formation, separate himself and stand still at a distance until the prayer concluded. Then, in front of the formation, the commander shouted that the plaintiff was standing apart because "he doesn't believe in what we believe." The plaintiff complained, whereupon he was removed from usual law enforcement tasks. Based on these facts, the court denied the defendants' motion to dismiss the plaintiff's Establishment Clause claim and qualified immunity defense. To find an Establishment Clause violation, the court applied a three-part test originating in the Seventh Circuit: (1) whether the state has acted; (2) whether the action was plainly coercive; (3) and whether the object of the coercion is religious. Rejecting qualified immunity, the court ruled that a reasonable police officer should have known that ordering a subordinate to observe a religious prayer given during an official meeting without giving the subordinate an opportunity to opt out violates the Constitution. In fact, the court ruled that law enforcement officers are particularly vulnerable to employer coercion given their strict chain of command. The court dismissed claims against two supervisors for lack of allegations concerning their knowledge or endorsement of, let alone participation in the challenged conduct.

Intrachurch Dispute Beyond Purview of Court

In Clark v. Moore, No. 2014-MO-034, 2014 WL 4102313 (S.C. Aug. 20, 2014), the court vacated a special referee's order enjoining a bishop from interfering with the Reformed Methodist Union Episcopal (RMUE) Church Annual Conferencing, managing RMUE funds, and serving as RMUE's bishop on the grounds that the matter is an ongoing ecclesiastical dispute which cannot be resolved by neutral principles of law. After RMUE general officers notified the bishop of suspected violations of church laws, including theft of church funds, they tried him in his absence due to his noncooperation and found him guilty. The bishop ignored his suspension, continued to act as bishop and suspended the general officers who then filed suit, alleging that the bishop's actions were improper. The parties consented to transfer the matter to a special referee who issued a temporary restraining order and injunction enjoining the bishop. The Supreme Court of South Carolina vacated the order on the grounds the dispute is "beyond the purview of the court."

Fraudulent Conveyance Law Does Not Violate RFRA

In Nichols v. Rose, No. TDC-14-0625, 2014 WL 4094340 (D. Md. Aug. 15, 2014), the court denied God's Universal Kingdom Christian Church's motion to take an interlocutory appeal of a non-final order denying its motion to dismiss a lawsuit filed by the trustee in bankruptcy to recover the debtor's charitable contributions to the church as so-called "fraudulent conveyances." The trustee alleged that Lynette Nichols made charitable contributions of $62,653 in 2011 and $31,138 in 2010 to the church, as compared to smaller amounts in prior years such as $3,140 in 2009. The trustee sought to recover these payments from the church for the bankruptcy estate. The church filed a motion to dismiss the trustee's lawsuit, arguing that the trustee's claims were barred by the Religious Freedom Restoration Act (RFRA). The bankruptcy court denied the motion in light of the enactment of the Religious Liberty and Charitable Donation Act of 1998 (RLCDA) that protects from fraudulent conveyance law contributions to churches not exceeding 15 percent of the debtor's income. Also, the court ruled that fraudulent conveyance provisions are generally applicable and do not target religious practices. Not all tithing is precluded by fraudulent conveyance law. The court observed, "In the wake of the RLCDA, to the extent there is case law addressing the application of the fraudulent conveyance provisions of the Bankruptcy Code to religious contributions, it provides no indication that courts have found such application to violate RFRA."

Limiting Access to Feathers to Federally Recognized Indian Tribes States RFRA Claim

In McAllen Grace Brethren Church v. Salazar, No. 13-40326, 2014 WL 4099141 (5th Cir. Aug. 20, 2014), the court of appeals reversed the District Court and held that the U.S. Department of the Interior failed to show that its regulation prohibiting American Indians who are not members of a federally recognized tribe from possessing bald eagle feathers and golden eagle feathers is the least restrictive means of furthering the government's interest in upholding the Migratory Bird Treaty Act (MBTA) and the Bald and Golden Eagle Protection Act. Department agents attended a powwow and determined that two participants who possessed and wore eagle feathers as part of the religious ceremony belonged to the Lipan Apache Tribe, not a federally recognized tribe, but a tribe recognized by the state of Texas. The Indians voluntarily abandoned the feathers, but filed a petition for their return. The department denied it on the basis of a regulation requiring that individuals seeking permits demonstrate that they are members of a federally recognized Indian tribe, whereupon the plaintiffs filed this lawsuit, claiming that the confiscation of the feathers violated RFRA. The department assumed that the government had either a compelling governmental interest in protecting eagles or fulfilling its responsibilities to federally recognized tribes, but ruled that the department failed to demonstrate that the current regulatory framework is the least restrictive means of achieving its goals for six reasons: (1) the record does not support the assertion that expanding the permitting process would cause an increase in poaching; (2) the record indicates that agents have to rely on anecdotal evidence and interviews with Indians as it is to determine the legal status of the feathers; thus, expanding the system would not jeopardize the preservation of eagles; (3) it is just as likely that the current system causes the black market in feathers to exist as that it keeps the black market small; (4) the regulation already contains a catch-all exception; (5) the evidence is not sufficient to prove that there would be an overwhelming number of permits sought and granted so as to overwhelm the feather repository and endanger the ability of the federal government to fulfill its "unique" responsibility to federally recognized tribes; and (6) left largely unexamined are the numerous solutions provided by the Plaintiffs to increase the supply of feathers by collecting molted feathers from zoos or allowing tribes to run aviaries.

Courts Enjoin PPACA's Religious Employer Exemption

In Brandt v. Burwell, No. 14cv0681, 2014 WL 4170671 (W.D. Pa. Aug. 20, 2014), the court permanently enjoined the Patient Protection and Affordable Care Act's (PPACA) accommodation for religious employers that requires them to self-certify that they are an eligible exempt organization as a substantial burden on their free exercise of religion in violation of RFRA. The bishop indicated that he would not sign the form as it would trigger the third-party administrator's responsibility to offer the preventive services to which the church objects. The bishop explained that, "although the self-certification form may take only a few minutes to sign, its ramifications are eternal because it constitutes direct facilitation of moral evil." The court found that the contraceptive mandate would be unequally applied to plaintiffs and would result in a division between the dioceses and their related nonprofit religious organizations, including some of its parochial schools and Catholic Charities that fulfill portions of the diocese's mission. The related organizations participate in a trust with the diocese through which they receive health insurance coverage. To comply with the mandate without exercising the accommodation, the diocese would have to expel them from the trust. The court was skeptical that the government has a compelling interest to apply the contraceptive mandate to religious employers, but not houses of worship which share the same faith. In fact, the court observed that to draw a distinction is to entangle the government in determining what constitutes "religion." Furthermore, relying upon Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751 (2014), the court concluded that the government failed to present any credible evidence tending to prove that it utilized the least restrictive means of advancing its interests. The court rejected the government's last-minute argument that there was no substantial burden on free exercise because it lacks the authority to force the third-party administrator of a church plan to provide contraceptive coverage. The court held that this argument ignored the fact that the accommodation still requires plaintiffs to sign a form; plaintiffs are barred from "influencing" the decision of the third-party administrator; and plaintiffs cannot morally disobey a regulation whether or not it is enforceable.

The court in Louisiana College v. Sebelius, No. 12-0463, 2014 WL 3970038 (W.D. La. Aug. 13, 2014), reached a similar conclusion with respect to a private Baptist college affiliated with the Southern Baptist denomination. Because the challenged regulation requires the plaintiff to self-certify or incur onerous financial penalties, the court ruled this "Hobson's choice" is a quintessential substantial burden under RFRA because the challenged regulations put substantial pressure on the plaintiff through threat of onerous fines to act contrary to its religious beliefs and facilitate its employees' free access to emergency contraceptives. The court agreed with the plaintiffs that the government – by agreeing to numerous exemptions to the mandate – could not convincingly assert a general need for uniformity. The court also found that there are other, less burdensome means for furthering the government's stated compelling interests in ensuring that women have equal access to preventive healthcare services.

Application of Historic District Regulations Leads to Valid RLUIPA Claim

In Chabad Lubavitch of Litchfield Cnty., Inc. v. Litchfield Historic Dist. Comm'n, Nos. 12-1057-cv, 12-1495-cv, 2014 WL 4652510 (2d Cir. 2014), the court affirmed in part and reversed in part the District Court in this lawsuit stemming from the denial of the plaintiffs' application for a certificate of appropriateness for expanding the facility that it purchased in the historic district. The court reversed the District Court's conclusion that generally applicable land use regulations may only result in a substantial burden when arbitrarily and capriciously imposed. Instead, the court found that when a governmental entity conducts a "case-by-case evaluation" of a land use application, the Religious Land Use and Institutionalized Persons Act (RLUIPA) applies. The court directed the lower court on remand to consider whether the conditions attendant to the denial of the application imposed a substantial burden on the plaintiffs' religious exercise, whether feasible alternatives existed for it to exercise its faith, whether the plaintiffs reasonably believed it would be permitted to undertake its proposed modifications when it purchased the property, and whether the modifications shared a "close nexus" with and would be consistent with accommodating the plaintiffs' religious exercise. The court also reversed the District Court's application of the nondiscrimination clause of RLUIPA, finding that the claim does not depend on the existence of comparators, but evidence of discriminatory intent, and dismissal of the rabbi's claim for lack of standing, finding that his plan to live in the facilities presented a redressable injury. The court affirmed the District Court's dismissal of the plaintiffs' equal terms RLUIPA claim for lack of a bona fide comparator and constitutional claims for lack of adequate briefing.

For-Profit Company Unable to Purchase Health Insurance May Lack Standing to Challenge Mandate

In Annex Med., Inc. v. Burwell, No. 13-1118, 2014 WL 4378763 (8th Cir. Sept. 5, 2014), the District Court denied a for-profit company and its controlling shareholders a preliminary injunction prohibiting the government from enforcing the contraceptive coverage mandate. The company argued that it could not purchase health insurance excluding the mandate. The court of appeal vacated the District Court order in part and remanded the case for a determination whether the company has standing to bring the action. The court observed that the company has less than 50 full-time employees and, thus, has no obligation to offer health insurance of any kind and that the company previously offered health insurance with contraceptive coverage, although allegedly without the controlling shareholders' knowledge. Because the mandate does not apply to the company, the court found that the only alleged injury is that independent third parties (i.e., private health insurers), are unable to sell a health insurance plan that excludes healthcare inconsistent with plaintiffs' beliefs. The court stated that there was no record evidence that any health insurer would sell such a plan to the company but for the mandate; therefore, it was unclear whether the injury the plaintiffs alleged was caused by the government or insurers, that have the right to include contraceptive coverage in their plans in a manner that the plaintiffs have no right to infringe. Judge Colloton concurred in vacating the order denying the preliminary injunction but concluded that the company has standing: "If, as alleged, the unavailability of a group health plan without the objected-to coverage is 'a result of the Mandate,' then it follows in ordinary usage that the HHS mandate is a but-for cause of the desired plan's unavailability."

Ordinance Impinging on Ritual Circumcision Subject to Strict Scrutiny

The court in Central Rabbinical Congress v. N.Y. City Dep't of Health & Mental Hygiene, No. 13-107-cv, 2014 WL 3973156 (2d Cir. Aug. 15, 2014), ruled that a city ordinance prohibiting any person from performing direct oral suction as part of circumcision without signed written consent from one of the child's parents is subject to strict scrutiny under the Free Exercise Clause. In Judaism, the "bris milah," or ritual circumcision of male infants, has been practiced for millennia as evidence of a covenant with God. As part of this ritual, some Orthodox Jews perform direct oral suction of the circumcision wound in a ritual act known as metzitzah b'peh or MBP. The New York City Department of Health believes MBP poses a health risk, such as the spread of the herpes simplex virus (HSV) to male infants. The court reversed the District Court's decision that the ordinance is a neutral and generally applicable law because it purposefully and exclusively targets a religious practice for special burdens and is underinclusive because the ordinance implicates fewer than 10 percent of the cases of neonatal HSV infection whereas it fails to regulate nonreligious conduct accounting for all other cases. The court remanded the action for further proceedings.

Court Sustains Objections to Testimony about Internal Church Organization

In Perez v. Paragon Contractors, Corp., No. 2:13cv00281-DS, 2014 WL 4628572 (D. Utah Sept. 11, 2014), an administrative enforcement action as part of an investigation into potential child labor violations, the court sustained the petitioners' objection to answering questions about the internal affairs or organization of the Fundamentalist Church of Jesus Christ of Latter-day Saints on the grounds that it would directly violate his sincerely held religious beliefs.

Religious Institutions in the News

The U.S. Department of Health and Human Services (DHHS) released proposed regulations in light of Burwell v. Hobby Lobby Stores, Inc., expanding the availability of the religious accommodations to the contraceptive coverage mandate. Comments are due on Oct. 21, 2014. http://www.regulations.gov/#!documentDetail;D=CMS-2014-0115-0002

On Aug. 22, 2014, DHHS also published interim final regulations amending the regulations in light of Wheaton College v. Burwell to provide an alternative form of notice of a plan sponsor's religious objection to all or a subset of contraceptive services required to be covered under the Act. http://www.regulations.gov/#!documentDetail;D=HHS_FRDOC_0001-0554

White evangelicals are now in a statistical dead heat with the "nones" (people who state they have no religion) as a percentage of the American population. http://www.washingtonpost.com/national/religion/embattled-evangelicals-war-on-religion-is-aimed-at-us/2014/09/23/32a6ee48-4362-11e4-8042-aaff1640082e_story.html.

A study finds that the least educated members of Generation X, rather than the most educated, are the most likely to leave religion. http://www.washingtonpost.com/national/religion/losing-religion-at-college-new-study-flips-the-common-wisdom/2014/08/07/5c13957a-1e5e-11e4-9b6c-12e30cbe86a3_story.html  


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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